Highest research budget in Bayer’s history

In the words of the Bayer CEO, sustainability requires sound business models, a responsible approach toward all interest groups, and investment in the future. In keeping with this principle, Bayer plans to increase its research spending to EUR 2.9 billion in 2009. This is the highest R&D budget in the company’s history. “Through innovation we safeguard growth – and with it jobs and prosperity – even if in most cases it will be many years before its success is apparent,” he said. The Chairman emphasized that Bayer is well equipped to deal with the expected changes in global markets and in society – especially world population growth and the increasing demand for food and health care. Climate protection will also remain at the top of the agenda, he said. “We have good answers in our portfolio that address long-term challenges and at the same time take advantage of related business opportunities for Bayer. We continue to focus closely on these perspectives, even though the current economic environment is particularly challenging.”

Janine Tychsen (left) tells Renate (second from right) and Robert Feuerborn (center) with Jakob and Dominik about medications derived from tobacco plants.

Zoom image

Janine Tychsen (left) tells Renate (second from right) and Robert Feuerborn (center) with Jakob and Dominik about medications derived from tobacco plants.

Looking at Bayer’s current business performance, Wenning described it as encouraging that the CropScience and Pharmaceuticals businesses remained on a path of growth in the first quarter of 2009. However, the slump in business at MaterialScience as a result of the economic crisis is leaving a distinct mark on sales and earnings of the Group as a whole. Group sales were down by a nominal 7.5 percent from the record level of the prior-year period, to EUR 7.9 billion. EBITDA before special items dropped by 22 percent to EUR 1.7 billion, and net income moved back by 44 percent to EUR 425 million.

Wenning confirmed the full-year guidance that the company published recently along with its first-quarter figures. He said the original aim of limiting the decline in Group EBITDA before special items to 5 percent in 2009 is increasingly demanding. However, he believes that aim could still be achieved if there is a tangible recovery in the MaterialScience business. The downturn appears to be bottoming out. “The first signs of a modest recovery in demand are appearing, although that does not yet signify a sustained improvement,” he said. Bayer expects Group sales for the full year to be in the region of EUR 32 billion. Net financial debt, which stood at EUR 14 billion at the end of March, is expected to fall toward EUR 10 billion in 2009 – helped by the conversion of the mandatory convertible bond into equity when it matures in June and by an improvement in net cash flow. “We are optimistic that we will emerge from this crisis even stronger than before, and we believe the Group is on track for long-term success, thanks to the potential our portfolio holds for innovation and growth,” concluded Wenning.

The proposals to be voted on at the Annual Stockholders’ Meeting include the planned switch from bearer shares to registered shares. This would make it easier for the company to contact its stockholders and also increase transparency. The switch would not involve any costs for the stockholders.