SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of August, 2003
--------------
Bayer Aktiengesellschaft
(Exact name of registrant as specified in its charter)
Bayerwerk, Gebaude W1
D-51368 Leverkusen
Germany
(Address of principal executive offices)
--------------
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
---
Indicate by check mark whether the registrant by furnishing information
contained in this Form is also thereby furnishing information to the
Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes No X
---
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- N/A
EXHIBIT INDEX
-------------
1. Press release dated June 10, 2003
2. Press release dated June 13, 2003
3. Press release dated June 27, 2003
4. Press release dated June 30, 2003
5. Press release dated July 22, 2003
6. Press release dated o, 2003
7. Interim Report for First Half 2003
8. Press release dated August 6, 2003
9. Press release dated August 6, 2003
Exhibit 1
Dear Ladies and Gentlemen,
Herewith we would like to inform you that the next Baycol update is now
available on our website:
www.investor.bayer.com
Leverkusen, June 10, 2003
Bayer AG, Investor Relations contacts:
Dr. Alexander Rosar (+49-214-30-81013)
Dr. Juergen Beunink (+49-214-30-65742)
Peter Dahlhoff (+49-214-30-33022)
Judith Nestmann (+49-214-30-66836)
Exhibit 2
Bayer: Moody's downgrade incomprehensible
-----------------------------------------
Debt reduction target exceeded, operating profit expected to grow
-----------------------------------------------------------------
Leverkusen - Bayer regrets the decision by the ratings agency Moody's to cut the
Bayer Group's credit rating by one notch from A2 to A3. The company fails to
understand the reasons for the downgrade, particularly as its balance sheet
ratios have greatly improved in the period since the Aventis CropScience
acquisition. Thanks to strong cash flow generation, the Group significantly
exceeded its published debt reduction target for 2002. We anticipate a further
significant reduction in net debt in 2003, along with a double-digit percentage
increase in operating performance. Our efficiency programs are fully on
schedule.
Apart from this change in the long-term rating, Moody's has also cut the
short-term rating from Prime-1 to Prime-2. This downgrade is incomprehensible in
that Bayer has a strong liquidity position, with the Group's liquidity well in
excess of total current liabilities. Therefore the downgrade will have only a
very limited impact on Bayer's interest charges.
Leverkusen, June 13, 2003
Bayer AG, Investor Relations contacts:
Dr. Alexander Rosar (+49-214-30-81013)
Dr. Juergen Beunink (+49-214-30-65742)
Peter Dahlhoff (+49-214-30-33022)
Judith Nestmann (+49-214-30-66836)
Forward-looking statements
This news release contains forward-looking statements based on current
assumptions and forecasts made by Bayer Group management. Various known and
unknown risks, uncertainties and other factors could lead to material
differences between the actual future results, financial situation, development
or performance of the company and the estimates given here. These factors
include those discussed in our public reports filed with the Frankfurt Stock
Exchange and with the U.S. Securities and Exchange Commission (including our
Form 20-F). The company assumes no liability whatsoever to update these
forward-looking statements or to conform them to future events or developments.
Exhibit 3
Dear Ladies and Gentlemen,
We would like to inform you that the next Baycol update is now available on our
website:
www.investor.bayer.com
Leverkusen, June 27, 2003
Bayer AG, Investor Relations contacts:
Dr. Alexander Rosar (+49-214-30-81013)
Dr. Juergen Beunink (+49-214-30-65742)
Peter Dahlhoff (+49-214-30-33022)
Judith Nestmann (+49-214-30-66836)
Exhibit 4
Bayer filed new Form 20-F
-------------------------
Dear Ladies and Gentlemen,
Our new Form 20-F, as filed with the U.S. Securities and Exchange Commission on
June 27, 2003, is now available for download from the companies IR website at
www.investor.bayer.com
Printed hardcopies of the document are available on request.
Leverkusen, June 30, 2003
Bayer AG, Investor Relations contacts:
Dr. Alexander Rosar (+49-214-30-81013)
Dr. Juergen Beunink (+49-214-30-65742)
Peter Dahlhoff (+49-214-30-33022)
Judith Nestmann (+49-214-30-66836)
Exhibit 5
Q2 / 2003 Consensus Estimates
-----------------------------
Ladies and Gentlemen,
We like to thank you for providing us with your Q2/ 2003 estimates for Bayer.
The calculated consensus is based on estimates contributed by 20 major banks.
All consensus numbers are quoted in million Euros.
Average High/Low
------- --------
Sales 7,321 7,589 / 6,805
Reported EBIT 466 727 / 310
Pre-tax income 279 547 / 145
EPS (Euro/share) 0.23 0.49 / 0.12
Best regards,
Bayer AG
Investor Relations Team
Leverkusen, July 22, 2003
Forward-Looking Statements
This news release contains forward-looking statements based on current
assumptions and forecasts made by Bayer Group management. Various known and
unknown risks, uncertainties and other factors could lead to material
differences between the actual future results, financial situation, development
or performance of the company and the estimates given here. These factors
include those discussed in our public reports filed with the Frankfurt Stock
Exchange and with the U.S. Securities and Exchange Commission (including our
Form 20-F). The company assumes no liability whatsoever to update these
forward-looking statements or to conform them to future events or developments.
Exhibit 6
Q2 / 2003 PUBLICATION SCHEDULE
------------------------------
Ladies and Gentlemen,
For the release of our Q2/2003 figures we set up the following schedule:
Wednesday, August 6, 2003
-------------------------
7:30 a.m. CEST: Q2 / 2003 statement
6:30 a.m. BST The Shareholder's Newsletter will be available on the internet at:
www.investor.bayer.com (english)
www.investor.bayer.de (german)
7:00 p.m. CEST: Half-year Investor Conference
6:00 p.m. BST London, One Whitehall Place
See details below
Live broadcast (English only) available on the internet at:
www.live.bayer.com (english)
www.live.bayer.de (german)
Thursday, August 7, 2003
------------------------
9:00 a.m. CEST: On-demand version of the conference webcast (english only)
8:00 a.m. BST Available on the internet at:
www.live.bayer.com (english)
www.live.bayer.de (german)
Best regards,
Bayer AG, Investor Relations contacts:
Dr. Alexander Rosar (+49-214-30-81013)
Dr. Juergen Beunink (+49-214-30-65742)
Peter Dahlhoff (+49-214-30-33022)
Judith Nestmann (+49-214-30-66836)
Exhibit 7
Stockholders' Newsletter 2003
Interim Report for the First Half
Second-quarter EBIT up
80 percent to (euro)454 million
EBIT up 40 percent to (euro)1,529 million in the first half
Negative currency effects on sales largely neutralized
Bayer ended the first half of 2003 with a 40 percent increase in the operating
result (EBIT) despite the continuing weakness of the global economy. Earnings
growth was driven mainly by the performances of the Pharmaceuticals/ Biological
Products, CropScience and Polyurethanes/Coatings/Fibers segments and by the
efficiency programs implemented in all parts of the company.
However, any stimulus to our business from the economic upswing
anticipated after the end of the Iraq war has so far failed to materialize. With
oil prices stable, financial markets showing a modest recovery and many
countries adopting an expansionary monetary and fiscal policy, the conditions
for economic recovery have been created. However, neither consumer nor corporate
confidence is yet well enough entrenched to trigger a recovery in industrial
demand.
Bayer Group sales declined by 3.3 percent, or (euro)248 million,
year-on-year in the second quarter of 2003, to (euro)7,256 million, due mainly
to the effects of currency translation. In local currencies, sales expanded by
7.3 percent, driven by increases in both prices and volumes. First-half sales
dipped by 0.8 percent after translation, but grew by 9.8 percent in local
currencies.
Bayer Group Highlights
(euro) million 2nd Quarter 1st Half
2002 2003 Change 2002 2003 Change
Sales 7,504 7,256 -3.3% 14,737 14,612 -0.8%
----------------------------------------------------------------------------------------------------------------------
of which discontinuing operations 233 0 456 0
Change in sales
----------------------------------------------------------------------------------------------------------------------
Volume - 2% + 4% - 2% + 4%
----------------------------------------------------------------------------------------------------------------------
Price - 4% + 3 - 4% + 1%
----------------------------------------------------------------------------------------------------------------------
Currency -4% -11% - 2% - 11%
----------------------------------------------------------------------------------------------------------------------
Portfolio changes + 3% + 1% - 2% + 5%
----------------------------------------------------------------------------------------------------------------------
EBITDA 1 1,034 1,100 +6.4% 2,522 2,882 + 14.3%
----------------------------------------------------------------------------------------------------------------------
Operating results (EBIT) 252 454 +80.2% 1,092 1,529 + 40.0%
----------------------------------------------------------------------------------------------------------------------
of which discontinuing operations 21 0 43 0
----------------------------------------------------------------------------------------------------------------------
of which special items (84) 17 273 272
----------------------------------------------------------------------------------------------------------------------
Return on sales 3.4% 6.3% 7.4% 10.5%
----------------------------------------------------------------------------------------------------------------------
Net income 293 128 -56.3% 816 714 - 12.5%
----------------------------------------------------------------------------------------------------------------------
Earnings per share ((euro)) 0.40 0.18 1.12 0.98
----------------------------------------------------------------------------------------------------------------------
Gross cash flow 2 761 1,089 + 43.1% 1,595 2,491 + 56.2%
----------------------------------------------------------------------------------------------------------------------
Gross cash flow per share ((euro)) 1.04 1.49 2.18 3.41
----------------------------------------------------------------------------------------------------------------------
Net cash flow 3 1,093 967 - 11.5% 1,333 1,130 - 15.2%
----------------------------------------------------------------------------------------------------------------------
Capital expenditures 486 324 - 33.3% 1,016 800 - 21.3%
----------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 782 646 - 17.4% 1,430 1,353 - 5.4%
----------------------------------------------------------------------------------------------------------------------
127,800 117,500 - 8.1%
Number of employees (as of June 30)
----------------------------------------------------------------------------------------------------------------------
Personnel expenses 2,018 2,033 + 0.7% 3,966 3,958 - 0.2%
1 EBITDA = operating result (EBIT) plus depreciation and amortization
2 Gross cash flow = operating result (EBIT) plus depreciation and
amortization, less gains on retirements of noncurrent assets, less income
taxes, and adjusted for changes in long-term provisions
3 Net cash flow = cash flow from operating activities according to IAS 7
EBIT jumped by 80.2 percent to (euro)454 million in the second quarter.
Before special items, EBIT improved by (euro)101 million or 30.1 percent, with
the Pharmaceuticals/Biological Products and Polyurethanes/Coatings/Fibers
segments making particularly strong contributions. EBIT for the first half of
2003 rose by (euro)437 million to (euro)1,529 million.
There was also an encouraging improvement in gross cash flow, which
grew 43.1 percent in the second quarter, to (euro)1,089 million, and 56.2
percent in the first half, to (euro)2,491 million.
Second-quarter net income fell by 56.3 percent compared with the same
period of 2002, to (euro)128 million, though it should be borne in mind that the
previous year's figure was
boosted by a (euro)269 million tax-free gain from the sale of Bayer's remaining
interest in Agfa-Gevaert. Net income in the first half of 2003 was down by 12.5
percent to (euro)714 million.
Net Sales (euro million)
02Q1 03Q1 02Q2 03Q2 02Q3 02Q4
Doesmtic 2,106 2,094 2,127 1,990 1,985 2,011
Foreign 5,127 5,262 5,377 5,266 5,474 5,417
Operating Result (EBIT) (euro million)
Q1 Q2 Q3 Q4
02 840 252 848 (362)
03 1,075 454
Gross Cash Flow (euro million)
Q1 Q2 Q3 Q4
02 834 761 601 820
03 1,402 1,089
Net Cash Flow (euro million)
Q1 Q2 Q3 Q4
02 240 1,093 1,397 1,690
03 163 967
Performance by Business Area -- 2nd Quarter of 2003 (euro million)
Operating Gross Net
Sales Result (EBIT) Cash Flor Cash Flow
HealthCare 2,204 379 450 112
CropScience 1,567 33 203 734
Polymers 2,451 69 245 51
Chemicals 871 2 92 51
Performance by Business Area -- 1st Half of 2003 (euro million)
Operating Gross Net
Sales Result (EBIT) Cash Flor Cash Flow
HealthCare 4,312 859 918 445
CropScience 3,228 476 720 542
Polymers 5,003 143 546 152
Chemicals 1,743 40 192 68
PERFORMANCE BY BUSINESS AREA
Our business activities are grouped together in the HealthCare, CropScience,
Polymers and Chemicals business areas, comprising the following reporting
segments:
--------------------------------------------------------------------------------
Business Area Segments
--------------------------------------------------------------------------------
HealthCare Pharmaceuticals, Biological Products;
Consumer Care, Diagnostics;
Animal Health
--------------------------------------------------------------------------------
CropScience CropScience
--------------------------------------------------------------------------------
Polymers Plastics, Rubber;
Polyurethanes, Coatings, Fibers
--------------------------------------------------------------------------------
Chemicals Chemicals
--------------------------------------------------------------------------------
HealthCare
Sales of the Pharmaceuticals and Biological Products segment in the
second quarter of 2003 were 2.0 percent above the same period of last year, at
(euro)1,190 million. In local currencies, sales grew by 15.2 percent. This
increase was due particularly to first shipments of ciprofloxacin to Barr
Laboratories in the United States. In addition, sales of the Factor VIII drug
Kogenate(R) grew significantly, thanks largely to improved product availability.
Sales of our plasma products in the United States were hampered chiefly by
pressure on prices. Although sales of the anti-infective Avalox(R) / Avelox(R)
showed a year-on-year decline in the second quarter, this was mainly
attributable to inventory management effects and seasonal factors. In the first
half overall, Avalox(R) /Avelox(R) posted strong growth from the previous year.
EBIT increased in the second quarter by 43.1 percent to (euro)146
million, mainly due to higher sales of Ciprobay(R) /Cipro(R) and Kogenate(R) and
improved cost structures.
The (euro)378 million drop in net cash flow, to minus (euro)152
million, was attributable largely to disbursements of (euro)231 million
following the settlement reached with U.S. authorities in the context of an
investigation into pharmaceutical product prices.
The market introduction of our new erectile dysfunction drug Levitra(R) is
proceeding on schedule. In Europe, Levitra(R) is already on the market in 16
countries, three months after its registration. We expect to receive marketing
authorization for the product in the United States in the third quarter of 2003.
HealthCare
(euro)million 2nd Quarter 1st Half
2002 2003 Change 2002 2003 Change
---------------------------------------------------------------------------------------------------------
Sales 2,350 2,204 -6.2% 4,760 4,312 -9.4%
---------------------------------------------------------------------------------------------------------
Proportion of Group sales 31.3% 30.4% 32.3% 29.5%
---------------------------------------------------------------------------------------------------------
EBITDA* 405 503 +24.2% 799 1,108 +38.7%
---------------------------------------------------------------------------------------------------------
Operating result (EBIT) 248 379 +52.8% 478 859 +79.7%
---------------------------------------------------------------------------------------------------------
of which special items 53 96 49 296
---------------------------------------------------------------------------------------------------------
Return on sales 10.6% 17.2% 10.0% 19.9%
---------------------------------------------------------------------------------------------------------
Gross cash flow* 245 450 +83.7% 511 918 +79.6%
---------------------------------------------------------------------------------------------------------
Net cash flow* 346 112 -67.6% 342 445 +30.1%
* for definition see Bayer Group Highlights on page __
Following the first two successfully concluded Baycol(R) trials in
Texas and Mississippi in March and April of this year, the number of
rhabdomyolysis cases resolved by settlement increased substantially. As of
August 1, 2003, 1,211 cases had been settled for payments totaling (euro)378
million (US$ 432 million). Moreover, Bayer is in settlement negotiations with
several hundred further plaintiffs. Bayer remains willing to settle those cases
in which plaintiffs suffered serious side-effects due to our product. As of
August 1, 2003 approximately 10,100 cases remain pending. Where facts have been
developed in the course of the litigation it so far appears that the vast
majority of plaintiffs did not suffer serious side-effects.
Should the U.S. plaintiffs in the Baycol(R) litigation or in the
phenylpropanolamine (PPA) product liability litigation substantially prevail
despite the existing meritorious defenses, it is possible that Bayer could face
payments that exceed its insurance coverage. The same is true should an
unexpectedly sharp increase in settlement cases occur in the Baycol(R)
litigation. PPA, which was widely used as an active ingredient in appetite
suppressants and cough-and-cold medications by many manufacturers, was
voluntarily replaced by Bayer and other producers in the U.S. in 2000 after a
recommendation by the U.S. Food and Drug Administration.
Pharmaceuticals, Biological Products
(euro)million 2nd Quarter 1st Half
2002 2003 Change 2002 2003 Change
---------------------------------------------------------------------------------------------------------
Sales 1,167 1,190 +2.0% 2,424 2,321 -4.2%
---------------------------------------------------------------------------------------------------------
Proportion of Group sales 15.6% 15.4% 16.4% 15.9%
---------------------------------------------------------------------------------------------------------
Pharmaceuticals 921 930 +1.0% 1,922 1,811 -5.8%
---------------------------------------------------------------------------------------------------------
Biological Products 246 260 +5.7% 502 510 +1.6%
---------------------------------------------------------------------------------------------------------
EBITDA* 173 202 +16.8% 377 456 +21.0%
---------------------------------------------------------------------------------------------------------
Operating result (EBIT) 102 146 +43.1% 225 345 +53.3%
---------------------------------------------------------------------------------------------------------
of which special items 64 (23) 61 (3)
---------------------------------------------------------------------------------------------------------
Return on sales 8.7% 12.3% 9.3% 14.9%
---------------------------------------------------------------------------------------------------------
Gross cash flow* 71 194 +173.2% 185 381 +105.9%
---------------------------------------------------------------------------------------------------------
Net cash flow* 226 (152) o 159 (45) o
* for definition see Bayer Group Highlights on page __
Best-Selling HealthCare Products
(euro)million 2nd Quarter 2003 Change 1st Half 2003 Change
Ciprobay(R)/Cipro(R)(Pharmaceuticals) 443 +20% 779 + 1%
-----------------------------------------------------------------------------------------------------------
Adalat(R)Pharmaceuticals 184 -22% 338 -24%
-----------------------------------------------------------------------------------------------------------
Aspirin(R)(Consumer Care/ Pharmaceuticals) 151 +4% 286 -2%
-----------------------------------------------------------------------------------------------------------
Kogenate(R)(Biological Products) 106 +33% 215 +31%
-----------------------------------------------------------------------------------------------------------
Ascensia(R)(Elite Diagnostics) 96 -28% 199 -22%
-----------------------------------------------------------------------------------------------------------
ADVIA(R)Centaur System (Diagnostics) 91 +8% 180 +13%
-----------------------------------------------------------------------------------------------------------
Avalox(R)/Avelox(R)(Pharmaceuticals) 31 -30% 139 +24%
-----------------------------------------------------------------------------------------------------------
Gamimune(R)N (Biological Products) 78 0% 138 -10%
-----------------------------------------------------------------------------------------------------------
Glucobay(R)(Pharmaceuticals) 65 -7% 135 -7%
-----------------------------------------------------------------------------------------------------------
Advantage(R)(Animal Health) 67 +24% 107 +16%
-----------------------------------------------------------------------------------------------------------
Total 1,312 +1% 2,516 -3%
-----------------------------------------------------------------------------------------------------------
Proportion of HealthCare sales 60% 58%
-----------------------------------------------------------------------------------------------------------
Business in the Consumer Care and Diagnostics segment decreased by 17.6 percent
in the second quarter to (euro)800 million, though in local currencies there was
only a 4.2 percent decline. Sales were diminished by the divestiture of the
household insecticides business. Adjusted for the effect of this divestiture,
sales in local currencies posted an increase. Business with the ADVIA(R) Centaur
and DCA 2000(R) laboratory diagnostic systems was encouraging. Sales of
Rapidpoint(R) 400 systems, which offer innovative diagnostic techniques for the
lung disease SARS, also expanded considerably. Business in products for
self-testing was unsatisfactory as a result of intense competitive pressure. We
believe we can regain market share in this area through new product
introductions. Volumes were up markedly in the Consumer Care Division, with
growth in sales of the recently launched One-A-Day Weight Smart(R) in the United
States along with increases for Alka-Seltzer Plus(R) effervescent tablets.
Second-quarter EBIT improved by (euro)85 million to (euro)188 million,
thanks to (euro)122 million in proceeds from the divestiture of further parts of
the household insecticides business. Earnings in Diagnostics were sharply down
due to the weakness of the self-testing business and the cost of integrating the
Visible Genetics acquisition.
Consumer Care, Diagnostics
(euro)million 2nd Quarter 1st Half
2002 2003 Change 2002 2003 Change
-----------------------------------------------------------------------------------------------------------
Sales 971 800 -17.6% 1,921 1,598 -16.8%
-----------------------------------------------------------------------------------------------------------
Proportion of Group sales 12.9% 11.0% 13.0% 10.9%
-----------------------------------------------------------------------------------------------------------
Consumer Care 463 340 -26.6% 928 690 -25.6%
-----------------------------------------------------------------------------------------------------------
Diagnostics 508 460 -9.4% 993 908 -8.6%
-----------------------------------------------------------------------------------------------------------
EBITDA* 180 248 +37.8% 311 552 +77.5%
-----------------------------------------------------------------------------------------------------------
Operating result (EBIT) 103 188 +82.5% 160 429 +168.1%
-----------------------------------------------------------------------------------------------------------
of which special items (11) 118 (12) 297
-----------------------------------------------------------------------------------------------------------
Return on sales 10.6% 23.5% 8.3% 26.8%
-----------------------------------------------------------------------------------------------------------
Gross cash flow* 123 208 +69.1% 234 449 +91.9%
-----------------------------------------------------------------------------------------------------------
Net cash flow* 93 242 +160.2% 165 448 +171.5%
* for definition see Bayer Group Highlights on page __
Animal Health
(euro)million 2nd Quarter 1st Half
2002 2003 Change 2002 2003 Change
-----------------------------------------------------------------------------------------------------------
Sales 212 214 +0.9% 415 393 -5.3%
-----------------------------------------------------------------------------------------------------------
Proportion of Group sales 2.8% 2.9% 2.8% 2.7%
-----------------------------------------------------------------------------------------------------------
EBITDA* 52 53 +1.9% 111 100 -9.9%
-----------------------------------------------------------------------------------------------------------
Operating result (EBIT) 43 45 +4.7% 93 85 -8.6%
-----------------------------------------------------------------------------------------------------------
of which special items 0 1 0 2
-----------------------------------------------------------------------------------------------------------
Return on sales 20.3% 21.0% 22.4% 21.6%
-----------------------------------------------------------------------------------------------------------
Gross cash flow* 51 48 -5.9% 92 88 -4.3%
-----------------------------------------------------------------------------------------------------------
Net cash flow* 27 22 -18.5% 18 42 +133.3%
* for definition see Bayer Group Highlights on page __
Sales of the Animal Health segment rose by 0.9 percent in the second quarter to
(euro)214 million. In local currencies, sales grew by 15.1 percent, helped by
the successful U.S. launch of our anti-parasitic treatment Advantix(R).
EBIT for the second quarter, at (euro)45 million, slightly exceeded the
already high level of the previous year.
CropScience
Sales of the CropScience subgroup grew by 44.7 percent, or (euro)484
million, in the second quarter to (euro)1,567 million due to the acquisition of
Aventis CropScience (ACS). As in the first three months, sales in the second
quarter were hampered considerably by negative currency effects. Total
first-half sales rose by 65.6 percent, or (euro)1,279 million, to (euro)3,228
million. Our market position held up well during the integration of ACS, which
continues to proceed on schedule.
CropScience
(euro)million 2nd Quarter 1st Half
2002 2003 Change 2002 2003 Change
-----------------------------------------------------------------------------------------------------------
Sales 1,083 1,567 +44.7% 1,949 3,228 +65.6%
-----------------------------------------------------------------------------------------------------------
Proportion of Group sales 14.4% 21.6% 13.2% 22.1%
-----------------------------------------------------------------------------------------------------------
Insecticides* 358 761
-----------------------------------------------------------------------------------------------------------
Fungicides* 333 660
-----------------------------------------------------------------------------------------------------------
Herbicides* 540 1,073
-----------------------------------------------------------------------------------------------------------
Seed Treatment/Environmental
Science/BioScience* 336 734
-----------------------------------------------------------------------------------------------------------
EBITDA** 151 228 +51.0% 354 869 +145.5%
-----------------------------------------------------------------------------------------------------------
Operating result (EBIT) 22 33 +50.0% 166 476 +186.7%
-----------------------------------------------------------------------------------------------------------
of which special items 0 (49) 0 (15)
-----------------------------------------------------------------------------------------------------------
Return on sales 2.0% 2.1% 8.5% 14.7%
-----------------------------------------------------------------------------------------------------------
Gross cash flow** 154 203 +31.8% 261 720 +175.9%
-----------------------------------------------------------------------------------------------------------
Net cash flow** 498 734 +47.4% 329 542 +64.7%
* 2002 sales figures for product group are not available.
** for definition see Bayer Group Highlights on page __
Business in the United States benefited from sales gains in local currency for
corn herbicides and insecticides. Sales in Japan and South Korea were below
expectations. In South America we were encouraged by continuing indications that
the economy is stabilizing. In Europe we gained market share despite a difficult
business environment caused by the continuing drought conditions and lower
demand for fungicides.
EBIT increased by (euro)11 million in the second quarter of 2003, to
(euro)33 million. While earnings in the first quarter had been boosted by
seasonal business in high-margin products and special gains from product
divestments made to comply with antitrust conditions, second-quarter earnings
were hampered by sales declines, special charges totaling (euro)49 million and
further substantial integration charges. Despite a comparatively weak second
quarter, earnings remain on target, with EBIT at (euro)476 million for the first
half and EBITDA at (euro)869 million, giving an EBITDA margin of 26.9 percent.
Gross cash flow for the second quarter was (euro)203 million, with net
cash flow rising to (euro)734 million thanks to a (euro)531 million reduction in
working capital.
Polymers
In the Plastics and Rubber segment, second-quarter sales dropped by
13.5 percent to (euro)1,188 million, with a 5.0 percent decline before currency
translations. Styrenics sales in Europe decreased due to lower demand and
growing competition from Asian producers. By contrast, polycarbonate volumes
remained steady despite excess capacities in the market. Sales of certain
technical rubber products receded in Europe.
The pressure on margins already evident in the first three months
intensified in the second quarter, with raw material costs remaining very high
and only limited opportunities arising for passing them along to customers.
Against this background, EBIT fell to (euro)6 million after a (euro)30 million
gain from the sale of PolymerLatex.
Polymers
(euro)million 2nd Quarter 1st Half
2002 2003 Change 2002 2003 Change
Sales 2,664 2,451 -8.0% 5,277 5,003 -5.2%
-----------------------------------------------------------------------------------------------------------
Proportion of Group sales 35.5% 33.8% 35.8% 34.2%
-----------------------------------------------------------------------------------------------------------
EBITDA* 336 262 -22.0% 632 582 -7.9%
-----------------------------------------------------------------------------------------------------------
Operating result (EBIT) 15 69 o 36 143 o
-----------------------------------------------------------------------------------------------------------
of which special items (126) (19) (185) (32)
-----------------------------------------------------------------------------------------------------------
Return on sales 0.6% 2.8% 0.7% 2.9%
-----------------------------------------------------------------------------------------------------------
Gross cash flow* 299 245 -18.1% 549 546 -0.5%
-----------------------------------------------------------------------------------------------------------
Net cash flow* 244 51 -79.1% 459 152 -66.9%
* for definition see Bayer Group Highlights on page __
Plastics, Rubber
(euro)million 2nd Quarter 1st Half
2002 2003 Change 2002 2003 Change
Sales 1,374 1,188 -13.5% 2,638 2,460 -6.7%
-----------------------------------------------------------------------------------------------------------
Proportion of Group sales 18.3% 16.4% 17.9% 16.8%
-----------------------------------------------------------------------------------------------------------
Thermoplastic Polymers 784 698 -11.0% 1,475 1,419 -3.8%
-----------------------------------------------------------------------------------------------------------
Rubber Polymers 590 490 -16.9% 1,163 1,041 -10.5%
-----------------------------------------------------------------------------------------------------------
EBITDA* 120 89 -25.8% 243 200 -17.7%
-----------------------------------------------------------------------------------------------------------
Operating result (EBIT) 22 6 -72.7% 31 9 -71.0%
-----------------------------------------------------------------------------------------------------------
of which special items (64) 7 (61) 7
-----------------------------------------------------------------------------------------------------------
Return on sales 1.6% 0.5% 1.2% 0.4%
-----------------------------------------------------------------------------------------------------------
Gross cash flow* 95 68 -28.4% 199 166 -16.6%
-----------------------------------------------------------------------------------------------------------
Net cash flow* 59 (172) o 164 (113) o
-----------------------------------------------------------------------------------------------------------
Polyurethanes, Coatings, Fibers
(euro)million 2nd Quarter 1st Half
2002 2003 Change 2002 2003 Change
-----------------------------------------------------------------------------------------------------------
Sales 1,290 1,263 -2.1% 2,639 2,543 -3.6%
-----------------------------------------------------------------------------------------------------------
Proportion of Group sales 17.2% 17.4% 17.9% 17.4%
-----------------------------------------------------------------------------------------------------------
Polyurethane Materials 783 786 +0.4% 1,602 1,563 -2.4%
-----------------------------------------------------------------------------------------------------------
Coatings Materials 507 477 -5.9% 1,037 980 -5.5%
-----------------------------------------------------------------------------------------------------------
EBITDA* 216 173 -19.9% 389 382 -1.8%
-----------------------------------------------------------------------------------------------------------
Operating result (EBIT) (7) 63 o 5 134 o
-----------------------------------------------------------------------------------------------------------
of which special items (62) (26) (124) (39)
-----------------------------------------------------------------------------------------------------------
Return on sales (0.5)% 5.0% 0.2% 5.3%
-----------------------------------------------------------------------------------------------------------
Gross cash flow* 204 177 -13.2% 350 380 +8.6%
-----------------------------------------------------------------------------------------------------------
Net cash flow* 185 223 +20.5% 295 265 -10.2%
-----------------------------------------------------------------------------------------------------------
* for definition see Bayer Group Highlights on page __
Chemicals
(euro)million 2nd Quarter 1st Half
2002 2003 Change 2002 2003 Change
-----------------------------------------------------------------------------------------------------------
Sales 1,187 871 -26.6% 2,345 1,743 -25.7%
-----------------------------------------------------------------------------------------------------------
of which discontinuing operations 233 0 456 0
-----------------------------------------------------------------------------------------------------------
Proportion of Group sales 15.8% 12.0% 15.9% 11.9%
-----------------------------------------------------------------------------------------------------------
Industrial Chemicals 262 257 -1.9% 512 501 -2.1%
-----------------------------------------------------------------------------------------------------------
Custom Manufacturing 57 39 -31.6% 115 94 -18.3%
-----------------------------------------------------------------------------------------------------------
Functional Chemicals 135 139 +3.0% 264 272 +3.0%
-----------------------------------------------------------------------------------------------------------
Process Chemicals 234 186 -20.5% 466 378 -18.9%
-----------------------------------------------------------------------------------------------------------
H.C. Starck 159 147 -7.5% 317 284 -10.4%
-----------------------------------------------------------------------------------------------------------
Wolff Walsrode 61 59 -3.3% 117 114 -2.6%
-----------------------------------------------------------------------------------------------------------
Others 279 44 -84.2% 554 100 -81.9%
-----------------------------------------------------------------------------------------------------------
EBITDA* 140 76 -45.7% 298 185 -37.9%
-----------------------------------------------------------------------------------------------------------
Operating result (EBIT) 32 2 -93.8% 91 40 -56.0%
-----------------------------------------------------------------------------------------------------------
of which special items (12) (11) (45) (13)
-----------------------------------------------------------------------------------------------------------
Return on sales 2.7% 0.2% 3.9% 2.3%
-----------------------------------------------------------------------------------------------------------
Gross cash flow* 122 92 -24.6% 239 192 -19.7%
-----------------------------------------------------------------------------------------------------------
Net cash flow* 147 51 -65.3% 216 68 -68.5%
* for definition see Bayer Group Highlights on page __
Business in the Polyurethanes, Coatings and Fibers segment dipped by 2.1 percent
to (euro)1,263 million. Sales in local currencies improved by 7.8 percent,
leading to high capacity utilization, particularly in the MDI product segment.
Pressure on prices has intensified again in recent months, especially in Asia.
EBIT improved by (euro)70 million in the second quarter to (euro)63
million, chiefly as a result of optimized cost structures. This figure contains
charges totaling (euro)49 million for termination of the joint venture
Bayer-Shell Isocyanates N.V. (BSI) and personnel adjustments.
Chemicals
Sales of the Chemicals segment fell by 26.6 percent in the second
quarter to (euro)871 million. Measured in local currencies, sales decreased by
19.6 percent. The decline was attributable to the divestiture of Haarmann &
Reimer on September 30, 2002 and other portfolio effects. The Functional
Chemicals product segment achieved gratifying growth in volumes, while business
in Process Chemicals was down. Sales of H.C. Starck also declined, particularly
due to the weak economy in the electronics sector. EBIT for the second quarter
fell to (euro)2 million.
Performance by Region -- 2nd Quarter of 2003
(by point of origin)
(euro million)
Latin America/
Africa/
Europe North Africa Asia/Pacific Middle East
Sales 3,443 2,317 965 531
Operating result (EBIT) 157 130 94 135
Performance by Region -- 1st Half of 2003
(by point of origin)
(euro million)
Latin America/
Africa/
Europe North Africa Asia/Pacific Middle East
Sales 7,154 4,499 1,933 1,026
Operating result (EBIT) 993 216 198 233
PERFORMANCE BY REGION
The economy of the euro zone remains weak, with the E.U. performing
less well than any other region. The economies of central and eastern Europe
continue to expand but are being held back by the slow pace of growth in western
Europe. Sales of our European companies fell by 2.1 percent or (euro)73 million
in the second quarter of 2003, to (euro)3,443 million. EBIT dropped by 34.3
percent to (euro)157 million, or by 17.9 percent if special items are
disregarded.
Business developed well in the other regions, with substantial
local-currency sales growth in some cases. Our companies in North America saw
sales rise 16.7 percent in the second quarter despite the sluggishness of the
U.S. economy in the wake of its surprisingly rapid expansion at the beginning of
the year. Confidence was dampened by higher raw material costs and the price of
natural gas, which was more than twice that of the previous year. Industry
remained reluctant to invest despite a marked improvement in corporate earnings.
Translated into euros, sales dipped 1.5 percent to (euro)2,317 million. EBIT
rose strongly to (euro)130 million thanks to higher earnings in HealthCare.
Business of our companies in the Asia/Pacific region increased by 4.8
percent in local currencies, even though the previous year's sales still
included the household insecticides business and despite the slower growth in
most Asian economies throughout the first half of 2003. After translation, sales
fell by 10.6 percent to (euro)965 million. Our growth driver in the Far East
continues to be China, where we achieved double-digit growth rates in local
currencies in the first half of 2003 after adjusting for the divestment of the
household insecticides. Second-quarter EBIT in Asia/Pacific improved by 9.3
percent to (euro)94 million.
In the Latin America/Africa/Middle East region, too, economic
development has so far fallen short of expectations. However, second-quarter
sales of our companies in the region advanced by 19.0 percent in local
currencies. Measured in euros, sales moved back 4.7 percent to (euro)531
million. EBIT rose by (euro)104 million to (euro)135 million.
Bayer Group Summary Cash Flow Statements
(euro) million 2nd Quarter 1st Half
2002 2003 2002 2003
Gross operating cash flow 761 1,089 1,595 2,491
-------------------------------------------------------------------------------------------------------------
Changes in working capital 332 (122) (262) (1,361)
-------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,093 967 1,333 1,130
-------------------------------------------------------------------------------------------------------------
of which discontinuing operations 16 0 38 0
-------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (4,289) (40) (4,406) 949
-------------------------------------------------------------------------------------------------------------
of which discontinuing operations (6) 0 (34) 0
-------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 2,955 (1,349) 3,204 (1,102)
-------------------------------------------------------------------------------------------------------------
of which discontinuing operations 0 0 5 0
-------------------------------------------------------------------------------------------------------------
Changes in cash and cash equivalents (241) (422) 131 977
due to business activities
-------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 1,092 2,165 719 767
-------------------------------------------------------------------------------------------------------------
Change due to exchange rate movements
and to changes in scope of consolidation (11) (15) (10) (16)
-------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of first half 840 1,728 840 1,728
-------------------------------------------------------------------------------------------------------------
Marketable securities and other instruments 32 30 32 30
-------------------------------------------------------------------------------------------------------------
Liquid assets as per balance sheets 872 1,758 872 1,758
LIQUIDITY AND CAPITAL RESOURCES
The consolidated financial statements for the first half of 2003 have
been prepared as for the year 2002 according to the rules issued by the
International Accounting Standards Board (IASB), London. Reference should be
made as appropriate to the notes to the 2002 statements.
Gross cash flow increased by (euro)328 million, or 43.1 percent, in the
second quarter of 2003 compared to the same period of the previous year, due
mainly to the (euro)202 million growth in EBIT. The (euro)126 million decline in
net cash flow to (euro)967 million resulted largely from an increase in working
capital and from disbursements of (euro)231 million following the settlement
reached with U.S. authorities in the context of an investigation into
pharmaceutical product prices. Provisions for these payments had been
established in 2002.
Net cash used in investing activities came to only (euro)40 million.
Here, cash outflows of (euro)324 million were largely offset by inflows from
sales of property, plant, equipment and investments in affiliated companies. The
latter included, in particular, the divestiture of PolymerLatex ((euro)107
million). Interest and other financial receipts amounted to (euro)177 million.
Financing activities resulted in net cash outflows of (euro)1,349
million, including (euro)664 million in dividend payments, (euro)250 million in
net loan repayments and (euro)435 million in interest paid after taxes. The
(euro)69 million, or 18.9 percent, increase in interest expense was chiefly
attributable to the financing of the Aventis CropScience acquisition.
Cash and cash equivalents decreased in the second quarter by (euro)437
million to (euro)1,728 million. Including marketable securities and other
instruments, the Group had liquid assets of (euro)1,758 million on June 30,
2003.
Earnings
(euro) million 2nd Quarter 1st Half
2002 2003 Change 2002 2003 Change
Operating result (EBIT) 252 454 +80.2% 1,092 1,529 +40.0%
----------------------------------------------------------------------------------------------------------
of which discontinuing operations 21 0 43 0
----------------------------------------------------------------------------------------------------------
of which special items (84) 17 273 272
----------------------------------------------------------------------------------------------------------
Non-operating result 44 (176) o (113) (348) o
----------------------------------------------------------------------------------------------------------
Income before income taxes 296 278 -6.1% 979 1,181 +20.6%
----------------------------------------------------------------------------------------------------------
Net income 293 128 -56.3% 816 714 -12.5%
----------------------------------------------------------------------------------------------------------
EARNINGS PERFORMANCE
EBIT increased by 80.2 percent in the second quarter to (euro)454
million, or by 30.1 percent if special items are disregarded. The special items
in the second quarter of 2003 mainly comprise (euro)122 million in gains from
the sale of further parts of the household insecticides business and a (euro)30
million gain from the divestiture of PolymerLatex, along with (euro)135 million
in non-recurring charges, primarily for restructuring. EBIT for the same period
of 2002 contained (euro)76 million in gains from the sale of the generics
business.
The non-operating result declined by (euro)44 million in the second
quarter to minus (euro)176 million, mainly because the previous year's figure
contained a (euro)269 million gain from the sale of our interest in Agfa-Gevaert
N.V. Income tax expense for the second quarter of 2003 amounted to (euro)149
million, causing net income to fall by 56.3 percent to (euro)128 million. The
effective tax rate, at 54 percent, was well above the theoretical Group tax rate
of 39 percent, mainly due to one-time taxation effects.
ASSET AND CAPITAL STRUCTURE
Total assets decreased by (euro)1.1 billion compared with December 31,
2002, to (euro)40.6 billion.
Intangible assets shrank by (euro)0.5 billion to (euro)8.4 billion.
Property, plant and equipment decreased by (euro)1.0 billion overall, with
(euro)0.6 billion in capital spending offset by (euro)0.8 billion in
depreciation and (euro)0.2 billion in retirements. Negative currency effects
diminished noncurrent assets by (euro)0.4 billion.
Current assets rose by (euro)0.4 billion, or 2.1 percent, from the
beginning of the year, to (euro)18.6 billion. Inventories grew by 3.0 percent to
(euro)6.5 billion, while trade accounts receivable increased by 5.7 percent to
(euro)5.9 billion. The divestitures made in connection with the acquisition of
the Aventis CropScience group led to a 21.3 percent decline in other
receivables, to (euro)3.3 billion, since the assets earmarked for divestment
were included in this item at the end of 2002. Liquid assets grew by (euro)1.0
billion to (euro)1.8 billion.
Stockholders' equity dropped by (euro)0.2 billion to (euro)15.1
billion. While (euro)0.7 billion was allocated out of net income, stockholders'
equity was diminished by (euro)0.7 billion due to payment in the second quarter
of the dividend for 2002. The reduction in stockholders' equity not recognized
in net income amounted to (euro)0.3 billion. Equity coverage of total assets
rose by 0.4 percentage points compared to the end of 2002, to 37.2 percent.
Balance Sheet Structure
(euro) million June 30, 2002 June 30, 2003 Dec. 31, 2002
Noncurrent assets 25,728 22,064 23,513
------------------------------------------------------------------------------------------------
Current assets 18,969 18,564 18,179
------------------------------------------------------------------------------------------------
Stockholders' equity 15,648 15,123 15,335
------------------------------------------------------------------------------------------------
Minority stockholders' interest 149 129 120
------------------------------------------------------------------------------------------------
Liabilities 28,900 25,376 26,237
------------------------------------------------------------------------------------------------
Total assets 44,697 40,628 41,692
------------------------------------------------------------------------------------------------
Liabilities fell by (euro)0.9 billion to (euro)25.4 billion, chiefly
due to a decline in trade accounts payable and to the disbursements made
following the settlement reached with U.S. authorities in the context of an
investigation into pharmaceutical product prices. Gross financial liabilities
dropped by (euro)0.1 billion to (euro)9.5 billion.
Net debt declined by (euro)1.1 billion in the first half of 2003, to
(euro)7.8 billion.
CAPITAL EXPENDITURES
In the second quarter of 2003 we spent (euro)324 million for intangible
assets, property, plant and equipment. This was considerably less than in the
same period of 2002, when capital expenditures totaled (euro)486 million. Total
capital spending in the first half of 2003 amounted to (euro)800 million, down
21.3 percent from the first half of 2002. At 59.9 percent of our (euro)1,336
million scheduled depreciation and amortization, the level of capital
expenditures was in line with our strategic objectives. Europe accounted for
capital spending of (euro)517 million, 56.3 percent of which went for our sites
in Germany.
The Group's capital expenditure budget for the full year 2003 is
(euro)2.0 billion.
EMPLOYEES
On June 30, 2003, the Bayer Group had 117,500 employees, 5,100 fewer
than at the start of the year. Headcount was reduced by 2,500 in Europe, 1,000
in North America, 1,100 in Asia/Pacific and 500 in Latin America/Africa/Middle
East.
Personnel expenses in the first half of 2003 were down by (euro)8
million, or 0.2 percent, compared to the same period of 2002, to (euro)3,958
million.
OUTLOOK
We do not anticipate a meaningful recovery in economic demand in the
second half of 2003. For that reason we will probably have only limited scope to
increase selling prices. At the same time, the continuing weakness of the U.S.
dollar and the high levels of raw material and energy costs - even if these have
declined a little - are likely to hold back earnings, particularly in our
industrial business. These effects should be mitigated by our programs aimed at
improving operating efficiency and long-term profitability, which are going to
plan so far.
We expect CropScience sales to weaken further in the second half,
primarily for seasonal reasons, with earnings of this business area also being
hampered by integration-related charges. In HealthCare, earnings are likely to
be restrained by launch costs for Levitra(R) and competitive pressure from
generics in the United States. Here too, however, our efficiency programs should
ease the situation.
Provided there is no further deterioration in the economy as a whole,
we continue to expect full-year EBIT before special items to increase by a
double-digit percentage over 2002.
Bayer Group Consolidated Statements of Income (Summary)
(euro) million 2nd Quarter 1st Half
2002 2003 2002 2003
Net Sales 7,504 7,256 14,737 14,612
---------------------------------------------------------------------------------------
of which discontinuing operations 233 0 456 0
---------------------------------------------------------------------------------------
Cost of goods sold (4,418) (4,151) (8,584) (8,130)
---------------------------------------------------------------------------------------
Gross profit 3,086 3,105 6,153 6,482
---------------------------------------------------------------------------------------
Selling expenses (1,663) (1,626) (3,291) (3,191)
---------------------------------------------------------------------------------------
Research and development expenses (633) (607) (1,202) (1,127)
---------------------------------------------------------------------------------------
General administration expenses (374) (389) (672) (770)
---------------------------------------------------------------------------------------
Other operating income 168 296 738 717
---------------------------------------------------------------------------------------
Other operating expenses (332) (325) (634) (582)
---------------------------------------------------------------------------------------
Operating result (EBIT) 252 454 1,092 1,529
---------------------------------------------------------------------------------------
of which discontinuing operations 21 0 43 0
---------------------------------------------------------------------------------------
Non-operating result 44 (176) (113) (348)
---------------------------------------------------------------------------------------
Income before income taxes 296 278 979 1,181
---------------------------------------------------------------------------------------
Income taxes 0 (149) (159) (459)
---------------------------------------------------------------------------------------
Income after taxes 296 129 820 722
---------------------------------------------------------------------------------------
Minority stockholders' interest (3) (1) (4) (8)
---------------------------------------------------------------------------------------
Net Income 293 128 816 714
---------------------------------------------------------------------------------------
Earnings per share ((euro)) 0.40 0.18 1.12 0.98
---------------------------------------------------------------------------------------
Bayer Group Consolidated Balance Sheets (Summary)
(euro)million June 30, June 30, Dec. 31,
2002 2003 2002
Assets
Noncurrent assets
Intangible assets 10,514 8,366 8,879
---------------------------------------------------------------------------------------
Property, plant and equipment 13,068 11,437 12,436
---------------------------------------------------------------------------------------
Investments 2,146 2,261 2,198
---------------------------------------------------------------------------------------
25,728 22,064 23,513
Current assets
Inventories 6,727 6,534 6,342
---------------------------------------------------------------------------------------
Receivables and other assets
Trade accounts receivable 7,008 5,860 5,542
---------------------------------------------------------------------------------------
Other receivables and other assets 3,100 3,313 4,210
---------------------------------------------------------------------------------------
10,108 9,173 9,752
Liquid assets 872 1,758 796
---------------------------------------------------------------------------------------
17,707 17,465 16,890
---------------------------------------------------------------------------------------
Deferred taxes 907 742 967
---------------------------------------------------------------------------------------
Deferred charges 355 357 322
---------------------------------------------------------------------------------------
44,697 40,628 41,692
of which discontinuing operations 778 0 0
---------------------------------------------------------------------------------------
Stockholders' Equity and Liabilities
Stockholder's equity
Capital stock and reserves 4,812 4,812 4,812
----------------------------------------------------------------------------------------------------------------------
Retained earnings 10,151 10,480 10,076
----------------------------------------------------------------------------------------------------------------------
Net income 816 714 1,060
----------------------------------------------------------------------------------------------------------------------
Other comprehensive income
----------------------------------------------------------------------------------------------------------------------
Currency translation adjustment (206) (981) (593)
----------------------------------------------------------------------------------------------------------------------
Miscellaneous items 75 98 (20)
----------------------------------------------------------------------------------------------------------------------
15,648 15,123 15,335
Minority stockholder's interest 149 129 120
----------------------------------------------------------------------------------------------------------------------
Liabilities
Long-term liabilities
Long-term financial liabilities 7,176 7,044 7,318
----------------------------------------------------------------------------------------------------------------------
Miscellaneous long-term liabilities 139 83 92
----------------------------------------------------------------------------------------------------------------------
Provisions for pensions and other post-employment benefits 4,693 4,992 4,925
----------------------------------------------------------------------------------------------------------------------
Other long-term provisions 1,324 1,249 1,215
----------------------------------------------------------------------------------------------------------------------
13,332 13,368 13,550
Short-term liabilities
Short-term financial liabilities 6,166 2,992 2,841
----------------------------------------------------------------------------------------------------------------------
Trade accounts payable 2,477 1,983 2,534
----------------------------------------------------------------------------------------------------------------------
Miscellaneous short-term liabilities 2,168 1,950 2,138
----------------------------------------------------------------------------------------------------------------------
Short-term provisions 1,643 2,424 2,257
----------------------------------------------------------------------------------------------------------------------
12,454 9,349 9,770
25,786 22,717 23,320
of which discontinuing operations 224 0 0
----------------------------------------------------------------------------------------------------------------------
Deferred taxes 2,748 2,194 2,453
----------------------------------------------------------------------------------------------------------------------
Deferred income 366 465 464
----------------------------------------------------------------------------------------------------------------------
44,697 40,628 41,692
Bayer Group Consolidated Statements of Changes in Stockholders' Equity (Summary)
Currency Miscel-
Capital stock Retained Net translation laneous
(euro) million and reserves earnings income adjustment items Total
December 31, 2001 4,812 9,841 965 759 545 16,922
----------------------------------------------------------------------------------------------------------------------
Dividend payment (657) (657)
----------------------------------------------------------------------------------------------------------------------
Allocation to retained earnings 310 (308) 2
----------------------------------------------------------------------------------------------------------------------
Exchange differences (965) (965)
----------------------------------------------------------------------------------------------------------------------
Other changes in stockholder's equity (470) (470)
----------------------------------------------------------------------------------------------------------------------
Net income 816 816
----------------------------------------------------------------------------------------------------------------------
June 30, 2002 4,812 10,151 816 (206) 75 15,648
----------------------------------------------------------------------------------------------------------------------
December 31, 2002 4,812 10,076 1,060 (593) (20)
----------------------------------------------------------------------------------------------------------------------
Dividend payment (657) (657)
----------------------------------------------------------------------------------------------------------------------
Allocation to retained earnings 404 (403) 1
----------------------------------------------------------------------------------------------------------------------
Exchange differences (388) (388)
----------------------------------------------------------------------------------------------------------------------
Other changes in stockholder's equity 118 118
----------------------------------------------------------------------------------------------------------------------
Net income 714 714
----------------------------------------------------------------------------------------------------------------------
June 30, 2003 4,812 10,480 714 (981) 98 15,123
----------------------------------------------------------------------------------------------------------------------
Key Data by Segment
-----------------------------------------------------------------------------------------------------------------
2nd Quarter HealthCare CropScience
Segments
Pharmaceuticals, Consumer Care, Animal CropScience
Biological Diagnostics Health
Products
2nd Quarter 2nd Quarter 2nd Quarter 2nd Quarter
(euro) million 2002 2003 2002 2003 2002 2003 2002 2003
Net sales (external) 1,167 1,190 971 800 212 214 1,083 1,567
-----------------------------------------------------------------------------------------------------------------
o Change in (euro) -22.7% +2.0% -6.0% -17.6% -8.6% +0.9% +25.1% +44.7%
-----------------------------------------------------------------------------------------------------------------
o Change in local currencies -18.1% +15.2% -0.1% -4.2% -3.6% +15.1% +28.4% +58.0%
-----------------------------------------------------------------------------------------------------------------
Intersegment sales 9 14 1 2 1 0 9 21
-----------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 102 146 103 188 43 45 22 33
-----------------------------------------------------------------------------------------------------------------
Return on sales 8.7% 12.3% 10.6% 23.5% 20.3% 21.0% 2.0% 2.1%
-----------------------------------------------------------------------------------------------------------------
Depreciation and amortization 71 56 77 60 9 8 129 195
-----------------------------------------------------------------------------------------------------------------
Gross cash flow 71 194 123 208 51 48 154 203
-----------------------------------------------------------------------------------------------------------------
Net cash flow 226 (152) 93 242 27 22 498 734
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
2nd Quarter Polymers Chemicals
Segments
Plastics, Polyurethanes, Chemicals
Rubber Coatings, Fibers
2nd Quarter 2nd Quarter 2nd Quarter
(euro) million 2002 2003 2002 2003 2002 2003
Net sales (external) 1,374 1,188 1,290 1,263 1,187 871
-----------------------------------------------------------------------------------------
o Change in (euro) -6.3% -13.5% -8.9% -2.1% -9.3% -26.6%
-----------------------------------------------------------------------------------------
o Change in local currencies -4.3% -5.0% -5.5% +7.8% -3.5% -19.6%
-----------------------------------------------------------------------------------------
Intersegment sales 35 13 10 66 93 105
-----------------------------------------------------------------------------------------
Operating result (EBIT) 22 6 (7) 63 32 2
-----------------------------------------------------------------------------------------
Return on sales 1.6% 0.5% (0.5)% 5.0% 2.7% 0.2%
-----------------------------------------------------------------------------------------
Depreciation and amortization 98 83 223 110 108 74
-----------------------------------------------------------------------------------------
Gross cash flow 95 68 204 177 122 92
-----------------------------------------------------------------------------------------
Net cash flow 59 (172) 185 223 147 51
-----------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
2nd Quarter
Segments Reconciliation Bayer Group Of which
discontinuing
operations
(Chemicals)
2nd Quarter 2nd Quarter 2nd Quarter
(euro) million 2002 2003 2002 2003 2002 2003
Net sales (external) 220 163 7,504 7,256 233 0
------------------------------------------------------------------------------------------------
o Change in (euro) -7.0% -3.3%
------------------------------------------------------------------------------------------------
o Change in local currencies -3.0% +7.3%
------------------------------------------------------------------------------------------------
Intersegment sales (158) (221)
------------------------------------------------------------------------------------------------
Operating result (EBIT) (65) (29) 252 454 21 0
------------------------------------------------------------------------------------------------
Return on sales 3.4% 6.3%
------------------------------------------------------------------------------------------------
Depreciation and amortization 67 60 782 646 16 0
------------------------------------------------------------------------------------------------
Gross cash flow (59) 99 761 1,089 29 0
------------------------------------------------------------------------------------------------
Net cash flow (142) 19 1,093 967 17 0
------------------------------------------------------------------------------------------------
Key Data by Segment
-----------------------------------------------------------------------------------------------------------------
1st Half HealthCare CropScience
Segments
Pharmaceuticals, Consumer Care, Animal CropScience
Biological Diagnostics Health
Products
1st Half 1st Half 1st Half 1st Half
(euro) million 2002 2003 2002 2003 2002 2003 2002 2003
-----------------------------------------------------------------------------------------------------------------
Net sales (external) 2,424 2,321 1,921 1,598 415 393 1,949 3,228
-----------------------------------------------------------------------------------------------------------------
o Change in(euro) -17.3% -4.2% -3.8% -16.8% +0.7% -5.3% +16.0% +65.6%
-----------------------------------------------------------------------------------------------------------------
o Change in local currencies -15.5% +8.6% -0.9% -2.8% +3.2% +8.9% +18.0% +77.7%
-----------------------------------------------------------------------------------------------------------------
Intersegment sales 17 22 2 3 1 1 26 32
-----------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 225 345 160 429 93 85 166 476
-----------------------------------------------------------------------------------------------------------------
Return on sales 9.3% 14.9% 8.3% 26.8% 22.4% 21.6% 8.5% 14.7%
-----------------------------------------------------------------------------------------------------------------
Depreciation and amortization 152 111 151 123 18 15 188 393
-----------------------------------------------------------------------------------------------------------------
Gross cash flow 185 381 234 449 92 88 261 720
-----------------------------------------------------------------------------------------------------------------
Net cash flow 159 (45) 165 448 18 42 329 542
-----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
1st Half Polymers Chemicals
Segments
Plastics, Polyurethanes, Chemicals
Rubber Coatings, Fibers
1st Half 1st Half 1st Half
(euro) million 2002 2003 2002 2003 2002 2003
--------------------------------------------------------------------------------------------
Net sales (external) 2,638 2,460 2,639 2,543 2,345 1,743
--------------------------------------------------------------------------------------------
o Change in (euro) -11.7% -6.7% -5.9% -3.6% -14.1% -25.7%
--------------------------------------------------------------------------------------------
o Change in local currencies -11.2% +1.7% -4.5% +6.5% -10.7% -17.8%
--------------------------------------------------------------------------------------------
Intersegment sales 64 46 42 102 188 209
--------------------------------------------------------------------------------------------
Operating result (EBIT) 31 9 5 134 91 40
--------------------------------------------------------------------------------------------
Return on sales 1.2% 0.4% 0.2% 5.3% 3.9% 2.3%
--------------------------------------------------------------------------------------------
Depreciation and amortization 212 191 384 248 207 145
--------------------------------------------------------------------------------------------
Gross cash flow 199 166 350 380 239 192
--------------------------------------------------------------------------------------------
Net cash flow 164 (113) 295 265 216 68
--------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
1st Half
Segments Reconciliation Bayer Group Of which
discontinuing
operations (Chemicals)
1st Half 1st Half 1st Half
(euro) million 2002 2003 2002 2003 2002 2003
Net sales (external) 406 326 14,737 14,612 456 0
-------------------------------------------------------------------------------------------------
o Change in (euro) -7.7% -0.8%
-------------------------------------------------------------------------------------------------
o Change in local currencies -5.8% +9.8%
-------------------------------------------------------------------------------------------------
Intersegment sales (340) (415)
-------------------------------------------------------------------------------------------------
Operating result (EBIT) 321 11 1,092 1,529 43 0
-------------------------------------------------------------------------------------------------
Return on sales 7.4% 10.5%
-------------------------------------------------------------------------------------------------
Depreciation and amortization 118 127 1,430 1,353 31 0
-------------------------------------------------------------------------------------------------
Gross cash flow 35 115 1,595 2,491 56 0
-------------------------------------------------------------------------------------------------
Net cash flow (13) (77) 1,333 1,130 39 0
-------------------------------------------------------------------------------------------------
Key Data by Region
-------------------------------------------------------------------------------------------------------------------------
2nd Quarter
Regions Europe North America Asia/Pacific
2nd Quarter 2nd Quarter 2nd Quarter
(euro) million 2002 2003 2002 2003 2002 2003
-------------------------------------------------------------------------------------------------------------------------
Net sales (external) - by market 3,128 3,098 2,322 2,299 1,277 1,116
-------------------------------------------------------------------------------------------------------------------------
Net sales (external) - by point of origin 3,516 3,443 2,352 2,317 1,079 965
-------------------------------------------------------------------------------------------------------------------------
of which discontinuing operations 126 0 49 0 30 0
-------------------------------------------------------------------------------------------------------------------------
o Change in(euro) -4.9% -2.1% -12.3% -1.5% +1.8% -10.6%
-------------------------------------------------------------------------------------------------------------------------
o Change in local currencies -4.8% -1.2% -7.7% +16.7% +6.1% +4.8%
-------------------------------------------------------------------------------------------------------------------------
Interregional sales 732 963 509 518 49 72
-------------------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 239 157 (39) 130 86 94
-------------------------------------------------------------------------------------------------------------------------
of which discontinuing operations 9 0 3 0 3 0
-------------------------------------------------------------------------------------------------------------------------
Return on sales 6.8% 4.6% (1.7)% 5.6% 8.0% 9.7%
-------------------------------------------------------------------------------------------------------------------------
Gross cash flow 458 589 243 347 92 91
-------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
2nd Quarter
Regions Latin America/ Reconciliation Bayer Group
Africa/Middle
East
2nd Quarter 2nd Quarter 2nd Quarter
(euro) million 2002 2003 2002 2003 2002 2003
-----------------------------------------------------------------------------------------------------------------
Net sales (external) - by market 777 743 7,504 7,256
-----------------------------------------------------------------------------------------------------------------
Net sales (external) - by point of origin 557 531 7,504 7,256
-----------------------------------------------------------------------------------------------------------------
of which discontinuing operations 28 0 233
-----------------------------------------------------------------------------------------------------------------
o Change in (euro) -12.0% -4.7% -7.0% -3.3%
-----------------------------------------------------------------------------------------------------------------
o Change in local currencies +15.2% +19.0% -3.0% +7.3%
-----------------------------------------------------------------------------------------------------------------
Interregional sales 61 45 (1,351) (1,598)
-----------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 31 135 (65) (62) 252 454
-----------------------------------------------------------------------------------------------------------------
of which discontinuing operations 6 0 0 0 21 0
-----------------------------------------------------------------------------------------------------------------
Return on sales 5.6% 25.4% 3.4% 6.3%
-----------------------------------------------------------------------------------------------------------------
Gross cash flow 42 114 (74) (52) 761 1,089
-----------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
1st Half
Regions Europe North America Asia/Pacific
1st Half 1st Half 1st Half
(euro) million 2002 2003 2002 2003 2002 2003
-------------------------------------------------------------------------------------------------------------------------
Net sales (external) - by market 6,225 6,450 4,597 4,416 2,412 2,287
-------------------------------------------------------------------------------------------------------------------------
Net sales (external) - by point of origin 6,964 7,154 4,686 4,499 2,007 1,933
-------------------------------------------------------------------------------------------------------------------------
of which discontinuing operations 244 0 98 0 57 0
-------------------------------------------------------------------------------------------------------------------------
o Change in (euro) -8.7% +2.7% -8.2% -4.0% -1.9% -3.7%
-------------------------------------------------------------------------------------------------------------------------
o Change in local currencies -8.8% +3.4% -8.1% +14.0% +1.1% +10.3%
-------------------------------------------------------------------------------------------------------------------------
Interregional sales 1,527 2,070 1,015 982 102 131
-------------------------------------------------------------------------------------------------------------------------
Operating result (EBIT) 1,134 993 (157) 216 158 198
-------------------------------------------------------------------------------------------------------------------------
of which discontinuing operations 21 0 2 0 6 0
-------------------------------------------------------------------------------------------------------------------------
Return on sales 16.3% 13.9% (3.4)% 4.8% 7.9% 10.2%
-------------------------------------------------------------------------------------------------------------------------
Gross cash flow 1,048 1,503 416 655 166 210
-------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
1st Half
Regions Latin America/ Reconciliation Bayer Group
Africa/Middle
East
1st Half 1st Half 1st Half
(euro) million 2002 2003 2002 2003 2002 2003
-----------------------------------------------------------------------------------------------------------------------
Net sales (external) - by market 1,503 1,459 14,737 14,612
-----------------------------------------------------------------------------------------------------------------------
Net sales (external) - by point of origin 1,080 1,026 14,737 14,612
-----------------------------------------------------------------------------------------------------------------------
of which discontinuing operations 57 0 456 0
-----------------------------------------------------------------------------------------------------------------------
o Change in (euro) -9.5% -5.0% -7.7% -0.8%
-----------------------------------------------------------------------------------------------------------------------
o Change in local currencies +8.6% +27.0% -5.8% +9.8%
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Interregional sales 83 82 (2,727) (3,265)
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Operating result (EBIT) 75 233 (118) (111) 1,092 1,529
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of which discontinuing operations 14 0 0 0 43 0
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Return on sales 6.9% 22.7% 7.4% 10.5%
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Gross cash flow 84 205 (119) (82) 1,595 2,491
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Forward-Looking Statements
This Stockholders' Newsletter contains forward-looking statements. These
statements use words like "believes," "assumes," "expects" or similar
formulations. Various known and unknown risks, uncertainties and other factors
could lead to material differences between the actual future results, financial
situation, development or performance of our company and those either expressed
or implied by these statements. These factors include, among other things:
o downturns in the business cycle of the industries in which we compete;
o new regulations, or changes to existing regulations, that increase our
operating costs or otherwise reduce our profitability;
o increases in the prices of our raw materials, especially if we are unable
to pass these costs along to customers;
o loss or reduction of patent protection for our products;
o liabilities, especially those incurred as a result of environmental laws or
product liability litigation;
o fluctuation in international currency exchange rates as well as changes in
the general economic climate; and
o other factors identified in this Stockholders' Newsletter.
These factors include those discussed in our public reports filed with the
Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission
(including our Form 20-F).
In view of these uncertainties, we caution readers not to place undue reliance
on these forward-looking statements. We assume no liability whatsoever to update
these forward-looking statements or to conform them to future events or
developments.
Exhibit 8
Business performance in second quarter of 2003
----------------------------------------------
Bayer boosts operating result (EBIT) by 80 percent
o First-half EBIT up 40 percent to EUR 1.5 billion
o CEO Wenning: "We are quite satisfied with our performance in the first
half"
o Company confirms forecast of double-digit earnings growth for the full year
--------------------------------------------------------------------------------
Leverkusen -- The Bayer Group improved its year-on-year operating result (EBIT)
by 80.2 percent in the second quarter of 2003, to EUR 454 million. Before
special items, EBIT improved by EUR 101 million or 30.1 percent, with the
Pharmaceuticals/ Biological Products and Polyurethanes/Coatings/Fibers segments
making particularly strong contributions. EBIT for the first half of 2003 rose
by 40.0 percent to EUR 1.5 billion. "After the strong first quarter, we are
quite satisfied with our performance in the second quarter and with the first
half overall," commented Werner Wenning, Management Board Chairman of Bayer AG.
"Provided there is no further deterioration in the economy as a whole, we
continue to expect the operating result from continuing operations to increase
by a double-digit percentage over 2002."
Although Group sales declined by 3.3 percent, to EUR 7.3 billion, in the second
quarter due to the strength of the euro, business expanded in most regions, with
sales increasing by 7.3 percent in local currencies. First-half sales totaled
EUR 14.6 million, declining by 0.8 percent in euros but climbing by 9.8 percent
in local currencies. Second-quarter net income fell by 56.3 percent to EUR 128
million, though here it should be borne in mind that the previous year's figure
was boosted by a EUR 269 million tax-free gain from the sale of Bayer's interest
in Agfa-Gevaert. As a result of these one-time effects and higher income tax
expense, net income for the first half of 2003 was down by 12.5 percent year on
year to EUR 714 million.
Although sales of the HealthCare business area fell by 6.2 percent in the second
quarter to EUR 2.2 billion, EBIT climbed by 52.8 percent to EUR 379 million.
EBIT for the Pharmaceuticals/Biological Products segment increased in the second
quarter by 43.1 percent to EUR 146 million, mainly due to higher sales of
Ciprobay(R)/Cipro(R) and Kogenate(R) and to improved cost structures.
Bayer also stated in its first-half report that the number of Baycol cases
resolved by settlement has increased substantially. As of August 1, 2003, Bayer
had settled 1,211 cases - without acknowledging any legal liability - for
payments totaling EUR 378 million (US$ 432 million). Approximately 10,100 cases
remain pending.
Sales of Bayer CropScience grew by 44.7 percent in the second quarter to EUR 1.6
billion due to the acquisition of Aventis CropScience in 2002. Business trends
varied according to region. Sales of corn herbicides and insecticides rose in
the United States, and there were encouraging indications of a stabilizing
economy in South America. However, sales in Japan and South Korea were below
expectations. In Europe Bayer CropScience gained market share despite a
difficult business environment caused by the continuing drought conditions and
lower demand for fungicides.
CropScience EBIT increased by 50 percent in the second quarter of 2003, to EUR
33 million. While earnings in the first quarter had been boosted by seasonal
business in high-margin products and special gains from product divestments made
to comply with antitrust conditions, second-quarter earnings were hampered by
sales declines, special charges totaling EUR 49 million and further substantial
integration charges.
Bayer's industrial business continued to suffer from a weak economy in the
second quarter. Although sales of the Polymers business area fell by 8.0 percent
to EUR 2.5 billion, EBIT increased from EUR 15 million in the same period last
year to EUR 69 million, chiefly as a result of improved cost structures in the
Polyurethanes/Coatings/ Fibers segment. Sales of the Chemicals segment fell by
26.6 percent in the second quarter to EUR 871 million. The decline was mainly
attributable to the divestiture of Haarmann & Reimer and other portfolio
effects. EBIT for the second quarter fell to EUR 2 million, compared to EUR 32
million in the second quarter of 2002.
Bayer is cautious about the prospects for the remainder of 2003 and does not
anticipate a meaningful recovery in economic demand in the second half. For that
reason the company expects it will have only limited scope to increase selling
prices. At the same time, the continuing weakness of the U.S. dollar and high
raw material costs are likely to hold back earnings, particularly in the
industrial business. "For the time being we cannot expect any stimulus for our
business through an improvement in the economy," explained Wenning. "So we will
drive forward our thorough internal restructuring with even greater vigor in
order to sustainably improve our earning power. The first half of 2003 has
already shown how well our efficiency programs are working. The progress we have
made compared to last year is an encouraging milestone along the way."
Bayer expects CropScience sales to weaken in the second half, primarily for
seasonal reasons, with earnings of this business area also being hampered by
charges related to the integration of Aventis CropScience. In HealthCare,
earnings are likely to be restrained by launch costs for the erectile
dysfunction drug Levitra(R) and competitive pressure from generics in the United
States. Here too, however, the company's efficiency programs should ease the
situation.
Leverkusen, August 6, 2003
Bayer AG, Investor Relations contacts:
--------------------------------------
Dr. Alexander Rosar (+49-214-30-81013)
Dr. Juergen Beunink (+49-214-30-65742)
Peter Dahlhoff (+49-214-30-33022)
Judith Nestmann (+49-214-30-66836)
Forward-looking statements
This news release contains forward-looking statements based on current
assumptions and forecasts made by Bayer Group management. Various known and
unknown risks, uncertainties and other factors could lead to material
differences between the actual future results, financial situation, development
or performance of the company and the estimates given here. These factors
include those discussed in our public reports filed with the Frankfurt Stock
Exchange and with the U.S. Securities and Exchange Commission (including our
Form 20-F). The company assumes no liability whatsoever to update these
forward-looking statements or to conform them to future events or developments.
BAYER AG 2003 INVESTOR CONFERENCE IN LONDON
Ladies and Gentlemen,
We would be delighted if you could join us for our London Investor Conference.
Our presentation and a dinner will take place on:
Date: Wednesday, August 6th, 2003
Time: 5:30 p.m. cocktail reception
6:00 p.m. presentation, followed by dinner
Place: One Whitehall Place, Westminster, London SW1A 2HD
Visiting London will be Werner Wenning, CEO and Chairman, Klaus Kuhn, CFO and
Board Member, Dr. Jochen Wulff, Chairman of the Board of Management of Bayer
CropScience and Dr. Alexander Rosar, Head of Investor Relations.
Please send a response by July 30 to Eddie Arcari at Morrow & Co., 1 Queen
Anne's Gate, London SW1H 9BT, E-mail: earcari@morrowco.com, Fax Number: (020)
7222 4651, Phone: (020) 7222 4645.
We would be most grateful if you would advise us if you have any special dietary
requirements for dinner.
We very much hope that you will be able to join us.
Sincerely,
Bayer Investor Relations Team
Exhibit 9
Dear Ladies and Gentlemen,
Herewith we would like to inform you that the Investor Handout 1 H 2003 is now
available for download on our website:
www.investor.bayer.com
Leverkusen, August 6, 2003
Bayer AG, Investor Relations contacts:
Dr. Alexander Rosar (+49-214-30-81013)
Dr. Juergen Beunink (+49-214-30-65742)
Peter Dahlhoff (+49-214-30-33022)
Judith Nestmann (+49-214-30-66836)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Bayer Aktiengesellschaft
(Registrant)
Date: August 11, 2003 By: /s/ ROSAR
-----------------------------------------
Name: Dr. Alexander Rosar
Title: Head of Investor Relations
/s/ BUCHMEIER
-----------------------------------------
Name: Dr. Armin Buchmeier
Title: Senior Counsel