18.2 Forecast for Key Data

The following forecast is based on the business development described in this report, taking into account the potential risks and opportunities and assuming the inclusion of the Covestro business for the full year. It refers to the new organizational structure following the restructuring of the Bayer Group with effect from January 1, 2016 (for more information see “Corporate Structure“).

Pro Forma Key Data by New Segment

 

 

Sales

 

 

 

EBITDA before special items1

 

 

 

2014

2015

Change

 

2014

2015

Change

 

 

€ million

€ million

%

Fx & p adj. %

 

€ million

€ million

%

1

For definition see Chapter 14.2 “Calculation of EBIT(DA) Before Special Items.”

2

Reconciliation comprises the Business Services and Currenta service companies (“Other segments”), corporate functions and consolidation effects.

3

Including the service companies

Pharmaceuticals

 

13,512

15,308

+13.3

+9.1

 

4,081

4,615

+13.1

Consumer Health

 

4,245

6,076

+43.1

+6.1

 

991

1,456

+46.9

Crop Science

 

9,494

10,367

+9.2

+1.7

 

2,360

2,416

+2.4

Animal Health

 

1,318

1,490

+13.1

+4.5

 

285

348

+22.1

Reconciliation2

 

1,119

1,101

−1.6

−1.1

 

(219)

(228)

−4.1

Total Life Sciences3

 

29,688

34,342

+15.7

+5.7

 

7,498

8,607

+14.8

Covestro

 

11,651

11,982

+2.8

−5.1

 

1,187

1,659

+39.8

Group

 

41,339

46,324

+12.1

+2.7

 

8,685

10,266

+18.2

Our forecast for fiscal 2016 is based on the exchanges rates at the closing date on December 31, 2015, including rates of US$1.09 the euro. A 1% appreciation (depreciation) of the euro against all other currencies would decrease (increase) sales on an annual basis by some €300 million and EBITDA EBIT plus the amortization of intangible assets and the depreciation of property, plant and equipment, plus impairment losses and minus impairment loss reversals, recognized in profit or loss during the reporting period; this indicator is not defined in the International Financial Reporting Standards. before special items by about €90 million.

Bayer Group

In 2016, we are planning sales of more than €47 billion for the Bayer Group, including Covestro. This corresponds to a low-single-digit percentage increase on a currency- and portfolio-adjusted basis. We plan to increase EBITDA before special items by a mid-single-digit percentage. We aim to increase Core earnings per share Earnings per share, plus / minus amortization and impairment losses / impairment loss reversals of intangible assets and impairment losses / impairment loss reversals on property, plant and equipment, plus special charges, minus special gains (other than amortization and impairment losses / impairment loss reversals), plus / minus the related tax effects and the share of the adjustments attributable to noncontrolling interest; this indicator facilitates the comparability of performance over time. It is not defined in the International Financial Reporting Standards. from Continuing operations Revenue and earnings reporting for continuing operations pertains only to business operations that are expected to remain in the company’s portfolio for the foreseeable future; opposite of discontinued operations. (calculated as explained in Chapter 14.3 “Core Earnings Per Share”) by a mid-single-digit percentage as well. It should be borne in mind that only 69% of Covestro will be reflected for the full year 2016. From the sale of the Diabetes Care business, we expect core earnings per share of just under €0.40 for Discontinued operations Business operations already divested or earmarked for divestiture in the near future; opposite of continuing operations .

Life Sciences total

We plan sales of approximately €35 billion for the Life Science activities, i.e. the Bayer Group excluding Covestro. This corresponds to a mid-single-digit percentage increase on a currency- and portfolio-adjusted basis. We plan to increase EBITDA before special items EBITDA plus special charges, minus special gains; this indicator is not defined in the International Financial Reporting Standards. by a mid-single-digit percentage. Our planning includes dissynergies of around €130 million from the legal independence of Covestro and from divestments.

Pharmaceuticals

Despite declining price developments in some areas, we expect sales of approximately €16 billion at Pharmaceuticals – including the Radiology business. This corresponds to a mid-single-digit percentage increase on a currency- and portfolio-adjusted basis. We plan to raise sales of our recently launched products to more than €5 billion. We expect a mid- to high-single-digit percentage increase in EBITDA before special items. Also, we aim to improve the EBITDA margin before special items The EBITDA margin before special items is calculated by dividing EBITDA before special items by sales. This indicator is not defined in the International Financial Reporting Standards. .

Consumer Health

In the Consumer Health Division, we expect sales to come in at more than €6 billion. We plan to grow sales by a mid-single-digit percentage on a currency- and portfolio-adjusted basis. We aim to improve EBITDA before special items by a mid-single-digit percentage.

Crop Science

At Crop Science we expect sales to be at the prior-year level. This corresponds to a low-single-digit percentage increase on a currency- and portfolio-adjusted basis. We plan to increase EBITDA before special items by a low-single-digit percentage.

Animal Health

At Animal Health we expect sales slightly above the prior-year level. We plan a currency- and portfolio-adjusted sales gain and an increase in EBITDA before special items, each by a low- to mid-single-digit percentage.

Reconciliation

For 2016, we expect sales to be level with the previous year. We are planning EBITDA before special items EBITDA plus special charges, minus special gains; this indicator is not defined in the International Financial Reporting Standards. of roughly minus €0.2 billion.

Covestro

For 2016, Covestro is budgeting sales at the prior-year level and a decline in EBITDA after adjustment for special items.

Further Information and Bayer Group Key Data

We expect to take special charges in the region of €0.5 billion in 2016, with the integration of the acquired consumer care businesses and charges in connection with the reorganization of the Bayer Group accounting for most of this amount.

Research and Development Budget 2016

Research and Development Budget 2016 by Subgroup (pie chart)Research and Development Budget 2016 by Subgroup (pie chart)

Capital Expenditure Budget 2016

Capital Expenditure Budget 2016 by Subgroup (pie chart)Capital Expenditure Budget 2016 by Subgroup (pie chart)

We intend to increase our research and development spending in 2016 to approximately €4.5 billion. We have budgeted capital expenditures of about €2.5 billion for property, plant and equipment and €0.4 billion for intangible assets. Depreciation and amortization are estimated at about €3.1 billion, including €1.6 billion in amortization of intangible assets.

We predict the financial result to come in at around minus €1.2 billion. The effective tax rate is likely to be about 24%. We expect net financial debt to be below €16 billion at the end of 2016.

Bayer AG

As the parent company of the Bayer Group, Bayer AG derives most of its income from its subsidiaries. The earnings of the major subsidiaries in Germany are transferred directly to Bayer AG under profit and loss transfer agreements. The earnings of Bayer AG are therefore expected to reflect the positive business development anticipated in the Bayer Group. A concerted dividend policy within the Group ensures the availability of sufficient distributable income. Based on these factors, we expect Bayer AG to report a distributable profit that will again enable our stockholders to adequately participate in the Bayer Group’s earnings.