 Bayer AktiengesellschaftLeverkusenInterim Report as of September 30, 2015Third quarter of 2015Bayer posts strong earnings growth
In the third quarter of 2015, Bayer made further strategic progress in its successful
development as a Life Science company. On September 18, 2015, we announced our new
corporate structure and the reorganization of the Board of Management. From January
1, 2016, Bayer's operational business will be managed by three divisions: Pharmaceuticals,
Consumer Health and Crop Science. The former MaterialScience subgroup became a separate
economic and legal entity on September 1, 2015, and operates under the name Covestro.
Covestro AG was floated on the stock market on October 6, 2015. Bayer currently still
holds a 69% interest in Covestro, which is therefore still included in the Consolidated
Financial Statements of Bayer as a fully consolidated subsidiary. The Bayer Group posted an increase in sales on a currency- and portfolio-adjusted
basis (Fx. and portfolio adj.) and strong earnings growth of 28% in the third quarter
of 2015. HealthCare benefited once again from the positive development of our recently
launched pharmaceutical products and from expanded sales (Fx. and portfolio adj.)
in all Consumer Health divisions. We achieved a substantial increase in EBITDA before
special items at HealthCare. Despite a weaker market environment, sales at CropScience
were up (Fx. and portfolio adj.) against the strong prior-year period, while earnings
rose due to currency effects. Covestro significantly raised earnings again, due mainly
to lower raw material costs, while sales receded as expected. Core earnings per share
of the Bayer Group advanced by a substantial 28%. We are confirming our Group forecast
for 2015. 1. Overview of Sales, Earnings and Financial PositionTHIRD QUARTER OF 2015Bayer Group Quarterly Sales
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| Growth1 2014 | Growth1 forecast 2015 | ||
| World | + 2.7% | + 2.6% | |
| European Union | + 1.4% | + 1.9% | |
| of which Germany | + 1.6% | + 1.7% | |
| United States | + 2.4% | + 2.5% | |
| Emerging markets2 | + 4.4% | + 3.7% | |
1
Real growth of gross domestic product, source: IHS Global Insight
2
Including about 50 countries defined by IHS Global Insight as emerging markets in
line with the World Bank
As of October 2015
The global economy is likely to grow in 2015 at roughly the same pace as in the previous year, supported by a generally expansionary monetary policy and the much lower oil price. Growth in the United States has proven robust over the course of the year and is now expected to come in at the prior-year level. We also expect the economic recovery in the European Union to continue, although significant risks still exist in the eurozone. The rate of expansion in the emerging countries is likely to slightly weaken again on average.
Economic Outlook for the Subgroups
[Table 2]
| Growth1 2014 | Growth1 forecast 2015 | |
| HealthCare | ||
| Pharmaceuticals market | + 9% | + 9% |
| Consumer care market | + 4% | + 4% |
| Medical care market2 | - 1% | + 1% |
| Animal health market | + 5% | + 5% |
| CropScience | ||
| Seed and crop protection market | + 7% | ≤ 0% |
| Covestro (main customer industries) |
||
| Automotive | + 3% | + 2% |
| Construction | + 4% | + 4% |
| Electrical/ electronics | + 4% | + 4% |
| Furniture | + 4% | + 4% |
1
Bayer's estimate, except pharmaceuticals. Source for pharmaceuticals market: IMS Health,
IMS Market Prognosis. Copyright 2015. All rights reserved; currency-adjusted
2
Excluding diabetes care market
As of October 2015
The pharmaceuticals market is likely to come in at the prior-year level in 2015. New products in particular continue to drive steady growth, especially in the United States. We expect demand to be stable in the emerging economies. Slightly increased growth rates are predicted for Japan and a number of the major European markets in 2015.
The global consumer care market is expected to grow in 2015 at the same pace as in the previous year. At Medical Care , the market for contrast agents and medical devices will probably expand slightly compared to a year earlier. The animal health market is anticipated to grow at about the same rate as in 2014.
We expect the global seed and crop protection market to weaken considerably in 2015 compared with previous years. We anticipate stagnation or a slight decline, mainly as a result of low prices for agricultural commodities and the difficult market environment in Latin America.
The positive growth momentum in the main customer industries of Covestro is continuing in 2015 due to the persisting stable global economic climate. The automotive industry is temporarily growing somewhat more slowly than in the previous year.
3. Sales and Earnings Forecast
The following forecast for 2015 is based on the business development described in
this report, taking into account the potential risks and opportunities.
The Diabetes Care business is no longer included in continuing operations and therefore
is also not included in the updated forecast. However, Covestro continues to be included
in the Consolidated Financial Statements of Bayer as a fully consolidated subsidiary
after its stock market flotation on October 6, 2015, as Bayer AG currently still holds
a 69% interest in that company and exercises control over it.
BAYER GROUP
We have adjusted the exchange rates on which our forecast is based to reflect current
developments and are now using the exchange rates prevailing on September 30, 2015
with respect to the fourth quarter of 2015.
We are now planning sales in the region of €46 billion (previously: in the region
of €47 billion).
This still corresponds to a low-single-digit percentage increase on a currency- and
portfolio-adjusted basis. We anticipate currency effects to boost sales by approximately
6% (previously: approximately 7%) compared with the prior year. Our expectation regarding
the company's earnings development is largely unchanged. It remains our aim to raise
EBITDA before special items by a high-teens percentage, now allowing for expected
positive currency effects of about 4% (previously: about 5%). We continue to target
a high-teens percentage increase in core earnings per share (calculated as explained
in Chapter 7), allowing for expected positive currency effects of around 4% (previously:
around 5%).
As before, we expect to take special charges in the region of approximately €900 million,
with the integration of the acquired consumer care businesses, the carve-out and stock
market flotation of Covestro, and the optimization of production structures accounting
for most of this amount.
We now anticipate the financial result to come in at around minus €1.1 billion (previously:
minus €1 billion) and the effective tax rate at below 25% (previously: around 25%)
in 2015. Including the cash inflows from the stock market flotation of Covestro, we
expect net financial debt at year end to be below €18 billion (previously: below €20
billion).
Further details of the business forecast are given in Chapter 20.2 of the Annual Report
2014.
HealthCare
As before, we expect sales from continuing operations at HealthCare to rise to approximately
€23 billion. This now corresponds to a mid- to high-single-digit percentage increase
on a currency- and portfolio-adjusted basis (previously: a mid-single-digit percentage).
We predict positive currency effects of approximately 5% (previously: about 6%) compared
with 2014. It remains our aim to raise EBITDA before special items by a low-twenties
percentage.
We continue to expect sales in the Pharmaceuticals segment to move ahead to approximately
€14 billion. This now corresponds to a high-single-digit percentage increase on a
currency- and portfolio-adjusted basis (previously: a mid- to high-single-digit percentage).
We anticipate positive currency effects of approximately 5% (previously: about 6%)
compared with 2014. We intend to raise sales of our recently launched products to
over €4 billion. We plan to raise EBITDA before special items by a midteens percentage.
In the Consumer Health segment, we now expect sales of approximately €9 billion (previously:
over €9 billion), including those of the acquired consumer care businesses. We still
plan to grow sales by a mid-single-digit percentage on a currency- and portfolio-adjusted
basis. We anticipate positive currency effects of approximately 5% (previously: about
7%) compared with 2014. As before, we expect to raise EBITDA before special items
by a mid-thirties percentage, with the acquired consumer care businesses contributing
to the increase.
CROPSCIENCE
At CropScience, we are adjusting the outlook to reflect the weaker development of
the market environment and lower-than-expected currency effects. We continue to expect
above-market growth and now aim to raise sales to slightly above €10 billion (previously:
around €10.5 billion). This still corresponds to a low-single-digit percentage increase
on a currency- and portfolio-adjusted basis. We anticipate positive currency effects
of about 7% (previously: about 8%) compared with 2014. In view of the weakened market
environment, we now plan to improve EBITDA before special items by a mid-single-digit
percentage (previously: a mid- to high-single-digit percentage).
COVESTRO
Covestro continues to plan further volume growth in 2015 accompanied by declining
selling prices. This will lead to lower sales on a currency- and portfolio-adjusted
basis. However, the company still expects a significant increase in EBITDA before
special items for the full year. Covestro aims to return to earning the cost of capital
in 2015.
RECONCILIATION
For 2015 we continue to expect sales on a currency- and portfolio-adjusted basis to
be level with the previous year. We now expect EBITDA before special items to be in
the region of minus €0.2 billion (previously: minus €0.3 billion).
4. Corporate Structure
Bayer AG, headquartered in Leverkusen, Germany, is the strategic management holding
company for the Bayer Group. Business operations are conducted by the HealthCare and
CropScience subgroups. The Covestro subgroup became independent on September 1, 2015.
It will be fully consolidated for as long as Bayer exercises control over it.
Sales in the First Nine Months of 2015
[Graphic 6]
Restated 2014 figures in parentheses
Our subgroups are supported by the Business Services, Technology Services and Currenta
service companies, which are reported in the reconciliation as "All Other Segments"
along with "Corporate Center and Consolidation."
Key Data by Subgroup and Segment
[Table 3]
| Sales | Sales | EBIT | EBIT | EBITDA before special items | EBITDA before special items | |
| 3rd Quarter 2014 | 3rd Quarter 2015 | 3rd Quarter 2014 | 3rd Quarter 2015 | 3rd Quarter 2014 | 3rd Quarter 2015 | |
| € million | € million | € million | € million | € million | € million | |
| HealthCare | 4,740 | 5,651 | 1,062 | 1,219 | 1,368 | 1,677 |
| Pharmaceuticals | 3,039 | 3,482 | 699 | 859 | 960 | 1,139 |
| Consumer Health | 1,701 | 2,169 | 363 | 360 | 408 | 538 |
| CropScience | 1,929 | 2,113 | 157 | 180 | 278 | 309 |
| Covestro | 3,036 | 3,009 | 184 | 217 | 334 | 472 |
| Reconciliation | 262 | 263 | (57) | (51) | (3) | 65 |
| Group | 9,967 | 11,036 | 1,346 | 1,565 | 1,977 | 2,523 |
| First Nine Months 2014 | First Nine Months 2015 | First Nine Months 2014 | First Nine Months 2015 | First Nine Months 2014 | First Nine Months 2015 | |
| HealthCare | 13,724 | 17,063 | 2,920 | 3,273 | 3,948 | 4,908 |
| Pharmaceuticals | 8,781 | 10,174 | 1,996 | 2,256 | 2,760 | 3,204 |
| Consumer Health | 4,943 | 6,889 | 924 | 1,017 | 1,188 | 1,704 |
| CropScience | 7,299 | 7,928 | 1,615 | 1,625 | 1,991 | 2,082 |
| Covestro | 8,703 | 9,208 | 512 | 714 | 970 | 1,402 |
| Reconciliation | 821 | 806 | (201) | (270) | (53) | (29) |
| Group | 30,547 | 35,005 | 4,846 | 5,342 | 6,856 | 8,363 |
2014 figures restated
1
For definition see Chapter 6 "Calculation of EBIT(DA) Before Special Items."
5. Business Development by Subgroup, Segment and Region
5.1 HealthCare
Key Data - HealthCare
[Table 4]
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | ||
| € million | € million | % | Fx & p adj. % | ||
| Sales | 4,740 | 5,651 | + 19.2 | + 8.3 | |
| Change in sales | |||||
| Volume | + 6.2% | + 7.6% | |||
| Price | + 0.9% | + 0.7% | |||
| Currency | - 2.4% | + 3.0% | |||
| Portfolio | - 0.1% | + 7.9% | |||
| Sales | |||||
| Pharmaceuticals | 3,039 | 3,482 | + 14.6 | + 11.7 | |
| Consumer Health | 1,701 | 2,169 | + 27.5 | + 2.2 | |
| € million | € million | % | Fx. adj. % | ||
| Sales by region | |||||
| Europe | 1,707 | 1,817 | + 6.4 | + 7.7 | |
| North America | 1,247 | 1,777 | + 42.5 | + 26.3 | |
| Asia/ Pacific | 1,084 | 1,315 | + 21.3 | + 13.9 | |
| Latin America/Africa/Middle East | 702 | 742 | + 5.7 | + 22.4 | |
| EBIT | 1,062 | 1,219 | + 14.8 | ||
| Special items | 54 | (46) | |
||
| EBIT before special items1 | 1,008 | 1,265 | +25.5 | ||
| EBITDA1 | 1,422 | 1,633 | + 14.8 | ||
| Special items | 54 | (44) | |
||
| EBITDA before special items1 | 1,368 | 1,677 | +22.6 | ||
| EBITDA margin before special items1 | 28.9% | 29.7% | |||
| Gross cash flow2 | 910 | 1,117 | + 22.7 | ||
| Net cash flow2 | 1,068 | 1,273 | + 19.2 | ||
| First Nine Months 2014 | First Nine Months 2015 | Change | Change | ||
| € million | € million | % | Fx & p adj. % | ||
| Sales | 13,724 | 17,063 | + 24.3 | + 7.9 | |
| Change in sales | |||||
| Volume | + 6.6% | + 7.0% | |||
| Price | + 0.8% | + 0.9% | |||
| Currency | - 5.1% | + 6.2% | |||
| Portfolio | + 0.5% | + 10.2% | |||
| Sales | |||||
| Pharmaceuticals | 8,781 | 10,174 | + 15.9 | + 10.0 | |
| Consumer Health | 4,943 | 6,889 | + 39.4 | + 4.3 | |
| € million | € million | % | Fx. adj. % | ||
| Sales by region | |||||
| Europe | 5,038 | 5,481 | + 8.8 | + 9.9 | |
| North America | 3,503 | 5,435 | + 55.2 | + 35.8 | |
| Asia/ Pacific | 3,212 | 3,966 | + 23.5 | + 11.8 | |
| Latin America/Africa/Middle East | 1,971 | 2,181 | + 10.7 | + 18.1 | |
| EBIT | 2,920 | 3,273 | + 12.1 | ||
| Special items | 45 | (336) | |
||
| EBIT before special items1 | 2,875 | 3,609 | + 25.5 | ||
| EBITDA1 | 3,997 | 4,599 | + 15.1 | ||
| Special items | 49 | (309) | |
||
| EBITDA before special items1 | 3,948 | 4,908 | + 24.3 | ||
| EBITDA margin before special items1 | 28.8% | 28.8% | |||
| Gross cash flow2 | 2,681 | 3,301 | + 23.1 | ||
| Net cash flow2 | 2,173 | 3,227 | + 48.5 | ||
2014 figures restated
Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted
1
For definition see Chapter 6 "Calculation of EBIT(DA) Before Special Items."
2
For definition see Chapter 8 "Financial Position of the Bayer Group."
Sales of the HealthCare subgroup increased by 8.3% (Fx & portfolio adj.) to €5,651 million (reported: + 19.2%) in the third quarter of 2015 . This positive business development continued to be driven to a significant extent by our recently launched pharmaceutical products. Business expanded in all divisions of the Consumer Health segment. The substantial reported increase in sales at Consumer Health was mainly attributable to sales of products acquired from Merck & Co., Inc., United States, and to currency effects.
HealthCare Quarterly Sales
[Graphic 7]
2014 figures restated
EBIT of HealthCare improved by 14.8% in the third quarter of 2015 to €1,219 million (Q3 2014: €1,062 million), reflecting special charges of €46 million (Q3 2014: special gains of €54 million). EBIT before special items increased by a substantial 25.5% to €1,265 million (Q3 2014: €1,008 million). EBITDA before special items improved by 22.6% to €1,677 million (Q3 2014: €1,368 million). This increase resulted mainly from the continuing favorable development of business at Pharmaceuticals and Consumer Health - at Consumer Care especially due to the contributions from the acquired businesses - and from positive currency effects of about €70 million. Earnings were held back by an increase in research and development investment at Pharmaceuticals.
HealthCare
Quarterly EBIT
[Graphic 8]
2014 figures restated
HealthCare
Quarterly EBITDA Before Special Items
[Graphic 9]
2014 figures restated
PHARMACEUTICALS
Key Data - Pharmaceuticals
[Table 5]
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | ||
| € million | € million | % | Fx & p adj. % | ||
| Sales | 3,039 | 3,482 | + 14.6 | + 11.7 | |
| € million | € million | % | Fx adj. % | ||
| Sales by region | |||||
| Europe | 1,094 | 1,212 | + 10.8 | + 11.5 | |
| North America | 731 | 915 | + 25.2 | + 10.0 | |
| Asia/ Pacific | 796 | 953 | + 19.7 | + 11.4 | |
| Latin America/Africa/Middle East | 418 | 402 | - 3.8 | + 16.0 | |
| EBIT | 699 | 859 | + 22.9 | ||
| Special items | - | (7) | |
||
| EBIT before special items1 | 699 | 866 | + 23.9 | ||
| EBITDA1 | 960 | 1,132 | + 17.9 | ||
| Special items | - | (7) | |
||
| EBITDA before special items1 | 960 | 1,139 | + 18.6 | ||
| EBITDA margin before special items1 | 31.6% | 32.7% | |||
| Gross cash flow2 | 666 | 781 | + 17.3 | ||
| Net cash flow2 | 808 | 894 | + 10.6 | ||
| First Nine Months 2014 | First Nine Months 2015 | Change | Change | ||
| € million | € million | % | Fx & p adj. % | ||
| Sales | 8,781 | 10,174 | + 15.9 | + 10.0 | |
| € million | € million | % | Fx adj. % | ||
| Sales by region | |||||
| Europe | 3,220 | 3,575 | + 11.0 | + 11.4 | |
| North America | 1,993 | 2,540 | + 27.4 | + 9.4 | |
| Asia/ Pacific | 2,394 | 2,866 | + 19.7 | + 7.6 | |
| Latin America/Africa/Middle East | 1,174 | 1,193 | + 1.6 | + 11.9 | |
| EBIT | 1,996 | 2,256 | + 13.0 | ||
| Special items | 4 | (105) | |
||
| EBIT before special items1 | 1,992 | 2,361 | +18.5 | ||
| EBITDA1 | 2,768 | 3,103 | + 12.1 | ||
| Special items | 8 | (101) | |
||
| EBITDA before special items1 | 2,760 | 3,204 | +16.1 | ||
| EBITDA margin before special items1 | 31.4% | 31.5% | |||
| Gross cash flow2 | 1,902 | 2,191 | + 15.2 | ||
| Net cash flow2 | 1,547 | 2,079 | + 34.4 | ||
Fx & p adj. = currency- and portfolio-adjusted: Fx. adj. = currencv-adjusted
1
For definition see Chapter 6 "Calculation of EBIT(DA) Before Special Items."
2
For definition see Chapter 8 "Financial Position of the Bayer Group."
Sales of our Pharmaceuticals segment rose by a substantial 11.7% (Fx & portfolio adj.) to €3,482 million in the third quarter of 2015 . This is largely attributable to the good development of our recently launched products. Xarelto™, Eylea™, Stivarga™, Xofigo™ and Adempas™ continued to experience gratifying growth, posting combined sales of €1,082 million (Q3 2014: €750 million). The Pharmaceuticals business grew in all regions on a currency-adjusted basis.
Best-Selling Pharmaceuticals Products
[Table 6]
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | |
| € million | € million | % | Fx adj. % | |
| Xarelto™ | 440 | 571 | + 29.8 | + 31.3 |
| Eylea™ | 189 | 320 | + 69.3 | + 67.0 |
| Kogenate™ | 295 | 309 | + 4.7 | - 0.8 |
| Mirena™ product family | 208 | 240 | + 15.4 | + 4.9 |
| Nexavar™ | 192 | 234 | + 21.9 | + 14.5 |
| Betaferon™/Betaseron™ | 223 | 204 | - 8.5 | - 16.5 |
| YAZ™/Yasmin™/Yasminelle™ | 198 | 183 | - 7.6 | - 1.9 |
| Adalat™ | 139 | 151 | + 8.6 | + 4.1 |
| Aspirin™ Cardio | 124 | 130 | + 4.8 | + 1.0 |
| Glucobay™ | 102 | 122 | + 19.6 | + 4.6 |
| Avalox™/Avelox™ | 85 | 85 | 0.0 | - 2.2 |
| Stivarga™ | 46 | 73 | + 58.7 | + 42.6 |
| Xofigo™ | 49 | 69 | + 40.8 | + 24.4 |
| Levitra™ | 65 | 59 | - 9.2 | - 9.6 |
| Fosrenol™ | 42 | 46 | + 9.5 | + 7.3 |
| Total | 2,397 | 2,796 | + 16.6 | + 12.4 |
| Proportion of Pharmaceuticals sales | 79% | 80% |
| First Nine Months 2014 | First Nine Months 2015 | Change | Change | |
| € million | € million | % | Fx adj. % | |
| Xarelto™ | 1,163 | 1,602 | + 37.7 | + 37.1 |
| Eylea™ | 540 | 874 | + 61.9 | + 57.1 |
| Kogenate™ | 808 | 869 | + 7.5 | + 0.7 |
| Mirena™ product family | 594 | 742 | + 24.9 | + 9.8 |
| Nexavar™ | 571 | 661 | + 15.8 | + 6.1 |
| Betaferon™/Betaseron™ | 629 | 634 | + 0.8 | -9.2 |
| YAZ™/Yasmin™/Yasminelle™ | 570 | 538 | - 5.6 | - 5.0 |
| Adalat™ | 435 | 481 | + 10.6 | + 0.8 |
| Aspirin™ Cardio | 356 | 393 | + 10.4 | + 2.3 |
| Glucobay™ | 310 | 381 | + 22.9 | + 4.1 |
| Avalox™/Avelox™ | 285 | 294 | + 3.2 | -3.5 |
| Stivarga™ | 161 | 236 | + 46.6 | + 29.3 |
| Xofigo™ | 128 | 188 | + 46.9 | + 27.5 |
| Levitra™ | 189 | 165 | - 12.7 | - 13.7 |
| Fosrenol™ | 122 | 131 | + 7.4 | + 3.1 |
| Total | 6,861 | 8,189 | + 19.4 | + 12.0 |
| Proportion of Pharmaceuticals sales | 78% | 80% |
Fx adj. = currency-adjusted
Xarelto™ registered strong sales gains and thus further cemented its leading position
among the nonvitamin K-dependent oral anticoagulants. This was attributable to volume
increases in Europe and Japan. Business with Xarelto™ also developed positively in
the United States, where it is marketed by a subsidiary of Johnson & Johnson. Sales
of our eye medicine Eylea™ also rose significantly, mainly as a result of very good
business in Europe and Japan after marketing authorization was granted in further
indications. Business with our cancer drug Stivarga™ improved against the weak prior-year
quarter, due in part to positive development in the United States. The sales gains
for our cancer drug Xofigo™ resulted mainly from good business development in Europe
and the United States. Sales of Adempas™ to treat pulmonary hypertension amounted
to €49 million (Q3 2014: €26 million) and reflected the proportionate recognition
of the one-time payment resulting from the sGC collaboration with Merck & Co., United
States.
Business with the hormone-releasing intrauterine devices of the Mirena™ product family - Mirena™ and Jaydess™ / Skyla™ - benefited especially from expanded volumes in the United States. We achieved substantial sales gains for our cancer drug Nexavar™, particularly in Germany and the United States. Sales increases for Adalat™ for the treatment of hypertension and coronary heart disease, Aspirin™ Cardio for secondary prevention of heart attacks and our oral diabetes treatment Glucobay™ resulted mainly from gains in China.
Sales of our blood-clotting drug Kogenate™ were level year on year as expected. Business with our multiple sclerosis drug Betaferon™ /Betaseron™ was down overall, due partly to increased competition in the United States and Europe. Sales of our yaz™ /Yasmin™ /Yasminelle™ line of oral contraceptives receded slightly against the prior-year quarter as the result of lower demand in Europe. Despite positive development in the United States, sales of the erectile dysfunction treatment Levitra™ declined overall, particularly in China.
EBIT of the Pharmaceuticals segment advanced by a substantial 22.9% in the third quarter of 2015 to €859 million, including special charges of €7 million for efficiency improvement measures (Q3 2014: €0 million). EBIT before special items rose by 23.9% to €866 million. We raised EBITDA before special items by 18.6% to €1,139 million. The pleasing growth in earnings was mainly attributable to the very good business development - particularly for our recently launched products - and to positive currency effects of around €50 million, while higher investments in research and development had a diminishing effect as anticipated.
In the first nine months of 2015 , we raised sales in our Pharmaceuticals segment by a robust 10.0% (Fx & portfolio adj.) to €10,174 million. This growth was driven especially by our recently launched products Xarelto™ , Eylea™ , Stivarga™ , Xofigo™ and Adempas™ , which generated combined sales of €3,031 million (9M 2014: €2,050 million). Sales moved ahead in all regions.
EBIT for the first nine months of 2015 advanced by 13.0% to €2,256 million after special charges of €105 million (9M 2014: special gains of €4 million). These mainly comprised €54 million from the revaluation of other receivables and €35 million in charges for efficiency improvement measures. EBIT before special items increased by 18.5% to €2,361 million. EBITDA before special items improved by 16.1% to €3,204 million after positive currency effects of about €150 million.
CONSUMER HEALTH
Key Data - Consumer Health
[Table 7]
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | ||
| € million | € million | % | Fx & p adj. % | ||
| Sales | 1,701 | 2,169 | + 27.5 | + 2.2 | |
| Consumer Care | 1,006 | 1,424 | + 41.6 | + 1.7 | |
| Animal Health | 330 | 357 | + 8.2 | + 1.8 | |
| Medical Care1 | 365 | 388 | + 6.3 | + 4.1 | |
| € million | € million | % | Fx adj. % | ||
| Sales by region | |||||
| Europe | 613 | 605 | - 1.3 | + 0.8 | |
| North America | 516 | 862 | + 67.1 | + 49.4 | |
| Asia/ Pacific | 288 | 362 | + 25.7 | + 20.8 | |
| Latin America/Africa/ Middle East | 284 | 340 | + 19.7 | + 31.7 | |
| EBIT | 363 | 360 | - 0.8 | ||
| Special items | 54 | (39) | |
||
| EBIT before special items2 | 309 | 399 | + 29.1 | ||
| EBITDA1 | 462 | 501 | + 8.4 | ||
| Special items | 54 | (37) | |
||
| EBITDA before special items2 | 408 | 538 | + 31.9 | ||
| EBITDA margin before special items2 | 24.0% | 24.8% | |||
| Gross cash flow3 | 244 | 336 | + 37.7 | ||
| Net cash flow3 | 260 | 379 | + 45.8 | ||
| First Nine Months 2014 | First Nine Months 2015 | Change | Change | ||
| € million | € million | % | Fx & p adj. % | ||
| Sales | 4,943 | 6,889 | +39.4 | + 4.3 | |
| Consumer Care | 2,861 | 4,570 | + 59.7 | + 4.3 | |
| Animal Health | 1,018 | 1,171 | + 15.0 | + 4.8 | |
| Medical Care1 | 1,064 | 1,148 | + 7.9 | + 3.9 | |
| € million | € million | % | Fx adj. % | ||
| Sales by region | |||||
| Europe | 1,818 | 1,906 | + 4.8 | + 7.2 | |
| North America | 1,510 | 2,895 | + 91.7 | + 70.5 | |
| Asia/ Pacific | 818 | 1,100 | + 34.5 | + 24.1 | |
| Latin America/Africa/ Middle East | 797 | 988 | + 24.0 | + 27.2 | |
| EBIT | 924 | 1,017 | + 10.1 | ||
| Special items | 41 | (231) | |
||
| EBIT before special items2 | 883 | 1,248 | +41.3 | ||
| EBITDA1 | 1,229 | 1,496 | + 21.7 | ||
| Special items | 41 | (208) | |
||
| EBITDA before special items2 | 1,188 | 1,704 | +43.4 | ||
| EBITDA margin before special items2 | 24.0% | 24.7% | |||
| Gross cash flow3 | 779 | 1,110 | +42.5 | ||
| Net cash flow3 | 626 | 1,148 | + 83.4 | ||
2014 figures restated
Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted
1
Includes the business with contrast agents and medical devices
2
For definition see Chapter 6 "Calculation of EBIT(DA) Before Special Items."
3
For definition see Chapter 8 "Financial Position of the Bayer Group."
Sales of the Consumer Health segment increased by 2.2% (Fx & portfolio adj.) in the third quarter of 2015 to €2,169 million, with all divisions contributing to this growth. The significant reported increase in sales in the Consumer Care Division resulted from the products added through the recent acquisitions.
Best-Selling Consumer Health Products
[Table 8]
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | |
| € million | € million | % | Fx adj. % | |
| Claritin™ (Consumer Care)1 | - | 124 | . | . |
| Advantage™ product family (Animal Health) | 120 | 130 | + 8.3 | - 1.7 |
| Aspirin™ (Consumer Care)2 | 122 | 124 | + 1.6 | - 3.2 |
| Aleve™ (Consumer Care) | 92 | 91 | - 1.1 | - 12.9 |
| Bepanthen™/ Bepanthol™ (Consumer Care) | 84 | 88 | + 4.8 | + 15.2 |
| Ultravist™ (Medical Care) | 73 | 78 | + 6.8 | + 5.6 |
| Gadovist™/Gadavist™ (Medical Care) | 58 | 71 | + 22.4 | + 18.8 |
| Coppertone™ (Consumer Care) | - | 28 | . | . |
| Canesten™ (Consumer Care) | 67 | 72 | + 7.5 | + 19.5 |
| Dr. Scholl's™ (Consumer Care) | - | 55 | . | . |
| Total | 616 | 861 | + 39.8 | + 33.8 |
| Proportion of Consumer Health sales | 36% | 40% |
| First Nine Months 2014 | First Nine Months 2015 | Change | Change | |
| € million | € million | % | Fx adj. % | |
| Claritin™ (Consumer Care)1 | - | 493 | . | . |
| Advantage™ product family (Animal Health) | 390 | 443 | + 13.6 | + 0.5 |
| Aspirin™ (Consumer Care)2 | 316 | 345 | + 9.2 | + 1.7 |
| Aleve™ (Consumer Care) | 252 | 308 | + 22.2 | + 4.4 |
| Bepanthen™/Bepanthol™ (Consumer Care) | 261 | 270 | + 3.4 | + 12.0 |
| Ultravist™ (Medical Care) | 218 | 235 | + 7.8 | + 2.7 |
| Gadovist™/Gadavist™ (Medical Care) | 168 | 211 | + 25.6 | + 17.4 |
| Coppertone™ (Consumer Care) | - | 210 | . | . |
| Canesten™ (Consumer Care) | 193 | 201 | + 4.1 | + 9.1 |
| Dr. Scholl's™ (Consumer Care) | - | 191 | . | . |
| Total | 1,798 | 2,907 | + 61.7 | + 47.6 |
| Proportion of Consumer Health sales | 36% | 42% |
Fx adj. = currency-adjusted 2014 figures restated
1
Product acquired from Merck & Co., Inc.
2
Total sales of Aspirin™, also including Aspirin™ Cardio, which is reflected in sales
of the Pharmaceuticals segment, increased by 3.3% (Fx adj. - 1.1%) in Q3 2015 to €254
million (Q3 2014: €246 million). These total sales increased in the first nine months
of 2015 by 9.7% (Fx adj. + 2.0%) to €737 million (9M 2014: €672 million).
Sales of the Consumer Care Division improved by 1.7% (Fx & portfolio adj.) to €1,424 million. This increase was driven especially by gratifying gains in sales of our Bepanthen™ / Bepanthol™ line of skin-care products and our antifungal Canesten™, particularly in the Emerging Markets. Business with our analgesic Aspirin™ was down, however, as gains in Latin America / Africa /Middle East only partly offset declines in Europe. Business with our analgesic Aleve™ declined against the strong prior-year quarter, due particularly to changes in sales phasing in the United States.
We posted sales of €366 million with the products acquired from Merck & Co., Inc.,
United States, in the third quarter of 2015.
Sales of the Animal Health Division rose by 1.8% (Fx & portfolio adj.) to €357 million. We registered encouraging growth for our Seresto™ flea and tick collar, primarily in the United States. However, sales of our Advantage™ family of flea, tick and worm control products declined slightly.
Sales of the Medical Care Division improved by 4.1% (Fx & portfolio adj.) to €388 million, mainly as a result of continuing positive development in the United States. Business with our mri contrast agent Gadovist™ /Gadavist™ expanded substantially in all regions.
EBIT of the Consumer Health segment in the third quarter of 2015 was level year on year (-0.8%) at €360 million. Special charges amounted to €39 million (Q3 2014: special gains of €54 million). They included charges of €31 million for the integration of acquired businesses and €8 million for efficiency improvement measures. EBIT before special items increased by 29.1% to €399 million (Q3 2014: €309 million). EBITDA before special items improved by a substantial 31.9% to €538 million (Q3 2014: €408 million). All divisions supported this growth, with Consumer Care in particular making earnings contributions from the acquired businesses. Currency effects of around €20 million also had a positive impact.
Sales of our Consumer Health segment in the first nine months of 2015 increased by 4.3% (Fx & portfolio adj.) to €6,889 million. We registered higher sales in all divisions. Our Consumer Care business posted the strongest absolute growth on a currency- and portfolio-adjusted basis, particularly in Latin America and Europe.
EBIT for the first nine months of 2015 rose by 10.1% to €1,017 million, reflecting special charges of €231 million (9M 2014: special gains of €41 million). These mainly comprised integration costs of €175 million and efficiency improvement measures of €53 million. EBIT before special items improved by 41.3% to €1,248 million (9M 2014: €883 million). EBITDA before special items advanced by a substantial 43.4% to €1,704 million (9M 2014: €1,188 million) after positive currency effects of about €80 million.
5.2 CropScience
Key Data - CropScience
[Table 9]
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | ||
| € million | € million | % | Fx & p adj. % | ||
| Sales | 1,929 | 2,113 | + 9.5 | + 1.6 | |
| Change in sales | |||||
| Volume | + 11.3% | + 4.2% | |||
| Price | + 3.3% | - 2.6% | |||
| Currency | - 2.1% | + 7.3% | |||
| Portfolio | + 0.2% | + 0.6% | |||
| Sales | |||||
| Crop Protection/Seeds | 1,781 | 1,957 | + 9.9 | + 2.3 | |
| Environmental Science | 148 | 156 | + 5.4 | - 7.4 | |
| € million | € million | % | Fx adj. % | ||
| Sales by region | |||||
| Europe | 454 | 465 | + 2.4 | + 3.1 | |
| North America | 303 | 367 | + 21.1 | + 4.3 | |
| Asia/ Pacific | 318 | 363 | + 14.2 | + 7.2 | |
| Latin America/Africa/Middle East | 854 | 918 | + 7.5 | - 1.2 | |
| EBIT | 157 | 180 | + 14.6 | ||
| Special items | - | (4) | |||
| EBIT before special items1 | 157 | 184 | +17.2 | ||
| EBITDA1 | 278 | 306 | + 10.1 | ||
| Special items | - | (3) | |||
| EBITDA before special items1 | 278 | 309 | +11.2 | ||
| EBITDA margin before special items1 | 14.4% | 14.6% | |||
| Gross cash flow2 | 214 | 206 | - 3.7 | ||
| Net cash flow2 | 598 | 677 | + 13.2 | ||
| First Nine Months 2014 | First Nine Months 2015 | Change | Change | ||
| € million | € million | % | Fx & p adj. % | ||
| Sales | 7,299 | 7,928 | + 8.6 | + 0.6 | |
| Change in sales | |||||
| Volume | + 9.6% | 0.0% | |||
| Price | + 2.5% | + 0.6% | |||
| Currency | - 5.9% | + 7.4% | |||
| Portfolio | + 0.1% | + 0.6% | |||
| Sales | |||||
| Crop Protection/Seeds | 6,788 | 7,318 | + 7.8 | + 0.5 | |
| Environmental Science | 511 | 610 | + 19.4 | + 1.8 | |
| € million | € million | % | Fx adj. % | ||
| Sales by region | |||||
| Europe | 2,580 | 2,737 | + 6.1 | + 9.0 | |
| North America | 2,005 | 2,225 | + 11.0 | - 5.8 | |
| Asia/ Pacific | 1,018 | 1,166 | + 14.5 | + 2.7 | |
| Latin America/Africa/Middle East | 1,696 | 1,800 | + 6.1 | - 3.7 | |
| EBIT | 1,615 | 1,625 | + 0.6 | ||
| Special items | - | (79) | |||
| EBIT before special items1 | 1,615 | 1,704 | +5.5 | ||
| EBITDA1 | 1,991 | 2,009 | + 0.9 | ||
| Special items | - | (73) | |||
| EBITDA before special items1 | 1,991 | 2,082 | + 4.6 | ||
| EBITDA margin before special items1 | 27.3% | 26.3% | |||
| Gross cash flow2 | 1,453 | 1,448 | - 0.3 | ||
| Net cash flow2 | 847 | 596 | - 29.6 | ||
Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted
Sales of the CropScience subgroup in the third quarter of 2015 , at €2,113 million, were slightly above the strong prior-year period (Fx & portfolio adj.: +1.6%; reported: +9.5%). Crop Protection /Seeds posted a slight sales increase in a weaker market environment, particularly in Latin America. By contrast, we registered declining sales at Environmental Science.
1
For definition see Chapter 6 "Calculation of EBIT(DA) Before Special Items."
2
For definition see Chapter 8 "Financial Position of the Bayer Group."
CropScience Quarterly Sales [Graphic 10]
Sales of Crop Protection/Seeds rose by 2.3% (Fx & portfolio adj.) to €1,957 million in the third quarter of 2015. Our Herbicides business, which expanded by a double-digit percentage, and the Fungicides business registered a positive trend. By contrast, business was down at SeedGrowth, Insecticides and Seeds.
Sales of Environmental Science receded by 7.4% (Fx & portfolio adj.) to €156 million. The business with both products for professional users and consumer products posted declines.
Sales by Business Unit
[Table 10]
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | |||
| € million | € million | % | Fx & p adj. % | |||
| Herbicides | 384 | 487 | + 26.8 | + 21.0 | ||
| Fungicides | 479 | 577 | + 20.5 | + 9.4 | ||
| Insecticides | 471 | 471 | 0.0 | - 9.3 | ||
| SeedGrowth | 316 | 298 | -5.7 | - 10.5 | ||
| Crop Protection | 1,650 | 1,833 | + 11.1 | + 2.9 | ||
| Seeds | 131 | 124 | -5.3 | - 5.3 | ||
| Crop Protection/ Seeds | 1,781 | 1,957 | + 9.9 | + 2.3 | ||
| Environmental Science | 148 | 156 | + 5.4 | - 7.4 | ||
| First Nine Months 2014 | First Nine Months 2015 | Change | Change | |||
| € million | € million | % | Fx & p adj. % | |||
| Herbicides | 2,032 | 2,180 | + 7.3 | + 1.8 | ||
| Fungicides | 1,922 | 2,234 | + 16.2 | + 8.9 | ||
| Insecticides | 1,213 | 1,166 | -3.9 | - 12.9 | ||
| SeedGrowth | 724 | 682 | -5.8 | - 11.7 | ||
| Crop Protection | 5,891 | 6,262 | + 6.3 | - 0.5 | ||
| Seeds | 897 | 1,056 | + 17.7 | + 7.0 | ||
| Crop Protection/ Seeds | 6,788 | 7,318 | + 7.8 | + 0.5 | ||
| Environmental Science | 511 | 610 | + 19.4 | + 1.8 | ||
Fx & p adj. = currency- and portfolio-adjusted
The sales development of CropScience varied by region:
Sales in Europe came in at €465 million, up 3.1% on a currency-adjusted basis. Sales at Herbicides, particularly with products for use in cereals, grew by a double-digit percentage. Business with insecticides and vegetable seeds also expanded. Sales at Fungicides declined substantially against the strong prior-year quarter as a result of lower disease pressure due to weather conditions.
Sales in North America climbed by 4.3% (Fx adj.) to €367 million in the third quarter of 2015. We achieved very gratifying growth in the Herbicides, Fungicides, Insecticides and Seeds businesses. By contrast, business was down substantially at SeedGrowth, due particularly to high inventories of treated seed in the market. At Environmental Science, business with products for professional users developed positively. Canada played a key role in the positive development overall, as business expanded in all areas in that country.
Sales in the Asia/Pacific region climbed by a substantial 7.2% (Fx adj.) to €363 million. The Herbicides and SeedGrowth businesses were especially successful in a slightly improved market environment, posting double-digit growth rates. Business also expanded significantly at Insecticides and Fungicides, as well as with vegetable seeds. On the other hand, we registered declining sales for rice seed and at Environmental Science.
Sales in the Latin America/Africa/Middle East region edged back by 1.2% to €918 million. Crop Protection /Seeds registered a decline mainly at Insecticides, and particularly in Brazil, where sales were weakened by considerably lower pest pressure. Significantly higher sales at Herbicides and Fungicides and for vegetable seeds did not fully offset this effect. Sales at Environmental Science declined substantially against the prior-year quarter.
CropScience
Quarterly EBIT
[Graphic 11]
CropScience
Quarterly EBITDA Before Special Items
[Graphic 12]
EBIT of CropScience rose by 14.6% in the third quarter of 2015 to €180 million. This figure reflected special charges of €4 million (Q3 2014: €0 million) resulting from the consolidation of production sites. EBIT before special items climbed by 17.2% to €184 million. EBITDA before special items came in 11.2% above the prior-year quarter at €309 million (Q3 2014: €278 million). This increase was largely driven by a positive currency effect of about €30 million.
Sales of CropScience in the first nine months of 2015 were level year on year at €7,928 million (Fx & portfolio adj. + 0.6%), despite the weaker market environment. At Crop Protection/ Seeds, the positive overall development at Fungicides and Seeds offset lower sales at Insecticides and SeedGrowth. Environmental Science posted modest growth. In regional terms, we were particularly successful in the first nine months of 2015 in Europe, as well as in Asia /Pacific. By contrast, sales were down in North America and in Latin America /Africa /Middle East.
EBIT of CropScience for the first nine months of 2015 came in level with the prior-year period at €1,625 million (+ 0.6%). Earnings were diminished by special charges of €79 million (9M 2014: €0 million) that resulted mainly from the consolidation of production sites. EBIT before special items climbed by 5.5% to €1,704 million. EBITDA before special items came in 4.6% above the prior-year period at €2,082 million. This was largely the result of higher selling prices and a positive currency effect of around €60 million.
5.3 Covestro
Key Data - Covestro
[Table 11]
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | |
| € million | € million | % | Fx & p adj. % | |
| Sales | 3,036 | 3,009 | -0.9 | - 7.7 |
| Change in sales | ||||
| Volume | + 6.1% | - 0.2% | ||
| Price | -0.8% | - 7.5% | ||
| Currency | - 0.3% | + 6.8% | ||
| Portfolio | - 0.2% | 0.0% | ||
| Sales | ||||
| Polyurethanes | 1,652 | 1,513 | -8.4 | - 14.5 |
| Polycarbonates | 726 | 818 | + 12.7 | + 3.2 |
| Coatings, Adhesives, Specialties | 503 | 520 | + 3.4 | - 3.2 |
| Other Covestro business | 155 | 158 | + 1.9 | - 1.3 |
| € million | € million | % | Fx adj. % | |
| Sales by region | ||||
| Europe | 1,122 | 1,130 | + 0.7 | + 1.0 |
| North America | 678 | 729 | + 7.5 | - 9.7 |
| Asia/ Pacific | 878 | 819 | -6.7 | - 18.9 |
| Latin America/Africa/Middle East | 358 | 331 | -7.5 | - 3.6 |
| EBIT | 184 | 217 | + 17.9 | |
| Special items | (2) | (87) | |
|
| EBIT before special items1 | 186 | 304 | + 63.4 | |
| EBITDA1 | 333 | 388 | + 16.5 | |
| Special items | (1) | (84) | |
|
| EBITDA before special items1 | 334 | 472 | + 41.3 | |
| EBITDA margin before special items1 | 11.0% | 15.7% | ||
| Gross cash flow2 | 261 | 310 | + 18.8 | |
| Net cash flow2 | 274 | 326 | + 19.0 |
| First Nine Months 2014 | First Nine Months 2015 | Change | Change | |
| € million | € million | % | Fx & p adj. % | |
| Sales | 8,703 | 9,208 | + 5.8 | - 3.2 |
| Change in sales | ||||
| Volume | + 6.5% | + 2.9% | ||
| Price | - 1.9% | - 6.1% | ||
| Currency | -2.4% | + 9.0% | ||
| Portfolio | -0.4% | 0.0% | ||
| Sales | ||||
| Polyurethanes | 4,694 | 4,702 | + 0.2 | - 8.2 |
| Polycarbonates | 2,079 | 2,410 | + 15.9 | + 4.1 |
| Coatings, Adhesives, Specialties | 1,455 | 1,615 | + 11.0 | + 2.5 |
| Other Covestro business | 475 | 481 | + 1.3 | - 2.9 |
| € million | € million | % | Fx adj. % | |
| Sales by region | ||||
| Europe | 3,405 | 3,381 | -0.7 | - 0.5 |
| North America | 1,920 | 2,213 | + 15.3 | - 5.1 |
| Asia/Pacific | 2,360 | 2,579 | + 9.3 | - 7.7 |
| Latin America/Africa/Middle East | 1,018 | 1,035 | + 1.7 | + 1.9 |
| EBIT | 512 | 714 | + 39.5 | |
| Special items | (21) | (188) | ||
| EBIT before special items1 | 533 | 902 | + 69.2 | |
| EBITDA1 | 953 | 1,239 | + 30.0 | |
| Special items | (17) | (163) | ||
| EBITDA before special items1 | 970 | 1,402 | + 44.5 | |
| EBITDA margin before special items1 | 11.1% | 15.2% | ||
| Gross cash flow2 | 760 | 981 | + 29.1 | |
| Net cash flow2 | 363 | 849 | + 133.9 |
Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted
1
For definition see Chapter 6 "Calculation of EBIT(DA) Before Special Items."
2
For definition see Chapter 8 "Financial Position of the Bayer Group."
Sales of Covestro (formerly MaterialScience) in the third quarter of 2015 fell to €3,009 million (Fx & portfolio adj.: -7.7%; reported: -0.9%). Selling prices declined in the three business units, primarily at Polyurethanes. This was chiefly attributable to the development of raw material prices. Overall, volumes remained at the level of the prior-year quarter.
Covestro Quarterly Sales
[Graphic 13]
The Polyurethanes business unit saw sales fall by 14.5% (Fx & portfolio adj.) to €1,513 million. This decline resulted mainly from much lower selling prices for the three product groups toluene diisocyanate (TDI), diphenylmethane diisocyanate (MDI) and polyether polyols (PET), due primarily to declining raw material prices overall.
The Polycarbonates business unit raised sales by 3.2% (Fx & portfolio adj.) to €818 million. This growth was due above all to positive volume development, although selling prices were down slightly.
Sales in the Coatings, Adhesives, Specialties business unit declined by 3.2% (Fx & portfolio adj.) to €520 million. Volumes and selling prices were down slightly overall against the prior year.
Covestro
Quarterly EBIT
[Graphic 14]
Covestro
Quarterly EBITDA Before Special Items
[Graphic 15]
EBIT of Covestro in the third quarter of 2015 was above the prior-year level at €217 million (+ 17.9%). This figure reflected special charges of €87 million (Q3 2014: €2 million) for restructuring measures, chiefly for the separation and stock market listing of Covestro and for the consolidation of production sites. EBIT before special items climbed by a substantial 63.4% to €304 million. EBITDA before special items also improved significantly by 41.3% to €472 million (Q3 2014: €334 million). Considerably lower raw material prices more than offset the decline in selling prices. This was due to a more favorable supply-and-demand situation in some markets. Earnings were additionally buoyed by positive currency effects of around €70 million.
Sales of Covestro in the first nine months of 2015 moved back by 3.2% (Fx & portfolio adj.; reported: + 5.8%) to €9,208 million. Higher volumes in all business units were not sufficient to offset lower selling prices, particularly at Polyurethanes but also at Polycarbonates.
EBIT advanced by a significant 39.5% to €714 million. EBITDA before special items climbed by 44.5% to €1,402 million. Considerably lower raw material prices and higher volumes more than offset the decline in selling prices. Positive currency effects of some €200 million also contributed to this increase in earnings.
5.4 Business Development by Region
Sales by Region and Segment (by Market)
[Table 12]
| Europe | Europe | Europe | Europe | |
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | |
| € million | € million | % | Fx.adj. % | |
| HealthCare | 1,707 | 1,817 | + 6.4 | + 7.7 |
| Pharmaceuticals | 1,094 | 1,212 | + 10.8 | + 11.5 |
| Consumer Health | 613 | 605 | - 1.3 | + 0.8 |
| CropScience | 454 | 465 | + 2.4 | + 3.1 |
| Covestro | 1,122 | 1,130 | + 0.7 | + 1.0 |
| Group (incl. reconciliation) | 3,527 | 3,659 | + 3.7 | + 4.4 |
| First Nine Months 2014 | First Nine Months 2015 | Change | Change | |
| € million | € million | % | Fx adj. % | |
| HealthCare | 5,038 | 5,481 | + 8.8 | + 9.9 |
| Pharmaceuticals | 3,220 | 3,575 | + 11.0 | + 11.4 |
| Consumer Health | 1,818 | 1,906 | + 4.8 | + 7.2 |
| CropScience | 2,580 | 2,737 | + 6.1 | + 9.0 |
| Covestro | 3,405 | 3,381 | - 0.7 | - 0.5 |
| Group (incl. reconciliation) | 11,792 | 12,352 | + 4.7 | + 5.9 |
| North America | North America | North America | North America | |
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | |
| € million | € million | % | Fx.adj. % | |
| HealthCare | 1,247 | 1,777 | + 42.5 | + 26.3 |
| Pharmaceuticals | 731 | 915 | + 25.2 | + 10.0 |
| Consumer Health | 516 | 862 | + 67.1 | + 49.4 |
| CropScience | 303 | 367 | + 21.1 | + 4.3 |
| Covestro | 678 | 729 | + 7.5 | - 9.7 |
| Group (incl. reconciliation) | 2,230 | 2,874 | + 28.9 | + 12.4 |
| First Nine Months 2014 | First Nine Months 2015 | Change |
Change | |
| € million | € million | % | Fx adj. % | |
| HealthCare | 3,503 | 5,435 | + 55.2 | + 35.8 |
| Pharmaceuticals | 1,993 | 2,540 | + 27.4 | + 9.4 |
| Consumer Health | 1,510 | 2,895 | + 91.7 | + 70.5 |
| CropScience | 2,005 | 2,225 | + 11.0 | - 5.8 |
| Covestro | 1,920 | 2,213 | + 15.3 | - 5.1 |
| Group (incl. reconciliation) | 7,434 | 9,879 | + 32.9 | + 14.0 |
| Asia/Pacific | Asia/Pacific | Asia/Pacific | Asia/Pacific | |
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | |
| € million | € million | % | Fx.adj. % | |
| HealthCare | 1,084 | 1,315 | + 21.3 | + 13.9 |
| Pharmaceuticals | 796 | 953 | + 19.7 | + 11.4 |
| Consumer Health | 288 | 362 | + 25.7 | + 20.8 |
| CropScience | 318 | 363 | + 14.2 | + 7.2 |
| Covestro | 878 | 819 | - 6.7 | - 18.9 |
| Group (incl. reconciliation) | 2,284 | 2,500 | + 9.5 | + 0.3 |
First Nine Months 2014 |
First Nine Months 2015 |
Change |
Change | |
| € million | € million | % | Fx adj. % | |
| HealthCare | 3,212 | 3,966 | + 23.5 | + 11.8 |
| Pharmaceuticals | 2,394 | 2,866 | + 19.7 | + 7.6 |
| Consumer Health | 818 | 1,100 | + 34.5 | + 24.1 |
| CropScience | 1,018 | 1,166 | + 14.5 | + 2.7 |
| Covestro | 2,360 | 2,579 | + 9.3 | - 7.7 |
| Group (incl. reconciliation) | 6,604 | 7,721 | + 16.9 | + 3.3 |
| Latin America/Africa/Middle East | Latin America/Africa/Middle East | Latin America/Africa/Middle East | Latin America/Africa/Middle East | |
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | |
| € million | € million | % | Fx.adj. % | |
| HealthCare | 702 | 742 | + 5.7 | + 22.4 |
| Pharmaceuticals | 418 | 402 | - 3.8 | + 16.0 |
| Consumer Health | 284 | 340 | + 19.7 | + 31.7 |
| CropScience | 854 | 918 | + 7.5 | - 1.2 |
| Covestro | 358 | 331 | - 7.5 | - 3.6 |
| Group (incl. reconciliation) | 1,926 | 2,003 | + 4.0 | + 7.1 |
| First Nine Months 2014 | First Nine Months 2015 | Change | Change | |
| € million | € million | % | Fx adj. % | |
| HealthCare | 1,971 | 2,181 | + 10.7 | + 18.1 |
| Pharmaceuticals | 1,174 | 1,193 | + 1.6 | + 11.9 |
| Consumer Health | 797 | 988 | + 24.0 | + 27.2 |
| CropScience | 1,696 | 1,800 | + 6.1 | - 3.7 |
| Covestro | 1,018 | 1,035 | + 1.7 | + 1.9 |
| Group (incl. reconciliation) | 4,717 | 5,053 | + 7.1 | + 6.8 |
| Total | Total | Total | Total | |
| 3rd Quarter 2014 | 3rd Quarter 2015 | Change | Change | |
| € million | € million | % | Fx.adj. % | |
| HealthCare | 4,740 | 5,651 | + 19.2 | + 16.2 |
| Pharmaceuticals | 3,039 | 3,482 | + 14.6 | + 11.7 |
| Consumer Health | 1,701 | 2,169 | + 27.5 | + 24.0 |
| CropScience | 1,929 | 2,113 | + 9.5 | + 2.2 |
| Covestro | 3,036 | 3,009 | - 0.9 | - 7.7 |
| Group (incl. reconciliation) | 9,967 | 11,036 | + 10.7 | + 5.8 |
| First Nine Months 2014 | First Nine Months 2015 | Change | Change | |
| € million | € million | % | Fx adj. % | |
| HealthCare | 13,724 | 17,063 | + 24.3 | + 18.1 |
| Pharmaceuticals | 8,781 | 10,174 | + 15.9 | + 10.0 |
| Consumer Health | 4,943 | 6,889 | + 39.4 | + 32.6 |
| CropScience | 7,299 | 7,928 | + 8.6 | + 1.2 |
| Covestro | 8,703 | 9,208 | + 5.8 | - 3.2 |
| Group (incl. reconciliation) | 30,547 | 35,005 | + 14.6 | + 7.5 |
6. Calculation of EBIT(DA) Before Special Items
Key performance indicators for the Bayer Group are EBIT before special items and EBITDA
before special items. These indicators are reported in order to allow a more accurate
assessment of business operations. The special items - comprising effects that are
non-recurring or do not regularly recur or attain similar magnitudes - are detailed
in the following table. EBITDA, EBITDA before special items and EBIT before special
items are not defined in the International Financial Reporting Standards (IFRS) and
should therefore be regarded only as supplementary information. EBITDA before special
items is a meaningful indicator of operating performance since it is not affected
by depreciation, amortization, impairment losses, impairment loss reversals or special
items. By reporting this indicator, the company aims to give readers a clear picture
of the results of operations and ensure comparability of data over time. The EBITDA
margin before special items, which is the ratio of EBITDA before special items to
sales, serves as a relative indicator for the internal and external comparison of
operational earning power.
Depreciation, amortization and impairments rose by 17.5% in the first nine months
of 2015 to €2,376 million (9M 2014: €2,022 million), comprising €1,273 million (9M
2014: €1,077 million) in amortization and impairments of intangible assets and €1,103
million (9M 2014: €945 million) in depreciation and impairments of property, plant
and equipment. Impairments totaled €75 million (9M 2014: €68 million), of which €58
million (9M 2014: €8 million) was included in special items.
Special Items Reconciliation
[Table 13]
| EBIT1
3rd Quarter 2014 |
EBIT1
3rd Quarter 2015 |
EBIT1
First Nine Months 2014 |
EBIT1
First Nine Months 2015 |
||
| € million | € million | € million | € million | ||
| Before special items | 1,301 | 1,769 | 4,842 | 6,045 | |
| HealthCare | 54 | (46) | 45 | (336) | |
| Restructuring | - | (15) | - | (88) | |
| Litigations | - | - | - | (14) | |
| Integration costs | (26) | (31) | (67) | (177) | |
| Settlement of pre-existing relationship | - | - | 35 | - | |
| Divestitures | 80 | - | 77 | 3 | |
| Revaluation of other receivables | - | - | - | (60) | |
| CropScience | - | (4) | - | (79) | |
| Litigations | - | - | - | (18) | |
| Divestitures | - | (4) | - | (50) | |
| Revaluation of other receivables | - | - | (11) | ||
| Covestro | (2) | (87) | (21) | (188) | |
| Restructuring | (2) | (87) | (21) | (186) | |
| Revaluation of other receivables | - | - | - | (2) | |
| Reconciliation | (7) | (67) | (20) | (100) | |
| Restructuring | (7) | (35) | (20) | (67) | |
| Litigations | - | (32) | - | (32) | |
| Revaluation of other receivables | - | - | - | (1) | |
| Total special items | 45 | (204) | 4 | (703) | |
| of which cost of goods sold | (2) | (34) | (12) | (271) | |
| of which selling expenses | (2) | (9) | (13) | (80) | |
| of which research and development expenses | (1) | (5) | (3) | (16) | |
| of which general administration expenses | (5) | (97) | (32) | (160) | |
| of which other operating income/expenses | 55 | (59) | 64 | (176) | |
| After special items | 1,346 | 1,565 | 4,846 | 5,342 | |
| EBITDA2 3rd Quarter 2014 | EBITDA2 3rd Quarter 2015 | EBITDA2 First Nine Months 2014 | EBITDA2 First Nine Months 2015 | ||
| € million | € million | € million | € million | ||
| Before special items | 1,977 | 2,523 | 6,856 | 8,363 | |
| HealthCare | 54 | (44) | 49 | (309) | |
| Restructuring | - | (13) | - | (61) | |
| Litigations | - | - | - | (14) | |
| Integration costs | (26) | (31) | (63) | (177) | |
| Settlement of pre-existing relationship | - | - | 35 | - | |
| Divestitures | 80 | - | 77 | 3 | |
| Revaluation of other receivables | - | - | - | (60) | |
| CropScience | - | (3) | - | (73) | |
| Litigations | - | - | - | (18) | |
| Divestitures | - | (3) | - | (44) | |
| Revaluation of other receivables | - | - | - | (11) | |
| Covestro | (1) | (84) | (17) | (163) | |
| Restructuring | (1) | (84) | (17) | (161) | |
| Revaluation of other receivables | - | - | - | (2) | |
| Reconciliation | (7) | (67) | (20) | (100) | |
| Restructuring | (7) | (35) | (20) | (67) | |
| Litigations | - | (32) | - | (32) | |
| Revaluation of other receivables | - | - | - | (1) | |
| Total special items | 46 | (198) | 12 | (645) | |
| of which cost of goods sold | (2) | (28) | (12) | (219) | |
| of which selling expenses | (2) | (9) | (13) | (76) | |
| of which research and development expenses | (1) | (5) | (3) | (14) | |
| of which general administration expenses | (5) | (97) | (28) | (160) | |
| of which other operating income/expenses | 56 | (59) | 68 | (176) | |
| After special items | 2,023 | 2,325 | 6,868 | 7,718 | |
2014 figures restated
1
EBIT = earnings before financial result and taxes
2
EBITDA = EBIT plus amortization and impairment losses on intangible assets, plus depreciation
and impairment losses on property, plant and equipment, minus impairment loss reversals
7. Core Earnings Per Share
Earnings per share according to IFRS are affected by the purchase price allocation
for acquisitions and other special factors. To enhance comparability, we also determine
core net income from continuing operations after eliminating amortization and impairment
losses /impairment loss reversals on intangible assets, impairment losses/ impairment
loss reversals on property, plant and equipment, and special items, along with the
related tax effects.
From this core net income we calculate core earnings per share in the same way as
earnings per share. Core earnings per share form the basis for our dividend policy.
Core earnings per share from continuing operations in the third quarter of 2015 increased
by 28.0% to €1.69 (Q3 2014: €1.32).
Core Earnings per Share
[Table 14]
| 3rd Quarter 2014 | 3rd Quarter 2015 | First Nine Months 2014 | First Nine Months 2015 | |
| € million | € million | € million | € million | |
| EBIT (as per income statements) | 1,346 | 1,565 | 4,846 | 5,342 |
| Amortization and impairment losses/impairment loss reversals on intangible assets | 366 | 403 | 1,077 | 1,273 |
| Impairment losses/ impairment loss reversals on property, plant and equipment | 4 | 5 | 39 | 60 |
| Special items (other than amortization and impairment losses/ impairment loss reversals) | (46) | 198 | (12) | 645 |
| Core EBIT | 1,670 | 2,171 | 5,950 | 7,320 |
| Financial result (as per income statements) | (302) | (280) | (634) | (841) |
| Special items in the financial result | 59 | (21) | 10 | (30) |
| Income taxes (as per income statements) | (236) | (296) | (1,087) | (1,064) |
| Tax effects related to amortization, impairment losses/ impairment loss reversals and special items | (93) | (175) | (328) | (606) |
| Income after income taxes attributable to non-controlling interest (as per income statements) | (7) | (6) | (11) | (18) |
| Core net income from continuing operations | 1,091 | 1,393 | 3,900 | 4,761 |
| Shares | Shares | Shares | Shares | |
| Number of issued ordinary shares | 826,947,808 | 826,947,808 | 826,947,808 | 826,947,808 |
| Core earnings per share from continuing operations (€) | 1.32 | 1.69 | 4.72 | 5.76 |
| Core earnings per share from discontinued operations (€) | 0.03 | 0.03 | 0.11 | 0.11 |
| Core earnings per share from continuing and discontinued operations (€) | 1.35 | 1.72 | 4.83 | 5.87 |
2014 figures restated
Core net income from continuing operations, core earnings per share from continuing
operations (core eps) and core EBIT are not defined in IFRS.
8. Financial Position of the Bayer Group
Bayer Group Summary Statements of Cash Flows
[Table 15]
| 3rd Quarter 2014 | 3rd Quarter 2015 | First Nine Months 2014 | First Nine Months 2015 | |
| € million | € million | € million | € million | |
| Gross cash flow1 | 1,466 | 1,427 | 5,149 | 5,611 |
| Changes in working capital/other non-cash items | 315 | 879 | (1,655) | (678) |
| Net cash provided by (used in) operating activities (net cash flow), continuing operations | 1,781 | 2,306 | 3,494 | 4,933 |
| Net cash provided by (used in) operating activities (net cash flow), discontinued operations | 35 | 24 | 86 | 80 |
| Net cash provided by (used in) operating activities (net cash flow) (total) | 1,816 | 2,330 | 3,580 | 5,013 |
| Net cash provided by (used in) investing activities (total) | (3,974) | (965) | (6,671) | (2,088) |
| Net cash provided by (used in) financing activities (total) | 2,433 | (2,162) | 2,945 | (2,238) |
| Change in cash and cash equivalents due to business activities | 275 | (797) | (146) | 687 |
| Cash and cash equivalents at beginning of period | 1,228 | 3,247 | 1,662 | 1,853 |
| Change due to exchange rate movements and to changes in scope of consolidation | 177 | (55) | 164 | (145) |
| Cash and cash equivalents at end of period | 1,680 | 2,395 | 1,680 | 2,395 |
OPERATING CASH FLOW
Gross cash flow from continuing operations in the third quarter of 2015 declined year
on year to €1,427 million. The increase in earnings was partly offset by additional
tax expenses connected with the carve-out of Covestro. Net cash flow (total) rose
by 28.3% to €2,330 million due to a decrease in cash tied up in other working capital.
Net cash flow (total) reflected income tax payments of €421 million (Q3 2014: €685
million).
Gross cash flow from continuing operations in the first nine months of 2015 advanced
by 9.0% against the prior-year period to €5,611 million. Net cash flow (total) increased
by a considerable 40.0% to €5,013 million due to a reduction in cash tied up in other
working capital, reflecting income tax payments of €1,217 million (9M 2014: €1,420
million).
INVESTING CASH FLOW
Net cash outflow for investing activities in the third quarter of 2015 amounted to
€965 million. Disbursements for property, plant and equipment and intangible assets
were 20.0% higher at €655 million (Q3 2014: €546 million). Of this amount, HealthCare
accounted for €228 million (Q3 2014: €188 million), CropScience for €171 million (Q3
2014: €137 million) and Covestro for €128 million (Q3 2014: €134 million).
Net cash outflow for investing activities in the first nine months of 2015 totaled
€2,088 million. Disbursements for property, plant and equipment and intangible assets
were 11.8% higher at €1,601 million (9M 2014: €1,432 million). Of this amount, HealthCare
accounted for €601 million (9M 2014: €514 million), CropScience for €416 million (9M
2014: €377 million) and Covestro for €352 million (9M 2014: €371 million). Cash outflows
for noncurrent and current financial assets amounted to €584 million (9M 2014: €3,846
million).
FINANCING CASH FLOW
In the third quarter of 2015, there was a net cash outflow of €2,162 million for financing
activities, including net loan repayments of €1,938 million (Q3 2014: net borrowings
of €2,579 million). Net interest payments were 52.4% higher at €221 million (Q3 2014:
€145 million).
In the first nine months of 2015, there was a net cash outflow of €2,238 million for
financing activities, including net borrowings of €88 million (9M 2014: €4,952 million).
Net interest payments increased by 70.5% to €457 million (9M 2014: €268 million) due
to higher borrowings for acquisitions in the fourth quarter of 2014.
LIQUID ASSETS AND NET FINANCIAL DEBT
Net Financial Debt
[Table 16]
| Dec. 31, 2014 | June 30, 2015 | Sep. 30, 2015 | ||
| € million | € million | € million | ||
| Bonds and notes/promissory notes | 14,964 | 16,831 | 15,516 | |
| of which hybrid bonds1 | 4,552 | 5,824 | 4,525 | |
| Liabilities to banks | 3,835 | 3,543 | 3,423 | |
| Liabilities under finance leases | 441 | 458 | 470 | |
| Liabilities from derivatives | 642 | 738 | 776 | |
| Other financial liabilities | 1,976 | 3,278 | 2,583 | |
| Positive fair values of hedges of recorded transactions | (258) | (334) | (414) | |
| Financial liabilities | 21,600 | 24,514 | 22,354 | |
| Cash and cash equivalents | (1,853) | (3,247) | (2,395) | |
| Current financial assets | (135) | (133) | (700) | |
| Net financial debt | 19,612 | 21,134 | 19,259 | |
1
Classified as debt according to IFRS
Net financial debt of the Bayer Group declined by 8.9%, from €21.1 billion on June
30, 2015, to €19.3 billion on September 30, 2015, due mainly to cash inflows from
operating activities.
Financial debt included three subordinated hybrid bonds, which were reflected at a
total amount of €4.5 billion. Net financial debt should be viewed against the fact
that Moody's and Standard & Poor's treat 50% of the hybrid bonds with nominal volumes
of €1.75 billion and €1.5 billion issued in July 2014 and of the hybrid bond with
a nominal volume of €1.3 billion issued in April 2015 as equity. The hybrid bonds
thus have a more limited effect on the Group's rating-specific debt indicators than
conventional borrowings. The other financial liabilities as of September 30, 2015,
included commercial paper totaling €2.2 billion. Our noncurrent financial liabilities
declined in the third quarter of 2015 from €17.2 billion to €16.7 billion. At the
same time, current financial liabilities decreased from €7.7 billion to €6.0 billion.
Standard & Poor's gives Bayer a long-term issuer rating of A- with stable outlook,
while Moody's gives us a long-term rating of A3 with stable outlook. The short-term
ratings are A- 2 (Standard & Poor's) and P-2 (Moody's). These investment-grade ratings
document good creditworthiness.
ASSET AND CAPITAL STRUCTURE
Bayer Group Summary Statements of Financial Position
[Table 17]
| Dec. 31, 2014 | June 30, 2015 | Sep. 30, 2015 | |
| € million | € million | € million | |
| Noncurrent assets | 48,007 | 49,505 | 49,473 |
| Current assets | 22,227 | 25,975 | 24,819 |
| Assets held for sale and discontinued operations | - | 183 | 178 |
| Total current assets | 22,227 | 26,158 | 24,997 |
| Total assets | 70,234 | 75,663 | 74,470 |
| Equity | 20,218 | 22,466 | 22,580 |
| Noncurrent liabilities | 34,513 | 32,433 | 32,548 |
| Current liabilities | 15,503 | 20,650 | 19,231 |
| Provisions and liabilities directly related to assets held for sale and discontinued operations | - | 114 | 111 |
| Total current liabilities | 15,503 | 20,764 | 19,342 |
| Liabilities | 50,016 | 53,197 | 51,890 |
| Total equity and liabilities | 70,234 | 75,663 | 74,470 |
Total assets fell by €1.2 billion against June 30, 2015, to €74.5 billion. Noncurrent
assets were level year on year at €49.5 billion. Total current assets moved back by
€1.2 billion to €25.0 billion, mainly due to lower trade accounts receivable and cash
disbursements that were only partly offset by the increase in other financial assets
and other receivables.
Equity increased by €0.1 billion to €22.6 billion. Income after income taxes of €1.0
billion was offset by the €0.6 billion increase - recognized outside profit or loss
- in post-employment benefit obligations and negative exchange differences of €0.4
billion. The equity ratio (equity coverage of total assets) as of September 30, 2015,
was 30.3% (June 30, 2015: 29.7%).
Liabilities fell by €1.3 billion in the third quarter of 2015 to €51.9 billion. Provisions
for pensions and other post-employment benefits rose by €0.5 billion and other provisions
increased by €0.4 billion. The €2.1 billion decrease in financial liabilities resulted
partly from the repayment of a hybrid bond issued in 2005 and the sale of commercial
paper.
Net Defined Benefit Liability for Post-Employment Benefits
[Table 18]
| Dec. 31, 2014 | June 30,2015 | Sep. 30, 2015 | |
| € million | € million | € million | |
| Provisions for pensions and other post-employment benefits | 12,236 | 11,176 | 11,708 |
| Net defined benefit asset | (41) | (43) | (40) |
| Net defined benefit liability for post-employment benefits | 12,195 | 11,133 | 11,668 |
The net defined benefit liability for post-employment benefits increased by €0.6 billion
in the third quarter of 2015 to €11.7 billion, mainly due to a decrease in long-term
capital market interest rates for high-quality corporate bonds in Germany and the
United States.
9. Growth and Innovation
Our expenses for research and development rose by 14.1% (Fx adj.) in the first nine
months of 2015 to €3,023 million (9M 2014: €2,520 million), including €1,041 million
(Fx adj. +15.1%) in the third quarter (Q3 2014: €867 million). Capital expenditures
for property, plant and equipment and intangible assets in the first nine months of
2015 amounted to €1,599 million (9M 2014: €1,427 million), including €654 million
in the third quarter (Q3 2014: €544 million).
Research and Development Expenses in the First Nine Months of 2015
[Graphic 16]
Subgroup shares in parentheses
Capital Expenditures in the First Nine Months of 2015
[Graphic 17]
Subgroup shares in parentheses
Sales in the Emerging Markets1 advanced by 6.7% (Fx adj.) to €12,658 million in the first nine months of 2015 (9M 2014: €11,301 million), including €4,270 million in the third quarter (Fx adj. + 1.7%; Q3 2014: €4,103 million). The Emerging Markets' share of total sales was down slightly against the prior-year period at 36.2% (9M 2014: 37.0%). The respective figure for the third quarter of 2015 was 38.7% (Q3 2014: 41.2%).
Sales Development in the First Nine Months of 2015
[Graphic 18]
Currency-adjusted changes in parentheses
9.1 HealthCare
RESEARCH AND DEVELOPMENT
Expenses for research and development at HealthCare rose by 19.4% (Fx adj.) in the
first nine months of 2015 to €1,995 million (9M 2014: €1,613 million), including €699
million (Fx adj. +21.0%) in the third quarter (Q3 2014: €561 million). We made further
progress with our research and development pipeline in the third quarter of 2015.
The most important drug candidates in the approval process are:
Products Submitted for Approval1
[Table 19]
| Indication | |
| Aflibercept | E.U.; treatment of myopic choroidal neovascularization (mCNV) |
| Bay 81-8973 (rFVIII) | E.U., U.S.A., Japan; treatment of hemophilia A |
| Rivaroxaban2 | U.S.A.; secondary prophylaxis of acute coronary syndrome (ACS) |
1
As of October 22, 2015
2
Submitted by Janssen Research & Development, LLC
The following table shows our most important drug candidates currently in Phase ii
or iii of clinical testing:
Research and Development Projects (Phases II and III)1
[Table 20]
| Indication | Status | |
| Amikacin Inhale | Pulmonary infection | Phase III |
| BAY 1841788 (ODM-201, AR antagonist) | Prostate cancer | Phase III |
| Damoctocog alfa pegol (BAY 94-9027, long-acting rFVIII) | Hemophilia A | Phase III |
| Ciprofloxacin DPI | Pulmonary infection | Phase III |
| Copanlisib (PI3K inhibitor) | Various forms of non-Hodgkin's lymphoma (NHL) | Phase III |
| Finerenone (MR antagonist) | Chronic heart failure | Phase III |
| Finerenone (MR antagonist) | Diabetic kidney disease | Phase III |
| LCS-16 (ULD LNG Contraceptive System) | Contraception, duration of use: up to 5 years | Phase III |
| Radium-223 dichloride | Combination treatment of castration-resistant prostate cancer | Phase III |
| Regorafenib | Refractory liver cancer | Phase III |
| Riociguat | Pulmonary arterial hypertension (PAH) in patients who do not sufficiently respond to PDE-5i/ ERA | Phase III |
| Rivaroxaban | Prevention of major adverse cardiac events (MACE) | Phase III |
| Rivaroxaban | Anti-coagulation in patients with chronic heart failure2 | Phase III |
| Rivaroxaban | Long-term prevention of venous thromboembolism | Phase III |
| Rivaroxaban | Prevention of venous thromboembolism in high-risk patients after discharge from hospital2 | Phase III |
| Rivaroxaban | Embolic stroke of undetermined source | Phase III |
| Rivaroxaban | Peripheral artery disease (PAD) | Phase III |
| Tedizolid | Pulmonary infection | Phase III |
| Anetumab ravtansine (Mesothelin ADC) | Cancer | Phase II |
| BAY 1067197 (partial adenosine A1 agonist) | Heart failure | Phase II |
| BAY 1007626 (progestine IUS) | Contraception | Phase II |
| BAY 1142524 (Chymase inhibitor) | Heart failure | Phase II |
| BAY 2306001 (ISIS-FXIRx) | Prevention of thrombosis3 | Phase II |
| BAY 98-71 96 + anastrozole (intravaginal ring) | Endometriosis | Phase II |
| Copanlisib (PI3K inhibitor) | Recurrent/resistant non-Hodgkin's lymphoma (NHL) | Phase II |
| Molidustat (HIF-PH inhibitor) | Renal anemia | Phase II |
| PDGRF-beta + aflibercept | Wet age-related macular degeneration4 | Phase II |
| Radium-223 dichloride | Bone metastases in breast cancer | Phase II |
| Radium-223 dichloride | Cancer, various studies | Phase II |
| Refametinib (MEK inhibitor) | Cancer | Phase II |
| Regorafenib | Cancer | Phase II |
| Riociguat | Pulmonary hypertension (IIP) | Phase II |
| Riociguat | Raynaud's phenomenon | Phase II |
| Riociguat | Diffuse systemic sclerosis | Phase II |
| Riociguat | Cystic fibrosis | Phase II |
| Rivaroxaban | Secondary prevention of acute coronary syndrome (ACS)2 | Phase II |
| Roniciclib (CDK inhibitor) | Small-cell lung cancer (SCLC) | Phase II |
| Vericiguat (BAY 1021189, sGC stimulator) | Chronic heart failure | Phase II |
| Vilaprisan (S-PRM) | Symptomatic uterine fibroids | Phase II |
| Vilaprisan (S-PRM) | Endometriosis | Phase II |
1
As of October 22, 2015
2
Sponsored by Janssen Research & Development, LLC
3
Sponsored by Isis Pharmaceuticals, Inc.
4
Sponsored by Regeneron Pharmaceuticals, Inc.
The nature of drug discovery and development is such that not all compounds can be
expected to meet the pre-defined project goals. It is possible that any or all of
the projects listed above may have to be discontinued due to scientific and/or commercial
reasons and will not result in commercialized products. It is also possible that the
requisite Food and Drug Administration (FDA), European Medicines Agency (EMA) or other
regulatory approvals will not be granted for these compounds.
In July 2015, Gadovist™ was approved by the European Commission for use in children under two years of age. This label extension applies to all indications that have already been approved.
Since August 2015, our innovative immunostimulant Zelnate™ has been available in the United States.
It was approved by the United States Department of Agriculture (USDA) to aid in the
treatment of bovine respiratory disease caused by Mannheimia haemolytica bacteria.
The product offers veterinarians and farmers a new approach alongside vaccinations
and antibiotics for treating these complex infectious diseases, which have a substantial
negative impact in cattle breeding.
In September 2015, the oral anticoagulant Xarelto™ (active ingredient: rivaroxaban) was approved by the Japanese Ministry of Health, Labour and Welfare (MHLW) for the treatment and secondary prevention of pulmonary embolism and deep vein thrombosis.
In September 2015, the European Committee for Medicinal Products for Human Use (CHMP) recommended the approval of aflibercept for injection into the eye (tradename: Eylea™ ) for the treatment of myopic choroidal neovascularization (mCNV).
We are expanding the clinical development program for finerenone , our novel, oral, third-generation mineralocorticoid receptor antagonist, to include three new Phase III trials. In September 2015, two trials were initiated to investigate the efficacy and safety of finerenone in patients with diabetic kidney disease. Another Phase iii trial is being prepared in the indication chronic heart failure.
CAPITAL EXPENDITURES, ACQUISITIONS AND COOPERATIONS
In July 2015, we entered into a collaboration and license agreement with Sprint Bioscience
AB, Sweden, concerning the research, development and commercialization of oncological
drug candidates. Under the agreement, we will receive the license for a research program
that is currently at the preclinical stage and aims at inhibiting tumor cell metabolism.
EMERGING MARKETS
HealthCare raised sales in the Emerging Markets by 15.6% (Fx adj.) in the first nine
months of 2015 to €5,352 million (9M 2014: €4,582 million), including €1,749 million
(Fx adj. + 14.6%) in the third quarter (Q3 2014: €1,593 million). The largest increase
in absolute terms in the third quarter was recorded in China, where, in addition to
the positive development of our pharmaceutical products, we especially benefited from
the acquired consumer care businesses. We posted double-digit sales growth in Latin
America. The Emerging Markets' share of total HealthCare sales was 31.4% in the first
nine months of 2015 (9M 2014: 33.4%) and 31.0% in the third quarter (Q3 2014: 33.6%).
9.2 CropScience
RESEARCH AND DEVELOPMENT
Research and development expenses at CropScience rose by 4.8% (Fx adj.) in the first
nine months of 2015 to €777 million (9M 2014: €690 million), including €268 million
(Fx adj. + 5.9%) in the third quarter (Q3 2014: €238 million).
In August 2015, CropScience received marketing authorization from the European Commission for Terpenoid Blend QRD 460, the active ingredient in the product Requiem™ . This biological insecticide provides an option for controlling sucking pests. The market launch in Europe is scheduled for 2017.
CAPITAL EXPENDITURES, ACQUISITIONS AND COOPERATIONS
In August 2015, the construction of a new production plant for methane phosphorous
acid ester (MPE), a key precursor for the active substance glufosinate ammonium, began
at the Knapsack, Germany, site. With this capacity expansion, CropScience is reacting
to the rising demand for modern crop protection products. The total investment amounts
to more than €150 million.
In September 2015, CropScience opened a new building for its European Wheat Breeding
Center in Gatersleben, Germany. Our wheat activities focus primarily on the development
of hybrid seed that promises considerably improved yield stability compared with conventional
seed and is scheduled for launch after 2020.
In September 2015, CropScience opened a production facility in Monheim, Germany, to
expand its oilseed rape /canola range and thus achieve a leading position in the European
market.
Also in September 2015, CropScience and the Round Table on Responsible Soy (RTRS)
announced that they would jointly assist soybean producers in the certification of
their crops according to RTRS standards. RTRS certification guarantees that soybeans
- whether used as a raw material or in processed products - originate from environmentally
friendly, socially compatible and economically viable production. This collaboration
will initially be focused on Brazil.
EMERGING MARKETS
CropScience raised sales in the Emerging Markets by 4.7% (Fx adj.) in the first nine
months of 2015 to €3,349 million (9M 2014: €3,034 million), including €1,252 million
in the third quarter (Fx adj. -0.2%; Q3 2014: €1,163 million). We achieved gains in
Asia, while Latin America sales were level with the previous year. Compared with the
prior-year period, business was significantly down in Africa / Middle East. The Emerging
Markets' share of total CropScience sales was 42.2% in the first nine months of 2015
(9M 2014: 41.6%) and 59.3% in the third quarter (Q3 2014: 60.3%).
9.3 Covestro
RESEARCH AND DEVELOPMENT
Research and development expenses at Covestro increased by 10.1% (Fx adj.) in the
first nine months of 2015 to €192 million (9M 2014: €158 million), including €65 million
(Fx adj. +27.7%) in the third quarter (Q3 2014: €47 million). Covestro also invested
an additional €62 million in the first nine months of 2015 (9M 2014: €56 million)
in joint development projects with customers, including €21 million in the third quarter
(Q3 2014: €19 million).
CAPITAL EXPENDITURES, ACQUISITIONS AND COOPERATIONS
In July 2015, Covestro introduced a Partner Manufacturer Program to promote cooperation
between suppliers, manufacturers and brand owners in the textile industry. The aim
is to promote the INSQIN™ technology, which enables the most environmentally friendly
possible production of polyurethane-based coated textiles. The first partner is South
Korean company Duksung Co., Ltd., a global leader in the manufacture of polyurethane-based
imitation leather.
EMERGING MARKETS
In the Emerging Markets, Covestro posted sales of €3,909 million in the first nine
months of 2015 (Fx adj. -2.8%; 9M 2014: €3,639 million), including €1,254 million
in the third quarter (Fx adj. - 12.1%; Q3 2014: €1,330 million). The company registered
a substantial decrease in sales in Asia compared with the prior-year quarter. Business
also declined in the Latin America and Africa / Middle East regions, but expanded
in Eastern Europe. The Emerging Markets' share of total Covestro sales was 42.5% in
the first nine months of 2015 (9M 2014: 41.8%) and 41.7% in the third quarter (Q3
2014: 43.8%).
10. Employees
On September 30, 2015, the Bayer Group employed 117,866 people in its continuing operations
worldwide (December 31, 2014: 117,371). The workforce thus grew by 495 (+ 0.4%).
HealthCare employed 58,700 people (December 31, 2014: 59,199). The number of employees
at CropScience increased to 23,673 (December 31, 2014: 23,060). The number of employees
at Covestro rose to 15,698 (December 31, 2014: 14,122). This was largely due to the
transfer of around 1,700 employees in connection with the separation of Covestro.
The number of people mainly employed in the service companies therefore declined to
19,795 (December 31, 2014: 20,990).
Personnel expenses rose by 18.2% (Fx adj. 11.8%) in the first nine months of 2015
to €8,369 million (9M 2014: €7,080 million), partly due to portfolio adjustments,
with the third quarter accounting for €2,739 million.
11. Opportunities and Risks
As a global enterprise with a diversified portfolio, the Bayer Group is exposed to
a wide range of internal or external developments or events that could significantly
impact the achievement of our financial and non-financial objectives.
Bayer regards risk management as an integral part of corporate governance. Our risk
management process and the opportunities/ risks outlined in detail in the Annual Report
2014 (Combined Management Report, Chapter 20.3) are materially unchanged. No risks
have been identified that could endanger the Bayer Group's continued existence. There
are also no risks with mutually reinforcing dependencies that could combine to endanger
the Group's continued existence.
Significant developments that have occurred in respect of the legal risks since publication
of the Bayer Annual Report 2014 (Note [32] to the Consolidated Financial Statements)
are described in the Notes to the Condensed Consolidated Interim Financial Statements
under "Legal Risks." The Bayer Annual Report 2014 can be downloaded free of charge
at www.bayer.com.
12. Events After the End of the Reporting Period
After the end of the reporting period - on October 6, 2015 - Covestro (formerly MaterialScience)
issued 62.5 million new shares by way of a capital increase. The issue price was €24.00
per share, yielding total proceeds of €1.5 billion. Bayer's interest in Covestro thus
decreased to 69%.
Bonds with a value of €300 million (nominal) were transferred to a pension fund on
October 7, 2015.
On October 9, 2015, Bayer CropScience was awarded US$455 million from a three-member
arbitration panel of the International Chamber of Commerce (ICC) for infringement
of Bayer's rights concerning its Liberty Link™ weed control system by Dow AgroSciences
(DAS). The award is final and binding and now before a U.S. Court for confirmation.
Condensed Consolidated Interim Financial Statements of the Bayer Group as of September 30, 2015
Bayer Group Consolidated Income Statements
[Table 22]
| 3rd Quarter 2014 | 3rd Quarter 2015 | First Nine Months 2014 | First Nine Months 2015 | ||
| € million | € million | € million | € million | ||
| Net sales | 9,967 | 11,036 | 30,547 | 35,005 | |
| Cost of goods sold | (4,859) | (4,956) | (14,584) | (15,744) | |
| Gross profit | 5,108 | 6,080 | 15,963 | 19,261 | |
| Selling expenses | (2,579) | (2,927) | (7,499) | (9,024) | |
| Research and development expenses | (867) | (1,041) | (2,520) | (3,023) | |
| General administration expenses | (389) | (509) | (1,224) | (1,530) | |
| Other operating income | 204 | 362 | 412 | 640 | |
| Other operating expenses | (131) | (400) | (286) | (982) | |
| EBIT1 | 1,346 | 1,565 | 4,846 | 5,342 | |
| Equity-method loss | (3) | (4) | (11) | (4) | |
| Financial income | 68 | 32 | 258 | 129 | |
| Financial expenses | (367) | (308) | (881) | (966) | |
| Financial result | (302) | (280) | (634) | (841) | |
| Income before income taxes | 1,044 | 1,285 | 4,212 | 4,501 | |
| Income taxes | (236) | (296) | (1,087) | (1,064) | |
| Income from continuing operations after income taxes | 808 | 989 | 3,125 | 3,437 | |
| Income from discontinued operations after income taxes | 25 | 16 | 88 | 78 | |
| Income after income taxes | 833 | 1,005 | 3,213 | 3,515 | |
| of which attributable to non-controlling interest | 7 | 6 | 11 | 18 | |
| of which attributable to Bayer AG stockholders (net income) | 826 | 999 | 3,202 | 3,497 | |
| € | € | € | € | ||
| Earnings per share | |||||
| From continuing operations | |||||
| Basic | 0.97 | 1.19 | 3.77 | 4.13 | |
| Diluted | 0.97 | 1.19 | 3.77 | 4.13 | |
| From discontinued operations | |||||
| Basic | 0.03 | 0.02 | 0.10 | 0.10 | |
| Diluted | 0.03 | 0.02 | 0.10 | 0.10 | |
| From continuing and discontinued operations | |||||
| Basic | 1.00 | 1.21 | 3.87 | 4.23 | |
| Diluted | 1.00 | 1.21 | 3.87 | 4.23 | |
1
EBIT = earnings before financial result and taxes
2014 figures restated
Bayer Group Consolidated Statements of Comprehensive Income
[Table 23]
| 3rd Quarter 2014 | 3rd Quarter 2015 | First Nine Months 2014 | First Nine Months 2015 | |||
| € million | € million | € million | € million | |||
| Income after income taxes | 833 | 1,005 | 3,213 | 3,515 | ||
| of which attributable to non-controlling interest | 7 | 6 | 11 | 18 | ||
| of which attributable to Bayer AG stockholders | 826 | 999 | 3,202 | 3,497 | ||
| Remeasurements of the net defined benefit liability for post-employment benefit plans | (1,529) | (647) | (4,089) | 522 | ||
| Income taxes | 476 | 82 | 1,282 | (237) | ||
| Other comprehensive income from remeasurements of the net defined benefit liability for post-employment benefit plans | (1,053) | (565) | (2,807) | 285 | ||
| Other comprehensive income that will not be reclassified subsequently to profit or loss | (1,053) | (565) | (2,807) | 285 | ||
| Changes in fair values of derivatives designated as cash flow hedges | (125) | 22 | (178) | (235) | ||
| Reclassified to profit or loss | 3 | 89 | (73) | 226 | ||
| Income taxes | 35 | (45) | 71 | (14) | ||
| Other comprehensive income from cash flow hedges | (87) | 66 | (180) | (23) | ||
| Changes in fair values of available-for-sale financial assets | (1) | (3) | - | 15 | ||
| Reclassified to profit or loss | - | - | - | 1 | ||
| Income taxes | (2) | 2 | (3) | 1 | ||
| Other comprehensive income from available-for-sale financial assets | (3) | (1) | (3) | 17 | ||
| Changes in exchange differences recognized on translation of operations outside the eurozone | 1,060 | (361) | 1,002 | 465 | ||
| Reclassified to profit or loss | - | - | - | - | ||
| Other comprehensive income from exchange differences | 1,060 | (361) | 1,002 | 465 | ||
| Other comprehensive income that may be reclassified subsequently to profit or loss | 970 | (296) | 819 | 459 | ||
| Effects of changes in scope of consolidation | - | - | - | - | ||
| Total other comprehensive income1 | (83) | (861) | (1,988) | 744 | ||
| of which attributable to non-controlling interest | 5 | (4) | 9 | 4 | ||
| of which attributable to Bayer AG stockholders | (88) | (857) | (1,997) | 740 | ||
| Total comprehensive income | 750 | 144 | 1,225 | 4,259 | ||
| of which attributable to non-controlling interest | 12 | 2 | 20 | 22 | ||
| of which attributable to Bayer AG stockholders | 738 | 142 | 1,205 | 4,237 | ||
1
Total changes recognized outside profit or loss
Bayer Group Consolidated Statements of Financial Position
[Table 24]
| Sep. 30, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | |
| € million | € million | € million | |
| Noncurrent assets | |||
| Goodwill | 10,608 | 15,932 | 15,347 |
| Other intangible assets | 10,009 | 15,413 | 15,653 |
| Property, plant and equipment | 10,621 | 11,849 | 11,428 |
| Investments accounted for using the equity method | 212 | 240 | 223 |
| Other financial assets | 1,200 | 1,070 | 1,107 |
| Other receivables | 458 | 402 | 447 |
| Deferred taxes | 2,146 | 4,567 | 3,802 |
| Current assets | 35,254 | 49,473 | 48,007 |
| Inventories | 7,928 | 8,711 | 8,478 |
| Trade accounts receivable | 9,099 | 9,995 | 9,097 |
| Other financial assets | 4,519 | 1,542 | 723 |
| Other receivables | 1,435 | 1,656 | 1,488 |
| Claims for income tax refunds | 554 | 520 | 588 |
| Cash and cash equivalents | 1,680 | 2,395 | 1,853 |
| Assets held for sale and discontinued operations | 144 | 178 | - |
| 25,359 | 24,997 | 22,227 | |
| Total assets | 60,613 | 74,470 | 70,234 |
| Equity | |||
| Capital stock of Bayer AG | 2,117 | 2,117 | 2,117 |
| Capital reserves of Bayer AG | 6,167 | 6,167 | 6,167 |
| Other reserves | 11,903 | 14,198 | 11,822 |
| Equity attributable to Bayer AG stockholders | 20,187 | 22,482 | 20,106 |
| Equity attributable to non-controlling interest | 103 | 98 | 112 |
| 20,290 | 22,580 | 20,218 | |
| Noncurrent liabilities | |||
| Provisions for pensions and other post-employment benefits | 11,356 | 11,708 | 12,236 |
| Other provisions | 1,906 | 2,116 | 2,016 |
| Financial liabilities | 11,402 | 16,740 | 18,484 |
| Other liabilities | 311 | 1,077 | 1,088 |
| Deferred taxes | 589 | 907 | 689 |
| 25,564 | 32,548 | 34,513 | |
| Current liabilities | |||
| Other provisions | 5,419 | 6,142 | 4,912 |
| Financial liabilities | 3,107 | 6,036 | 3,376 |
| Trade accounts payable | 4,505 | 5,129 | 5,363 |
| Income tax liabilities | 133 | 98 | 63 |
| Other liabilities | 1,595 | 1,826 | 1,789 |
| Liabilities directly related to assets held for sale and discontinued operations | - | 111 | - |
| 14,759 | 19,342 | 15,503 | |
| Total equity and liabilities | 60,613 | 74,470 | 70,234 |
2014 figures restated
Bayer Group Consolidated Statements of Cash Flows
[Table 25]
| 3rd Quarter 2014 | 3rd Quarter 2015 | First Nine Months 2014 | First Nine Months 2015 | |
| € million | € million | € million | € million | |
| Income from continuing operations after income taxes | 808 | 989 | 3,125 | 3,437 |
| Income taxes | 236 | 296 | 1,087 | 1,064 |
| Financial result | 302 | 280 | 634 | 841 |
| Income taxes paid or accrued | (350) | (684) | (1,285) | (1,757) |
| Depreciation, amortization and impairments | 677 | 760 | 2,022 | 2,376 |
| Change in pension provisions | (115) | (151) | (300) | (274) |
| (Gains) losses on retirements of noncurrent assets | (92) | (63) | (134) | (76) |
| Gross cash flow | 1,466 | 1,427 | 5,149 | 5,611 |
| Decrease (increase) in inventories | (245) | (276) | (557) | (427) |
| Decrease (increase) in trade accounts receivable | 531 | 789 | (1,176) | (1,253) |
| (Decrease) increase in trade accounts payable | 210 | (23) | (174) | (370) |
| Changes in other working capital, other non-cash items | (181) | 389 | 252 | 1,372 |
| Net cash provided by (used in) operating activities (net cash flow), continuing operations | 1,781 | 2,306 | 3,494 | 4,933 |
| Net cash provided by (used in) operating activities (net cash flow), discontinued operations | 35 | 24 | 86 | 80 |
| Net cash provided by (used in) operating activities (net cash flow) (total) | 1,816 | 2,330 | 3,580 | 5,013 |
| Cash outflows for additions to property, plant, equipment and intangible assets | (546) | (655) | (1,432) | (1,601) |
| Cash inflows from the sale of property, plant, equipment and other assets | 30 | 81 | 81 | 165 |
| Cash inflows from divestitures | 297 | 2 | 303 | 2 |
| Cash inflows from (outflows for) noncurrent financial assets | 84 | 258 | 18 | (78) |
| Cash outflows for acquisitions less acquired cash | (14) | (162) | (1,871) | (159) |
| Interest and dividends received | 45 | 21 | 94 | 89 |
| Cash inflows from (outflows for) current financial assets | (3,870) | (510) | (3,864) | (506) |
| Net cash provided by (used in) investing activities (total) | (3,974) | (965) | (6,671) | (2,088) |
| Dividend payments and withholding tax on dividends | (1) | (3) | (1,738) | (1,869) |
| Issuances of debt | 4,965 | 4,445 | 11,798 | 11,647 |
| Retirements of debt | (2,386) | (6,383) | (6,846) | (11,559) |
| Interest paid including interest-rate swaps | (227) | (284) | (393) | (571) |
| Interest received from interest-rate swaps | 82 | 63 | 125 | 114 |
| Cash outflows for the purchase of additional interests in subsidiaries | - | - | (1) | - |
| Net cash provided by (used in) financing activities (total) | 2,433 | (2,162) | 2,945 | (2,238) |
| Change in cash and cash equivalents due to business activities (total) | 275 | (797) | (146) | 687 |
| Cash and cash equivalents at beginning of period | 1,228 | 3,247 | 1,662 | 1,853 |
| Change in cash and cash equivalents due to changes in scope of consolidation | - | 2 | - | 5 |
| Change in cash and cash equivalents due to exchange rate movements | 177 | (57) | 164 | (150) |
| Cash and cash equivalents at end of period | 1,680 | 2,395 | 1,680 | 2,395 |
Bayer Group Consolidated Statements of Changes in Equity
[Table 26]
| Capital stock of Bayer AG | Capital reserves of Bayer AG | Other reserves | Equity attributable to Bayer AG stockholders | Equity attributable to noncontrolling interest | Equity | |
| € million | € million | € million | € million | € million | € million | |
| Dec. 31, 2013 | 2,117 | 6,167 | 12,434 | 20,718 | 86 | 20,804 |
| Equity transactions with owners | ||||||
| Capital increase/decrease | ||||||
| Dividend payments | (1,737) | (1,737) | (2) | (1,739) | ||
| Other changes | 1 | 1 | (1) | |||
| Total comprehensive income | 1,205 | 1,205 | 20 | 1,225 | ||
| Sep. 30, 2014 | 2,117 | 6,167 | 11,903 | 20,187 | 103 | 20,290 |
| Dec. 31, 2014 | 2,117 | 6,167 | 11,822 | 20,106 | 112 | 20,218 |
| Equity transactions with owners | ||||||
| Capital increase/decrease | ||||||
| Dividend payments | (1,861) | (1,861) | (8) | (1,869) | ||
| Other changes | (28) | (28) | ||||
| Total comprehensive income | 4,237 | 4,237 | 22 | 4,259 | ||
| Sep. 30, 2015 | 2,117 | 6,167 | 14,198 | 22,482 | 98 | 22,580 |
Notes to the Condensed Consolidated Interim Financial Statements of the Bayer Group as of September 30, 2015
Key Data by Segment and Region
Key Data by Segment
[Table 27]
| HealthCare | HealthCare | HealthCare | HealthCare | ||
| Pharmaceuticals | Pharmaceuticals | Consumer Health | Consumer Health | ||
| 3rd Quarter 2014 | 3rd Quarter 2015 | 3rd Quarter 2014 | 3rd Quarter 2015 | ||
| € million | € million | € million | € million | ||
| Net sales (external) | 3,039 | 3,482 | 1,701 | 2,169 | |
| Change | + 7.8% | + 14.6% | + 1.3% | + 27.5% | |
| Currency-adjusted change | + 10.3% | + 11.7% | + 3.8% | + 24.0% | |
| Intersegment sales | 29 | 8 | 3 | 4 | |
| Net sales (total) | 3,068 | 3,490 | 1,704 | 2,173 | |
| EBIT | 699 | 859 | 363 | 360 | |
| EBIT before special items | 699 | 866 | 309 | 399 | |
| EBITDA before special items | 960 | 1,139 | 408 | 538 | |
| Gross cash flow1 | 666 | 781 | 244 | 336 | |
| Net cash flow1 | 808 | 894 | 260 | 379 | |
| Depreciation, amortization and impairments | 261 | 273 | 99 | 141 | |
| First Nine Months 2014 | First Nine Months 2015 | First Nine Months 2014 | First Nine Months 2015 | ||
| Net sales (external) | 8,781 | 10,174 | 4,943 | 6,889 | |
| Change | + 6.9% | + 15.9% | -1.5% | + 39.4% | |
| Currency-adjusted change | + 12.1% | + 10.0% | + 3.9% | + 32.6% | |
| Intersegment sales | 72 | 26 | 7 | 4 | |
| Net sales (total) | 8,853 | 10,200 | 4,950 | 6,893 | |
| EBIT | 1,996 | 2,256 | 924 | 1,017 | |
| EBIT before special items | 1,992 | 2,361 | 883 | 1,248 | |
| EBITDA before special items | 2,760 | 3,204 | 1,188 | 1,704 | |
| Gross cash flow1 | 1,902 | 2,191 | 779 | 1,110 | |
| Net cash flow1 | 1,547 | 2,079 | 626 | 1,148 | |
| Depreciation, amortization and impairments | 772 | 847 | 305 | 479 | |
| Number of employees (as of Sep. 30)2 | 38,808 | 40,045 | 16,533 | 18,655 | |
| CropScience | CropScience | Covestro | Covestro | ||
| CropScience | CropScience | Covestro | Covestro | ||
| 3rd Quarter 2014 | 3rd Quarter 2015 | 3rd Quarter 2014 | 3rd Quarter 2015 | ||
| € million | € million | € million | € million | ||
| Net sales (external) | 1,929 | 2,113 | 3,036 | 3,009 | |
| Change | + 12.7% | + 9.5% | + 4.8% | - 0.9% | |
| Currency-adjusted change | + 14.8% | + 2.2% | + 5.1% | - 7.7% | |
| Intersegment sales | 9 | 6 | 14 | 18 | |
| Net sales (total) | 1,938 | 2,119 | 3,050 | 3,027 | |
| EBIT | 157 | 180 | 184 | 217 | |
| EBIT before special items | 157 | 184 | 186 | 304 | |
| EBITDA before special items | 278 | 309 | 334 | 472 | |
| Gross cash flow1 | 214 | 206 | 261 | 310 | |
| Net cash flow1 | 598 | 677 | 274 | 326 | |
| Depreciation, amortization and impairments | 121 | 126 | 149 | 171 | |
| First Nine Months 2014 | First Nine Months 2015 | First Nine Months 2014 | First Nine Months 2015 | ||
| Net sales (external) | 7,299 | 7,928 | 8,703 | 9,208 | |
| Change | + 6.3% | + 8.6% | + 1.8% | + 5.8% | |
| Currency-adjusted change | + 12.2% | + 1.2% | + 4.2% | - 3.2% | |
| Intersegment sales | 40 | 25 | 42 | 45 | |
| Net sales (total) | 7,339 | 7,953 | 8,745 | 9,253 | |
| EBIT | 1,615 | 1,625 | 512 | 714 | |
| EBIT before special items | 1,615 | 1,704 | 533 | 902 | |
| EBITDA before special items | 1,991 | 2,082 | 970 | 1,402 | |
| Gross cash flow1 | 1,453 | 1,448 | 760 | 981 | |
| Net cash flow1 | 847 | 596 | 363 | 849 | |
| Depreciation, amortization and impairments | 376 | 384 | 441 | 525 | |
| Number of employees (as of Sep. 30)2 | 22,490 | 23,673 | 14,147 | 15,698 | |
| Reconciliation | Reconciliation | Reconciliation | Reconciliation | |||
| All Other Segments | All Other Segments | Corporate Center and Consolidation | Corporate Center and Consolidation | Group | Group | |
| 3rd Quarter 2014 | 3rd Quarter 2015 | 3rd Quarter 2014 | 3rd Quarter 2015 | 3rd Quarter 2014 | 3rd Quarter 2015 | |
| € million | € million | € million | € million | € million | € million | |
| Net sales (external) | 261 | 262 | 1 | 1 | 9,967 | 11,036 |
| Change | - 10.3% | + 0.4% | - | - | + 6.0% | + 10.7% |
| Currency-adjusted change | - 10.0% | + 1.1% | - | - | + 7.7% | + 5.8% |
| Intersegment sales | 567 | 575 | (622) | (611) | - | - |
| Net sales (total) | 828 | 837 | (621) | (610) | 9,967 | 11,036 |
| EBIT | 47 | 2 | (104) | (53) | 1,346 | 1,565 |
| EBIT before special items | 54 | 58 | (104) | (42) | 1,301 | 1,769 |
| EBITDA before special items | 99 | 105 | (102) | (40) | 1,977 | 2,523 |
| Gross cash flow1 | 151 | (166) | (70) | (40) | 1,466 | 1,427 |
| Net cash flow1 | 164 | (114) | (323) | 144 | 1,781 | 2,306 |
| Depreciation, amortization and impairments | 45 | 47 | 2 | 2 | 677 | 760 |
| First Nine Months 2014 | First Nine Months 2015 | First Nine Months 2014 | First Nine Months 2015 | First Nine Months 2014 | First Nine Months 2015 | |
| Net sales (external) | 815 | 803 | 6 | 3 | 30,547 | 35,005 |
| Change | - 5.9% | - 1.5% | - | - | + 3.5% | + 14.6% |
| Currency-adjusted change | - 5.2% | - 1.2% | - | - | + 7.9% | + 7.5% |
| Intersegment sales | 1,639 | 1,705 | (1,800) | (1,805) | - | - |
| Net sales (total) | 2,454 | 2,508 | (1,794) | (1,802) | 30,547 | 35,005 |
| EBIT | 106 | 45 | (307) | (315) | 4,846 | 5,342 |
| EBIT before special items | 126 | 123 | (307) | (293) | 4,842 | 6,045 |
| EBITDA before special items | 250 | 259 | (303) | (288) | 6,856 | 8,363 |
| Gross cash flow1 | 472 | 102 | (217) | (221) | 5,149 | 5,611 |
| Net cash flow1 | 364 | (57) | (253) | 318 | 3,494 | 4,933 |
| Depreciation, amortization and impairments | 124 | 136 | 4 | 5 | 2,022 | 2,376 |
| Number of employees (as of Sep. 30)2 | 20,105 | 19,086 | 748 | 709 | 112,831 | 117,866 |
2014 figures restated
1
For definition see chapter 8 "Financial Position of the Bayer Group."
2
Full-time equivalents
Key Data by Region
[Table 28]
| Europe | Europe | North America | North America | ||
| 3rd Quarter 2014 | 3rd Quarter 2015 | 3rd Quarter 2014 | 3rd Quarter 2015 | ||
| € million | € million | € million | € million | ||
| Net sales (external) - by market | 3,527 | 3,659 | 2,230 | 2,874 | |
| Change | + 3.5% | + 3.7% | + 8.4% | + 28.9% | |
| Currency-adjusted change | + 4.1% | + 4.4% | + 8.7% | + 12.4% | |
| Net sales (external) - by point of origin | 3,961 | 4,105 | 2,175 | 2,772 | |
| Change | + 4.8% | + 3.6% | + 7.1% | + 27.4% | |
| Currency-adjusted change | + 5.4% | + 4.2% | + 7.4% | + 10.2% | |
| Interregional sales | 2,276 | 2,770 | 845 | 1,010 | |
| EBIT | 843 | 848 | 190 | 345 | |
| First Nine Months 2014 | First Nine Months 2015 | First Nine Months 2014 | First Nine Months 2015 | ||
| Net sales (external) - by market | 11,792 | 12,352 | 7,434 | 9,879 | |
| Change | + 5.7% | + 4.7% | + 2.8% | + 32.9% | |
| Currency-adjusted change | + 6.8% | + 5.9% | + 6.9% | + 14.0% | |
| Net sales (external) - by point of origin | 13,023 | 13,617 | 7,279 | 9,683 | |
| Change | + 6.0% | + 4.6% | + 1.9% | + 33.0% | |
| Currency-adjusted change | + 6.9% | + 5.6% | + 6.2% | + 13.5% | |
| Interregional sales | 6,863 | 8,182 | 2,442 | 3,017 | |
| EBIT | 3,351 | 3,501 | 867 | 1,245 | |
| Number of employees (as of Sep. 30)1 | 54,093 | 55,992 | 14,596 | 15,958 | |
| Asia/Pacific | Asia/Pacific | Latin America / Africa / Middle East | Latin America / Africa / Middle East | ||
| 3rd Quarter 2014 | 3rd Quarter 2015 | 3rd Quarter 2014 | 3rd Quarter 2015 | ||
| € million | € million | € million | € million | ||
| Net sales (external) - by market | 2,284 | 2,500 | 1,926 | 2,003 | |
| Change | + 7.6% | + 9.5% | + 6.4% | + 4.0% | |
| Currency-adjusted change | + 8.3% | + 0.3% | + 12.8% | + 7.1% | |
| Net sales (external) - by point of origin | 2,220 | 2,445 | 1,611 | 1,714 | |
| Change | + 6.6% | + 10.1% | + 6.8% | + 6.4% | |
| Currency-adjusted change | + 7.3% | + 0.8% | + 14.4% | + 10.5% | |
| Interregional sales | 200 | 191 | 145 | 213 | |
| EBIT | 121 | 129 | 296 | 296 | |
| First Nine Months 2014 | First Nine Months 2015 | First Nine Months 2014 | First Nine Months 2015 | ||
| Net sales (external) - by market | 6,604 | 7,721 | 4,717 | 5,053 | |
| Change | + 3.1% | + 16.9% | 0.0% | + 7.1% | |
| Currency-adjusted change | + 8.7% | + 3.3% | + 11.1% | + 6.8% | |
| Net sales (external) - by point of origin | 6,434 | 7,537 | 3,811 | 4,168 | |
| Change | + 2.7% | + 17.1% | - 0.1% | + 9.4% | |
| Currency-adjusted change | + 8.4% | + 3.2% | + 13.6% | + 9.6% | |
| Interregional sales | 491 | 578 | 398 | 528 | |
| EBIT | 450 | 597 | 485 | 314 | |
| Number of employees (as of Sep. 30)1 | 27,513 | 29,501 | 16,629 | 16,415 | |
| Reconciliation | Reconciliation | Total | Total | ||
| 3rd Quarter 2014 | 3rd Quarter 2015 | 3rd Quarter 2014 | 3rd Quarter 2015 | ||
| € million | € million | € million | € million | ||
| Net sales (external) - by market | - | - | 9,967 | 11,036 | |
| Change | - | - | + 6.0% | + 10.7% | |
| Currency-adjusted change | - | - | + 7.7% | + 5.8% | |
| Net sales (external) - by point of origin | - | - | 9,967 | 11,036 | |
| Change | - | - | + 6.0% | + 10.7% | |
| Currency-adjusted change | - | - | + 7.7% | + 5.8% | |
| Interregional sales | (3,466) | (4,184) | - | - | |
| EBIT | (104) | (53) | 1,346 | 1,565 | |
| First Nine Months 2014 | First Nine Months 2015 | First Nine Months 2014 | First Nine Months 2015 | ||
| Net sales (external) - by market | - | - | 30,547 | 35,005 | |
| Change | - | - | + 3.5% | + 14.6% | |
| Currency-adjusted change | - | - | + 7.9% | + 7.5% | |
| Net sales (external) - by point of origin | - | - | 30,547 | 35,005 | |
| Change | - | - | + 3.5% | + 14.6% | |
| Currency-adjusted change | - | - | + 7.9% | + 7.5% | |
| Interregional sales | (10,194) | (12,305) | - | - | |
| EBIT | (307) | (315) | 4,846 | 5,342 | |
| Number of employees (as of Sep. 30)1 | - | - | 112,831 | 117,866 | |
2014 fiqures restated
Explanatory Notes
ACCOUNTING POLICIES
Pursuant to Section 37x Paragraph 3 of the German Securities Trading Act, the consolidated
interim financial statements as of September 30, 2015 have been prepared in condensed
form according to the International Financial Reporting Standards (IFRS) - including
lAS 34 - of the International Accounting Standards Board (IASB), London, which are
endorsed by the European Union, and the Interpretations of the IFRS Interpretations
Committee in effect at the closing date.
Reference should be made as appropriate to the Notes to the Consolidated Financial
Statements for the 2014 fiscal year, particularly with regard to the main recognition
and measurement principles, except where financial reporting standards have been applied
for the first time in 2015.
FINANCIAL REPORTING STANDARDS APPLIED FOR THE FIRST TIME IN 2015
The first-time application of the following amended financial reporting standards
had no impact, or no material impact, on the presentation of the Group's financial
position or results of operations, or on earnings per share.
In December 2013, the IASB published the fifth and sixth sets of "Annual Improvements
to IFRSs." The amendments address details of the recognition, measurement and disclosure
of business transactions and serve to standardize terminology. They consist mainly
of editorial changes to existing standards. They are to be applied for annual periods
beginning on or after July 1, 2014.
ACCOUNTING CHANGES
The purchase price allocation of the consumer care business of U.S. company Merck
& Co., Inc., which was acquired on October 1, 2014, was completed in the third quarter
of 2015. This resulted in the further capitalization of deferred tax assets due to
temporary differences between the carrying amounts of intangible assets in the IFRS
financial statements and those reported for tax purposes, as well as a corresponding
decline in goodwill in the statement of financial position. These deferred tax assets
were retroactively restated to the date of acquisition pursuant to IFRS 3.45. Deferred
taxes of €43 million were retroactively restated in the income statement. Further
explanations concerning ongoing purchase price adjustments are given under "Acquisitions,
divestitures and discontinued operations."
Accounting Changes: Consolidated Statements of Financial Position
[Table 29]
| Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | |
| Before accounting changes | Accounting changes | After accounting changes | |
| € million | € million | € million | |
| Noncurrent assets | |||
| Goodwill | 16,168 | (821) | 15,347 |
| Deferred taxes | 2,981 | 821 | 3,802 |
| 48,007 | - | 48,007 |
Accounting Changes: Consolidated Statements of Financial Position
[Table 30]
| March 31, 2015 | March 31, 2015 | March 31, 2015 | June 30, 2015 | June 30, 2015 | June 30, 2015 | |
| Before accounting changes | Accounting changes | After accounting changes | Before accounting changes | Accounting changes | After accounting changes | |
| € million | € million | € million | € million | € million | € million | |
| Noncurrent assets | ||||||
| Goodwill | 17,331 | (926) | 16,405 | 16,870 | (890) | 15,980 |
| Deferred taxes | 4,025 | 957 | 4,982 | 3,253 | 933 | 4,186 |
| 51,689 | 31 | 51,720 | 49,462 | 43 | 49,505 | |
| Total assets | 76,640 | 31 | 76,671 | 75,620 | 43 | 75,663 |
| Equity | ||||||
| Other reserves | 13,451 | 31 | 13,482 | 14,013 | 43 | 14,056 |
| Equity attributable to Bayer AG stockholders | 21,735 | 31 | 21,766 | 22,297 | 43 | 22,340 |
| 21,863 | 31 | 21,894 | 22,423 | 43 | 22,466 | |
| Total equity and liabilities | 76,640 | 31 | 76,671 | 75,620 | 43 | 75,663 |
Accounting Changes: Consolidated Income Statements
[Table 31]
| 1st Quarter 2015 | 1st Quarter 2015 | 1st Quarter 2015 | 2nd Quarter 2015 | 2nd Quarter 2015 | 2nd Quarter 2015 | |
| Before accounting changes | Accounting changes | After accounting changes | Before accounting changes | Accounting changes | After accounting changes | |
| € million | € million | € million | € million | € million | € million | |
| Income before income taxes | 1,670 | - | 1,670 | 1,546 | - | 1,546 |
| Income taxes | (406) | 31 | (375) | (405) | 12 | (393) |
| Income from continuing operations after income taxes | 1,264 | 31 | 1,295 | 1,141 | 12 | 1,153 |
| Income after income taxes | 1,309 | 31 | 1,340 | 1,158 | 12 | 1,170 |
| of which attributable to Bayer AG stockholders (net income) | 1,303 | 31 | 1,334 | 1,152 | 12 | 1,164 |
Accounting Changes: (Core) Earnings per Share
[Table 32]
| 1st Quarter 2015 | 1st Quarter 2015 | 1st Quarter 2015 | 2nd Quarter 2015 | 2nd Quarter 2015 | 2nd Quarter 2015 | |
| Before accounting changes | Accounting changes | After accounting changes | Before accounting changes | Accounting changes | After accounting changes | |
| € | € | € | € | € | € | |
| Earnings per share | ||||||
| From continuing operations | ||||||
| Basic | 1.52 | 0.04 | 1.56 | 1.37 | 0.01 | 1.38 |
| Diluted | 1.52 | 0.04 | 1.56 | 1.37 | 0.01 | 1.38 |
| From discontinued operations | ||||||
| Basic | 0.06 | - | 0.06 | 0.02 | - | 0.02 |
| Diluted | 0.06 | - | 0.06 | 0.02 | - | 0.02 |
| From continuing and discontinued operations | ||||||
| Basic | 1.58 | 0.04 | 1.62 | 1.39 | 0.01 | 1.40 |
| Diluted | 1.58 | 0.04 | 1.62 | 1.39 | 0.01 | 1.40 |
| Core earnings per share | ||||||
| From continuing operations | 2.04 | 0.04 | 2.08 | 1.98 | 0.01 | 1.99 |
| From discontinued operations | 0.06 | - | 0.06 | 0.02 | - | 0.02 |
| From continuing and discontinued operations | 2.10 | 0.04 | 2.14 | 2.00 | 0.01 | 2.01 |
CHANGES IN UNDERLYING PARAMETERS
Changes in the underlying parameters relate primarily to currency exchange rates and
the interest rates used to calculate pension obligations.
The exchange rates for major currencies against the euro varied as follows:
Exchange Rates for Major Currencies
[Table 33]
| Closing Rate | Closing Rate | Closing Rate | Average Rate | Average Rate | ||
| €1 | Dec. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2015 | First Nine Months 2014 | First Nine Months 2015 | |
| BRL | Brazil | 3.22 | 3.08 | 4.48 | 3.10 | 3.48 |
| CAD | Canada | 1.41 | 1.41 | 1.50 | 1.48 | 1.40 |
| CHF | Switzerland | 1.20 | 1.21 | 1.09 | 1.22 | 1.06 |
| CNY | China | 7.54 | 7.73 | 7.12 | 8.36 | 6.96 |
| GBP | United Kingdom | 0.78 | 0.78 | 0.74 | 0.81 | 0.73 |
| JPY | Japan | 145.23 | 138.11 | 134.69 | 139.55 | 134.73 |
| MXN | Mexico | 17.87 | 17.00 | 18.98 | 17.78 | 17.31 |
| RUB | Russia | 72.34 | 49.77 | 73.24 | 47.96 | 65.69 |
| USD | United States | 1.21 | 1.26 | 1.12 | 1.36 | 1.11 |
The most important interest rates used to calculate the present value of pension obligations
are given below:
Discount Rate for Pension Obligations
[Table 34]
| Dec. 31, 2014 | June 30, 2015 | Sep. 30, 2015 | |
| % | % | % | |
| Germany | 2.00 | 2.30 | 2.20 |
| United Kingdom | 3.60 | 3.80 | 3.80 |
| United States | 3.70 | 4.10 | 4.00 |
The data selection criteria used to determine the discount rate in the eurozone were
modified at the beginning of 2015. The item "Remeasurements of the net defined benefit
liability for post-employment benefit plans" contains gains resulting from the rise
in market interest rates. The modification of the data selection criteria had an effect
of €0.7 billion. The discount rate obtained by applying the previous data selection
criteria would have been lower by 20 basis points as of September 30, 2015. The change
in the way the discount rate is determined reduces the net pension expense for the
2015 fiscal year by €17 million. As before, the underlying bond portfolio consists
entirely of high-quality corporate bonds with a minimum AA or AAA rating. It does
not include government-guaranteed or covered bonds.
SEGMENT REPORTING
The following table shows the reconciliation of EBITDA before special items of the
segments to income before income taxes of the Group:
Reconciliation of Segments' EBITDA Before Special Items to Group Income Before Income
Taxes
[Table 35]
| 3rd Quarter 2014 | 3rd Quarter 2015 | First Nine Months 2014 | First Nine Months 2015 | |
| € million | € million | € million | € million | |
| EBITDA before special items of segments | 2,079 | 2,563 | 7,159 | 8,651 |
| EBITDA before special items of Corporate Center | (102) | (40) | (303) | (288) |
| EBITDA before special items | 1,977 | 2,523 | 6,856 | 8,363 |
| Depreciation, amortization and impairment losses before special items of segments | (674) | (752) | (2,010) | (2,313) |
| Depreciation, amortization and impairment losses before special items of Corporate Center | (2) | (2) | (4) | (5) |
| Depreciation, amortization and impairment losses before special items | (676) | (754) | (2,014) | (2,318) |
| EBIT before special items of segments | 1,405 | 1,811 | 5,149 | 6,338 |
| EBIT before special items of Corporate Center | (104) | (42) | (307) | (293) |
| EBIT before special items | 1,301 | 1,769 | 4,842 | 6,045 |
| Special items of segments | 45 | (193) | 4 | (681) |
| Special items of Corporate Center | - | (11) | - | (22) |
| Special items | 45 | (204) | 4 | (703) |
| EBIT of segments | 1,450 | 1,618 | 5,153 | 5,657 |
| EBIT of Corporate Center | (104) | (53) | (307) | (315) |
| EBIT | 1,346 | 1,565 | 4,846 | 5,342 |
| Financial result | (302) | (280) | (634) | (841) |
| Income before income taxes | 1,044 | 1,285 | 4,212 | 4,501 |
2014 figures restated
COMPANIES CONSOLIDATED
Changes in the scope of consolidation
The consolidated financial statements as of September 30, 2015, included 308 companies
(December 31, 2014: 302 companies). As in the statements as of December 31, 2014,
one of these companies was accounted for as a joint operation in line with Bayer's
interest in its assets, liabilities, revenues and expenses in accordance with IFRS
11 (Joint Arrangements). Two (December 31, 2014: three) joint ventures and four (December
31, 2014: three) associates were accounted for in the consolidated financial statements
using the equity method according to IAS 28 (Investments in Associates and Joint Ventures).
Acquisitions, divestitures and discontinued operations
Acquisitions
On March 2, 2015, Covestro successfully completed the acquisition of all the shares
of Thermoplast Composite GmbH, Germany, a technology leader specializing in the production
of thermoplastic fiber composites. The aim of the acquisition is to expand the range
of polycarbonate materials for major industries to include composites made from continuous
fiber-reinforced thermoplastics. A purchase price of €18 million was agreed. This
includes a variable component of €4 million. The purchase price pertained mainly to
patents and goodwill.
On July 1, 2015, CropScience completed the acquisition of all the shares of SeedWorks
India Pvt. Ltd., based in Hyderabad, India. The company is specialized in the breeding,
production and marketing of hybrid seeds of tomato, hot pepper, okra and gourds. It
has research and seed processing locations in Bangalore and Hyderabad respectively.
The purchase of SeedWorks India is intended to further strengthen CropScience's vegetable
seed business in India. A basic purchase price of €78 million was agreed. The purchase
price pertained mainly to patents, research and development projects and goodwill.
As part of the acquisition of the consumer care business of Merck & Co., Inc., Whitehouse
Station, New Jersey, United States, the production facilities at the Pointe-Claire
site in Canada were acquired on July 1, 2015. A purchase price of €70 million was
agreed.
The global purchase price allocation for the consumer care business of Merck & Co.,
Inc., was completed in September 2015. The purchase price was reduced by €8 million
in 2015. This reduction pertained mainly to other intangible assets, inventories and
goodwill. Further explanations concerning the purchase price allocation are given
under "Accounting changes."
The court proceedings initiated by former minority stockholders of Bayer Pharma AG
(formerly known as Bayer Schering Pharma AG), Berlin, Germany, were settled in August
2015. The corresponding supplementary payment represents a subsequent purchase price
adjustment according to the March 31, 2004 version of IFRS 3 applicable at the acquisition
date. The goodwill of €261 million recognized in 2013 is thereby reduced by €115 million.
The effects of these transactions and other, smaller transactions made in the first
nine months of 2015 -along with adjustments to purchase prices and purchase price
allocations made in the first nine months of 2015 relating to previous years' /quarters'
transactions - on the Group's assets and liabilities as of the respective acquisition
or adjustment dates are shown in the table. Net of acquired cash and cash equivalents,
the transactions resulted in the following cash outflow:
Acquired Assets, Assumed Liabilities and Adjustments
(Fair Values at the Respective Acquisition Dates)
[Table 36]
| First Nine Months 2015 | |
| € million | |
| Goodwill | 26 |
| Patents and technologies | 40 |
| Other intangible assets | 46 |
| Property, plant and equipment | 24 |
| Inventories | (68) |
| Other current assets | 48 |
| Cash and cash equivalents | 2 |
| Deferred tax assets | (2) |
| Other provisions | (62) |
| Financial liabilities | - |
| Other liabilities | 3 |
| Deferred tax liabilities | (21) |
| Net assets | 36 |
| Changes in non-controlling interest | - |
| Purchase price | 36 |
| Acquired cash and cash equivalents | (2) |
| Liabilities for future payments | 111 |
| Purchase price adjustment | (37) |
| Payments for previous years'/ quarters' acquisitions | 51 |
| Net cash outflow for acquisitions | 159 |
Divestitures
On March 2, 2015, Consumer Health completed the sale of two equine products, Legend/Hyonate
and Marquis, to Merial, Inc., Duluth, Georgia, United States. A purchase price of
€120 million was agreed.
The one-time payment is accounted for as deferred income. The purchase prices for
Legend /Hyonate and Marquis will be reflected in sales and earnings over a four-year
and a three-year period, respectively.
Discontinued operations
On June 8, 2015, an agreement was signed to sell the Diabetes Care business to Panasonic HealthCare Holdings Co., Ltd., Tokyo, Japan, for €1,022 million. The sale will include the leading Contour™ portfolio of blood glucose monitoring meters and strips, as well as other products such as Breeze™2, Elite™ and Microlet™ lancing devices. Closing of the transaction is subject to customary conditions, including relevant antitrust clearance, and is expected to occur in the first quarter of 2016.
The Diabetes Care activities are reported as a discontinued operation. The respective
information is provided from the standpoint of the Bayer Group and is not intended
to present these activities as a separate entity.
The income statements for the discontinued operation are given below:
Income Statements for Discontinued Operations
[Table 37]
| 3rd Quarter 2014 | 3rd Quarter 2015 | First Nine Months 2014 | First Nine Months 2015 | |
| € million | € million | € million | € million | |
| Net sales | 220 | 232 | 653 | 705 |
| Cost of goods sold | (84) | (98) | (254) | (284) |
| Gross profit | 136 | 134 | 399 | 421 |
| Selling expenses | (83) | (91) | (246) | (270) |
| Research and development expenses | (9) | (12) | (26) | (34) |
| General administration expenses | (8) | (9) | (26) | (27) |
| Other operating income/expenses | (6) | (6) | (2) | - |
| EBIT1 | 30 | 16 | 99 | 90 |
| Financial result | - | - | - | - |
| Income before income taxes | 30 | 16 | 99 | 90 |
| Income taxes | (5) | - | (11) | (12) |
| Income after income taxes | 25 | 16 | 88 | 78 |
1
EBIT = earnings before financial result and taxes
The assets and liabilities of the discontinued operation are shown in the following
table:
Assets and Liabilities of Discontinued Operations
[Table 38]
| Sep. 30, 2015 | |
| € million | |
| Noncurrent assets | |
| Goodwill | 35 |
| Other intangible assets | 6 |
| Property, plant and equipment | 7 |
| Other financial assets | - |
| Other receivables | - |
| Deferred taxes | 48 |
| Current assets | |
| Inventories | 116 |
| Trade accounts receivable | - |
| Other financial assets | - |
| Other receivables | - |
| Claims for income tax refunds | - |
| Cash and cash equivalents | - |
| 116 | |
| Total assets | 164 |
| Noncurrent liabilities | |
| Provisions for pensions and other post-employment benefits | 24 |
| Other provisions | - |
| Financial liabilities | - |
| Other liabilities | - |
| Deferred taxes | 24 |
| Current liabilities | |
| Other provisions | 85 |
| Financial liabilities | - |
| Trade accounts payable | - |
| Income tax liabilities | - |
| Other liabilities | 2 |
| 87 | |
| Total liabilities | 111 |
In addition to the assets of the discontinued Diabetes Care business amounting to
€164 million, the statement of financial position as of September 30, 2015, reflects
a further €14 million in assets held for sale. The discontinued operation affected
the Bayer Group statements of cash flows as follows:
Cash Flows of Discontinued Operations
[Table 39]
| 3rd Quarter 2014 | 3rd Quarter 2015 | First Nine Months 2014 | First Nine Months 2015 | |
| € million | € million | € million | € million | |
| Net cash provided by (used in) operating activities (net cash flow) | 35 | 24 | 86 | 80 |
| Net cash provided by (used in) investing activities | (2) | (1) | (5) | (2) |
| Net cash provided by (used in) financing activities | (33) | (23) | (81) | (78) |
| Change in cash and cash equivalents | - | - | - | - |
FINANCIAL INSTRUMENTS
Carrying Amounts and Fair Values of Financial Instruments
[Table 40]
| Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | ||
| Carried at amortized cost | Carried at amortized cost | Carried at fair value | Carried at fair value | Carried at fair value | ||
| Based on quoted prices in active markets (Level 1) | Based on observable market data (Level 2) | Based on unobservable inputs (Level 3) | ||||
| Carrying amount Sep. 30, 2015 | Fair value (for information) | Carrying amount | Carrying amount | Carrying amount | ||
| € million | € million | € million | € million | € million | ||
| Trade accounts receivable | 9,995 | |||||
| Loans and receivables | 9,995 | 9,995 | ||||
| Other financial assets | 1,041 | 857 | 671 | 43 | ||
| Loans and receivables | 947 | 947 | ||||
| Available-for-sale financial assets | 29 | 857 | 9 | |||
| Held-to-maturity financial assets | 65 | 65 | ||||
| Derivatives | 671 | 34 | ||||
| Other receivables | 630 | |||||
| Loans and receivables | 630 | 630 | ||||
| Non-financial assets | ||||||
| Cash and cash equivalents | 2,395 | |||||
| Loans and receivables | 2,395 | 2,395 | ||||
| Total financial assets | 14,061 | 857 | 671 | 43 | ||
| of which loans and receivables | 13,967 | |||||
| Financial liabilities | 21,991 | 785 | ||||
| Carried at amortized cost | 21,991 | 23,837 | ||||
| Derivatives | 785 | |||||
| Trade accounts payable | 5,048 | |||||
| Carried at amortized cost | 5,048 | 5,048 | ||||
| Non-financial liabilities | ||||||
| Other liabilities | 705 | 167 | 46 | |||
| Carried at amortized cost | 705 | 705 | ||||
| Carried at fair value (non-derivative) | 38 | |||||
| Derivatives | 167 | 8 | ||||
| Non-financial liabilities | ||||||
| Total financial liabilities | 27,744 | 952 | 46 | |||
| of which carried at amortized cost | 27,744 | |||||
| of which derivatives | 952 | 8 | ||||
| Sep. 30, 2015 | Sep. 30, 2015 | ||
| Non-financial assets/liabilities | |||
| Carrying amount | Carrying amount in the statement of financial position | ||
| € million | € million | ||
| Trade accounts receivable | 9,995 | ||
| Loans and receivables | 9,995 | ||
| Other financial assets | 2,612 | ||
| Loans and receivables | 947 | ||
| Available-for-sale financial assets | 895 | ||
| Held-to-maturity financial assets | 65 | ||
| Derivatives | 705 | ||
| Other receivables | 1,428 | 2,058 | |
| Loans and receivables | 630 | ||
| Non-financial assets | 1,428 | 1,428 | |
| Cash and cash equivalents | 2,395 | ||
| Loans and receivables | 2,395 | ||
| Total financial assets | 15,632 | ||
| of which loans and receivables | 13,967 | ||
| Financial liabilities | 22,776 | ||
| Carried at amortized cost | 21,991 | ||
| Derivatives | 785 | ||
| Trade accounts payable | 81 | 5,129 | |
| Carried at amortized cost | 5,048 | ||
| Non-financial liabilities | 81 | 81 | |
| Other liabilities | 1,985 | 2,903 | |
| Carried at amortized cost | 705 | ||
| Carried at fair value (non-derivative) | 38 | ||
| Derivatives | 175 | ||
| Non-financial liabilities | 1,985 | 1,985 | |
| Total financial liabilities | 28,742 | ||
| of which carried at amortized cost | 27,744 | ||
| of which derivatives | 960 | ||
The table on the preceding page shows the carrying amounts and fair values of financial
assets and liabilities by category of financial instrument and a reconciliation to
the corresponding line item in the statements of financial position. Since the line
items "Other receivables," "Trade accounts payable" and "Other liabilities" contain
both financial instruments and non-financial assets or liabilities (such as other
tax receivables or advance payments for services to be received in the future), the
reconciliation is shown in the column headed "Non-financial assets/ liabilities."
The loans and receivables reflected in other financial assets and the liabilities
measured at amortized cost also include receivables and liabilities under finance
leases in which Bayer is the lessor or lessee and which are therefore measured in
accordance with IAS 17.
Because of the short maturities of most trade accounts receivable and payable, other
receivables and liabilities, and cash and cash equivalents, their carrying amounts
at the closing date did not significantly differ from the fair values.
The fair value stated for noncurrent receivables, loans, held-to-maturity financial
investments and nonderivative financial liabilities is the present value of the respective
future cash flows. This was determined by discounting the cash flows at a closing-date
interest rate that takes into account the term of the assets or liabilities and the
creditworthiness of the counterparty. Where a market price was available, however,
this was deemed to be the fair value.
The fair values of available-for-sale financial assets correspond to quoted prices
in active markets for identical assets (Level 1).
The fair values of derivatives for which no publicly quoted prices existed in active
markets (Level 1) were determined using valuation techniques based on observable market
data as of the end of the reporting period (Level 2). In applying valuation techniques,
credit value adjustments were determined to allow for the contracting party's credit
risk. The respective currency and commodity forward contracts were measured individually
at their forward rates or forward prices on the closing date. These depend on spot
rates or prices including time spreads. The fair values of interest-rate hedging instruments
and cross-currency interest-rate swaps were determined by discounting future cash
flows over the remaining terms of the instruments at market rates of interest, taking
into account any foreign currency translation as of the closing date.
Fair values measured using unobservable inputs are categorized within Level 3 of the
fair value hierarchy. This applies in some cases to the fair values of embedded derivatives
or to obligations for contingent consideration in business combinations.
Embedded derivatives were separated from their respective host contracts. Such host
contracts are generally sales or purchase agreements relating to the operational business.
The embedded derivatives cause the cash flows from the contracts to vary with fluctuations
in exchange rates, commodity prices or other prices, for example. The internal measurement
of embedded derivatives is mainly performed using the discounted cash flow method,
which is based on unobservable inputs (Level 3). These included planned sales and
purchase volumes, and prices derived from market data. Regular monitoring is carried
out based on these fair values as part of quarterly reporting.
The changes in the net amount of financial assets and liabilities recognized at fair
value based on unobservable inputs (Level 3) were as follows:
Changes in the Net Amount of Financial Assets and Liabilities
Recognized at Fair Value Based on Unobservable Inputs
[Table 41]
| 2015 | ||
| € million | ||
| Net carrying amounts, Jan. 1 | (25) | |
| Gains (losses) recognized in profit or loss | 5 | |
| of which related to assets/liabilities recognized in the statement of financial position | (1) | |
| Gains (losses) recognized outside profit or loss | 1 | |
| Additions of assets/(liabilities) | 1 | |
| Settlements of (assets)/liabilities | 9 | |
| Reclassifications to "Liabilities directly related to assets held for sale and discontinued operations" | 6 | |
| Net carrying amounts, Sep. 30 | (3) | |
The changes recognized in profit or loss were included in other operating income or
expenses.
LEGAL RISKS
To find out more about the Bayer Group's legal risks, please see Note [32] to the
consolidated financial statements in the Bayer Annual Report 2014, which can be downloaded
free of charge at www.bayer.com. Since the Bayer Annual Report 2014, the following
significant changes have occurred in respect of the legal risks:
HealthCare
PRODUCT-RELATED LITIGATION
Yasmin™ / YAZ™: As of October 16, 2015, the number of claimants in the pending lawsuits and claims in the United States totaled about 3,400 (excluding claims already settled). Claimants allege that they have suffered personal injuries, some of them fatal, from the use of Bayer's drospirenone-containing oral contraceptive products such as Yasmin™ and /or YAZ™ or from the use of Ocella™ and /or Gianvi™, generic versions of Yasmin™ and YAZ™, respectively, marketed by Barr Laboratories, Inc. in the United States.
As of October 16, 2015, Bayer had reached agreements, without admission of liability,
to settle approximately 10,000 claims in the U.S. for venous clot injuries (primarily
deep vein thrombosis or pulmonary embolism) for a total amount of about US$2 billion.
Bayer will continue to consider the option of settling such claims after a case-specific
analysis of medical records. At present, about 600 such claims are under review.
In August 2015, Bayer reached an agreement to settle, without admission of liability,
lawsuits and claims in which plaintiffs allege an arterial thromboembolic injury (primarily
strokes and heart attacks) for a total maximum aggregate amount of US$56.9 million.
Bayer may withdraw from the settlement if fewer than 97.5% of those who are eligible,
and/or fewer than 96% of those who are eligible and allege death or catastrophic injuries,
choose to participate. As of October 16, 2015, about 1,200 of the 3,400 above-mentioned
claimants alleged arterial thromboembolic injuries.
In August 2015, the U.S. multidistrict and state coordinating courts overseeing the
litigation issued case management orders governing all cases before them (regardless
of alleged injury), imposing strict threshold requirements for litigating the remaining
unsettled cases as well as the filing of new cases, failing which they will be dismissed.
Mirena™: As of October 16, 2015, lawsuits from approximately 3,500 users of Mirena™, an intrauterine system providing long-term contraception, had been served upon Bayer in the U.S. Additional lawsuits are anticipated. Plaintiffs allege personal injuries resulting from the use of Mirena™, including perforation of the uterus, ectopic pregnancy, or idiopathic intracranial hypertension, and seek compensatory and punitive damages. As of October 16, 2015, five lawsuits relating to Mirena™ seeking class action certification had been served upon Bayer in Canada.
Xarelto™: As of October 16, 2015, lawsuits of approximately 2,500 recipients of Xarelto™, an oral anticoagulant for the treatment and prevention of blood clots, had been served upon Bayer in the U.S. Plaintiffs allege personal injuries from the use of Xarelto™ , including cerebral, gastrointestinal or other bleeding and death, and seek compensatory and punitive damages. Additional lawsuits are anticipated. As of October 16, 2015, six lawsuits relating to Xarelto™ seeking class action certification had been served upon Bayer in Canada.
COMPETITION LAW PROCEEDINGS
Phillips' Colon Health/Department of Justice: In September 2015, a New Jersey federal court ruled that the United States failed to discharge its burden of proving that Bayer failed to possess competent and reliable scientific evidence to substantiate its claims made about some of its dietary supplements. Thus, the court found that Bayer did not violate a 2007 consent decree. In 2014, the United States Department of Justice, representing the United States Federal Trade Commission (FTC), had filed a motion in the New Jersey federal court. The FTC can appeal.
PATENT DISPUTES
Beyaz™ /Safyral™: In September 2015, the U.S. federal court ruled in favor of Bayer regarding both the validity of its patent and the infringement thereof by Watson Laboratories, Inc. Watson appealed the decision. In May and October 2015, Bayer filed two suits against Lupin Ltd. and Lupin Pharmaceuticals, Inc. (together "Lupin") in U.S. federal court for infringement of the same patent. In April and September 2015, Bayer had received two notices of an abbreviated new drug application (ANDA) by Lupin seeking approval to market generic versions of Safyral™ and Beyaz™, Bayer's oral contraceptives containing folate, in the United States.
Finacea™: In July 2015, a U.S. federal court found that Bayer's patent relating to Finacea™ topical gel is valid and infringed by Glenmark Generics Ltd. Glenmark appealed the decision.
Staxyn™: In Bayer's patent infringement suit in a U.S. federal court against Watson Laboratories, Inc., the court ruled in April 2015 that both of Bayer's compound patents are valid and infringed. Watson may appeal. Bayer's erectile dysfunction treatment Staxyn™ is an orodispersible (orally disintegrating) formulation of Levitra™ . Both drug products contain the same active ingredient, which is protected in the U.S. by the compound patents upheld by the court.
Xarelto™: In October 2015, Bayer and Janssen Pharmaceuticals, Inc. filed a patent infringement suit in a U.S. federal court against Aurobindo Pharma Limited, Aurobindo Pharma USA, Inc. (together "Aurobindo"), Breckenridge Pharmaceutical Inc. ("Breckenridge"), Micro Labs Ltd., Micro Labs USA Inc. (together "Micro Labs"), Mylan Pharmaceuticals Inc., Mylan Inc. (together "Mylan"), Prinston Pharmaceutical Inc. ("Prinston"), Sigmapharm Laboratories, LLC ("Sigmapharm"), Torrent Pharmaceuticals, Limited and Torrent Pharma Inc. (together "Torrent"). In September 2015, Bayer had received notices of an ANDA by Aurobindo, Breckenridge, Micro Labs, Mylan, Prinston, Sigmapharm and Torrent, each seeking approval to market a generic version of Xarelto™, an oral anticoagulant for the treatment and prevention of blood clots, in the United States.
FURTHER LEGAL PROCEEDINGS
Bayer Pharma AG former shareholder litigation: In August 2015, the special court proceedings initiated by former minority stockholders of Bayer Pharma AG (formerly named Bayer Schering Pharma AG), Berlin, were resolved by way of settlement agreements. All applicants in both proceedings have agreed to the settlement. The settlements provide for an increase of the compensation in both proceedings to a uniform amount which is covered by the accounting measures that had been taken before.
RELATED PARTIES
Related parties as defined in lAS 24 (Related Party Disclosures) are those legal entities
and natural persons that are able to exert influence on Bayer AG and its subsidiaries
or over which Bayer AG or its subsidiaries exercise control or have a significant
influence. They include, in particular, nonconsolidated subsidiaries, joint ventures,
associates, post-employment benefit plans and the corporate officers of Bayer AG.
Sales to related parties were not material from the viewpoint of the Bayer Group.
Goods and services to the value of €0.5 billion were procured from the associated
company PO JV, IP, Wilmington, Delaware, United States, mainly in the course of normal
business operations. There was no significant change in receivables or payables vis-à-vis
related parties compared with December 31, 2014.
Leverkusen, October 26, 2015
Bayer Aktiengesellschaft
The Board of Management
| Dr. Marijn Dekkers | Werner Baumann | Johannes Dietsch | Michael König | Kemal Malik |