Interim / Quarterly Report • Aug 4, 2022
Interim / Quarterly Report
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Half-Year Financial Report 2022
| Bayer Group Key Data _____________ 3 | ||
|---|---|---|
| Interim Group Management Report as of June 30, 2022 __________ 4 | ||
| Key Events ____________ 4 | ||
| 1. | Overview of Sales, Earnings and Financial Position ___________ 5 | |
| 1.1 Earnings Performance of the Bayer Group ________ 5 | ||
| 1.2 Business Development by Division _________ 9 | ||
| 1.3 Asset and Financial Position of the Bayer Group _______ 16 | ||
| 2. | Research, Development, Innovation _____________ 19 | |
| Crop Science ___________ 19 | ||
| Pharmaceuticals ______________ 19 | ||
| Consumer Health _____________ 22 | ||
| Leaps by Bayer _______________ 22 | ||
| 3. | Report on Future Perspectives and on Opportunities and Risks _____ 23 | |
| 3.1 Future Perspectives __________ 23 | ||
| 3.2 Opportunities and Risks ____________ 25 |
| Responsibility Statement _______________ 46 | |
|---|---|
| Review Report ______________ 47 | |
| Financial Calendar ________________ 48 | |
| Reporting Principles ______________ 48 | |
| Masthead _____________ 48 |
| Change (%) | Change (%) | |||||||
|---|---|---|---|---|---|---|---|---|
| Fx. & p | Fx. & p | |||||||
| € million | Q2 2021 | Q2 2022 | Reported | adj. | H1 2021 | H1 2022 | Reported | adj. |
| Sales | 10,854 | 12,819 | + 18.1 | + 9.6 | 23,182 | 27,458 | + 18.4 | + 12.1 |
| Change in sales1 | ||||||||
| Volume | + 11.3% | + 0.1% | + 6.7% | + 3.0% | ||||
| Price | + 1.6% | + 9.5% | + 0.5% | + 9.1% | ||||
| Currency | – 5.2% | + 8.4% | – 6.4% | + 6.2% | ||||
| Portfolio | + 0.3% | + 0.1% | + 0.4% | + 0.1% | ||||
| Sales by region | ||||||||
| Europe/Middle East/Africa | 3,245 | 3,639 | + 12.1 | + 10.6 | 7,318 | 8,153 | + 11.4 | + 12.1 |
| North America | 4,066 | 4,817 | + 18.5 | + 5.7 | 8,964 | 10,779 | + 20.2 | + 9.7 |
| Asia/Pacific | 2,302 | 2,492 | + 8.3 | + 3.1 | 4,481 | 4,903 | + 9.4 | + 4.5 |
| Latin America | 1,241 | 1,871 | + 50.8 | + 31.8 | 2,419 | 3,623 | + 49.8 | + 34.7 |
| EBITDA1 | (891) | 2,651 | 3,278 | 7,943 | + 142.3 | |||
| Special items1 | (3,468) | (698) | (3,417) | (657) | ||||
| EBITDA before special items1 | 2,577 | 3,349 | + 30.0 | 6,695 | 8,600 | + 28.5 | ||
| EBITDA margin before special items1 | 23.7% | 26.1% | 28.9% | 31.3% | ||||
| EBIT1 | (2,281) | 169 | 802 | 4,381 | ||||
| Special items1 | (3,901) | (2,111) | (3,886) | (2,071) | ||||
| EBIT before special items1 | 1,620 | 2,280 | + 40.7 | 4,688 | 6,452 | + 37.6 | ||
| Financial result | (99) | (692) | (447) | (1,182) | + 164.4 | |||
| Net income (from continuing and discontinued operations) |
(2,335) | (298) | – 87.2 | (246) | 2,993 | |||
| Earnings per share from continuing | (0.30) | 3.05 | ||||||
| and discontinued operations (€) | (2.38) | – 87.4 | (0.25) | |||||
| Core earnings per share1 from continuing operations (€) |
1.61 | 1.93 | + 19.9 | 4.20 | 5.46 | + 30.0 | ||
| Net cash provided by (used in) operating activities (from continuing and discontinued operations) |
1,997 | 2,104 | + 5.4 | (768) | 1,378 | |||
| Free cash flow1 | 1,152 | 1,140 | – 1.0 | (2,074) | (47) | – 97.7 | ||
| Net financial debt (at end of period) | 34,365 | 36,575 | + 6.4 | 34,365 | 36,575 | + 6.4 | ||
| Cash flow-relevant capital expenditures (from continuing and discontinued operations) |
493 | 550 | + 11.6 | 822 | 899 | + 9.4 | ||
| Research and development expenses |
1,638 | 1,928 | + 17.7 | 2,836 | 3,382 | + 19.3 | ||
| Depreciation, amortization and impairment losses/loss reversals |
1,390 | 2,482 | + 78.6 | 2,476 | 3,562 | + 43.9 | ||
| Number of employees (at end of period)2 |
99,439 | 101,914 | + 2.5 | 99,439 | 101,914 | + 2.5 | ||
| Personnel expenses (including pension expenses) |
2,931 | 3,391 | + 15.7 | 5,751 | 6,562 | + 14.1 |
Fx & p adj. = currency- and portfolio-adjusted
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
2 Employees calculated as full-time equivalents (FTEs)
The safety of our 700 colleagues in Ukraine and their families is our top priority. In addition to establishing a disaster relief fund, we are also donating products such as antibiotics and seed for growing food. Together, Russia and Ukraine accounted for about 3% of our sales in 2021.
Energy provision and global supply chains may also be disrupted as a result of the war. At Bayer, energy costs only accounted for about 3% of the total cost of goods sold in 2021. We are well prepared to contain the impact of any potential gas shortages to the greatest degree possible. We have realigned our processes to significantly reduce our reliance on natural gas, which involved switching to alternative sources of energy and launching programs to save energy. At the same time, we are expanding our network of suppliers and building up additional inventories where possible.
Group sales and earnings were only marginally impacted by the war and its direct consequences in the second quarter. We also do not currently see any material financial impact in full-year 2022.
In July, we entered into an agreement with Grünenthal regarding the sale of Nebido™ (testosterone undecanoate) for a purchase price of up to €500 million, subject to customary closing adjustments. Grünenthal will acquire the global product rights to Nebido™, including the contract business in the United States, where Endo Pharmaceuticals has licensed the compound under the name Aveed. The transaction is expected to close by the end of 2022.
We have made important progress in a major ESG rating: MSCI ESG Research recently updated their ESG Controversies Report and lifted the red flag related to "environmental concerns over GMO crops" as well as their related allegation of a breach of the UN Global Compact Principles. Following the removal of the Institutional Shareholder Services (ISS) red flag related to neonicotinoid insecticides last year, this is another important improvement in our ESG rating profile.
Group sales in the second quarter of 2022 increased by 9.6% (Fx & portfolio adj.) to €12,819 million (Q2 2021: €10,854 million; reported: +18.1%). There was a positive currency effect of €915 million (Q2 2021: negative currency effect of €524 million). Sales in Germany amounted to €610 million (Q2 2021: €554 million).
Crop Science saw sales rise significantly due to a substantial improvement in the market environment. Business at Pharmaceuticals was up slightly in the second quarter. Growth was driven by sales gains for Eylea™ in particular, but was held back by price- and volume-related declines for Xarelto™ that were largely due to tender procedures in China and the expiration of our patent in Brazil. Consumer Health posted a strong increase in sales, with growth in all regions.
Group EBITDA before special items advanced by 30.0% to €3,349 million. This figure included a positive currency effect of €300 million (Q2 2021: negative currency effect of €153 million). At Crop Science, EBITDA before special items rose significantly, mainly due to the division's very strong performance. Pharmaceuticals posted an increase in EBITDA before special items, primarily as a result of the growth in sales. EBITDA before special items at Consumer Health was up significantly, mainly driven by the strong growth in sales. The Group EBITDA margin before special items was 26.1%.
Depreciation, amortization, impairment losses and impairment loss reversals led to net expenses of €2,482 million (Q2 2021: €1,390 million), with intangible assets accounting for €2,082 million (Q2 2021: €1,025 million) and property, plant and equipment for €400 million (Q2 2021: €365 million). Impairment losses, net of impairment loss reversals, totaled €1,460 million (Q2 2021: €458 million) and included €1,453 million in net impairment losses on intangible assets (Q2 2021: €466 million). A strong rise in capital market interest rates necessitated impairment testing, resulting in the recognition of impairment losses on intangible assets, especially at the Crop Science Division (€1,322 million).
A total of €1,413 million in impairment losses, net of impairment loss reversals, were included in special items (Q2 2021: €427 million).
EBIT of the Bayer Group came in at €169 million (Q2 2021: minus €2,281 million) after net special charges of €2,111 million (Q2 2021: €3,901 million) that were mainly related to the impairment losses in the Crop Science Division mentioned above, as well as ongoing litigations and restructuring measures. By contrast, special gains from divestments, especially at the Pharmaceuticals Division, had a positive impact. EBIT before special items rose by 40.7% to €2,280 million (Q2 2021: €1,620 million).
1 For definition of alternative performance measures see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
A 2
The following special items were taken into account in calculating EBIT and EBITDA:
| A 1 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Special Items by Category1 | ||||||||
| € million | EBIT Q2 2021 |
EBIT Q2 2022 |
EBIT H1 2021 |
EBIT H1 2022 |
EBITDA Q2 2021 |
EBITDA Q2 2022 |
EBITDA H1 2021 |
EBITDA H1 2022 |
| Total special items | (3,901) | (2,111) | (3,886) | (2,071) | (3,468) | (698) | (3,417) | (657) |
| Restructuring | (212) | (184) | (301) | (261) | (210) | (183) | (292) | (260) |
| of which in the Reconciliation | (144) | (25) | (210) | (55) | (144) | (24) | (210) | (54) |
| Acquisition/integration | (7) | (3) | (4) | (3) | (7) | (3) | (4) | (3) |
| of which in the Reconciliation | (1) | – | (1) | – | (1) | – | (1) | – |
| Divestments | 78 | 169 | 68 | 154 | 78 | 169 | 68 | 154 |
| of which in the Reconciliation | – | (10) | – | (10) | – | (10) | – | (10) |
| Litigations/legal risks | (3,334) | (690) | (3,193) | (603) | (3,334) | (690) | (3,193) | (603) |
| of which in the Reconciliation | 45 | (694) | 59 | (699) | 45 | (694) | 59 | (699) |
| Impairment losses/loss reversals2 | (433) | (1,416) | (463) | (1,417) | (2) | (3) | (3) | (3) |
| Other | 7 | 13 | 7 | 59 | 7 | 12 | 7 | 58 |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
2 Where not already included in the other special items categories
| Special Items1 by Functional Cost | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| € million | EBIT Q2 2021 |
EBIT Q2 2022 |
EBIT H1 2021 |
EBIT H1 2022 |
EBITDA Q2 2021 |
EBITDA Q2 2022 |
EBITDA H1 2021 |
EBITDA H1 2022 |
|||||
| Total special items | (3,901) | (2,111) | (3,886) | (2,071) | (3,468) | (698) | (3,417) | (657) | |||||
| Cost of goods sold | (288) | (842) | (324) | (854) | (28) | (25) | (29) | (36) | |||||
| Selling expenses | 77 | (282) | 65 | (300) | (32) | (125) | (44) | (143) | |||||
| Research and development expenses | (279) | (452) | (271) | (462) | 5 | (14) | 13 | (24) | |||||
| General administration expenses | (173) | (59) | (255) | (120) | (173) | (59) | (255) | (120) | |||||
| Other operating income/(expenses) | (3,238) | (476) | (3,101) | (335) | (3,240) | (475) | (3,102) | (334) |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
After a financial result of minus €692 million (Q2 2021: minus €99 million), income before income taxes amounted to minus €523 million (Q2 2021: minus €2,380 million). The financial result mainly comprised a loss of €96 million from investments in affiliated companies (Q2 2021: income of €209 million), net interest expense of €307 million (Q2 2021: €253 million) and interest cost of €136 million (Q2 2021: €18 million) for pension and other provisions, as well as net miscellaneous financial expenses of €113 million (Q2 2021: net miscellaneous financial income of €107 million). The financial result included net special charges of €127 million (Q2 2021: net special gains of €16 million). After income from income taxes of €234 million (Q2 2021: €52 million) and accounting for noncontrolling interest, net income amounted to minus €298 million (Q2 2021: minus €2,335 million).
Core earnings per share rose by 19.9% to €1.93 (Q2 2021: €1.61), mainly due to the very good business performance at the Crop Science Division, while the negative development of the financial result before special items had an opposing effect.
Earnings per share (total) came in at minus €0.30 (Q2 2021: minus €2.38) and, in comparison with core earnings per share, were primarily diminished by the impairment losses described above.
7
| A 3 | ||||
|---|---|---|---|---|
| Core Earnings per Share1 | ||||
| € million | Q2 2021 | Q2 2022 | H1 2021 | H1 2022 |
| EBIT1 (as per income statements) | (2,281) | 169 | 802 | 4,381 |
| Amortization and impairment losses/loss reversals on goodwill and other intangible assets |
1,025 | 2,082 | 1,697 | 2,781 |
| Impairment losses/loss reversals on property, plant and equipment, and accelerated depreciation included in special items |
3 | 8 | 46 | 15 |
| Special items (other than accelerated depreciation, amortization and impairment losses/loss reversals) |
3,468 | 698 | 3,417 | 657 |
| Core EBIT1 | 2,215 | 2,957 | 5,962 | 7,834 |
| Financial result (as per income statements) | (99) | (692) | (447) | (1,182) |
| Special items in the financial result2 | (16) | 127 | (53) | 198 |
| Income taxes (as per income statements) | 52 | 234 | (593) | (194) |
| Special items in income taxes | – | – | – | – |
| Tax effects related to amortization, impairment losses/loss reversals and special items |
(563) | (724) | (734) | (1,282) |
| Income after income taxes attributable to noncontrolling interest (as per income statements) |
(7) | (9) | (8) | (12) |
| Above-mentioned adjustments attributable to noncontrolling interest | – | – | – | – |
| Core net income from continuing operations | 1,582 | 1,893 | 4,127 | 5,362 |
| Shares (million) | ||||
| Weighted average number of shares | 982.42 | 982.42 | 982.42 | 982.42 |
| € | ||||
| Core earnings per share from continuing operations1 | 1.61 | 1.93 | 4.20 | 5.46 |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
2 Includes in particular the changes in the fair value of the interests in Century Therapeutics and Pyxis Oncology, as well as interest cost for the provisions for litigations/legal risks. The prior-year figure mainly comprises changes in the fair value of our interests in Elanco and Covestro.
The number of employees in the Bayer Group as of the closing date rose by 2.5% year on year to 101,914 (June 30, 2021: 99,439). Personnel expenses increased by 15.7% to €3,391 million in the second quarter (Q2 2021: €2,931 million). This was partly attributable to currency effects and higher compensation.
Group sales in the first half of 2022 rose by 12.1% (Fx & portfolio adj.) to €27,458 million (H1 2021: €23,182 million; reported: +18.4%). There was a positive currency effect of €1,444 million. Sales in Germany amounted to €1,345 million (H1 2021: €1,215 million).
The Crop Science Division saw sales increase substantially, with double-digit-percentage growth in all regions. Business at Pharmaceuticals was up slightly in the first six months. Growth was mainly driven by higher sales for Eylea™ across all regions, but was held back by price- and volume-related declines for Xarelto™ that were largely due to tender procedures in China. Sales at Consumer Health increased significantly, with growth in all regions and categories.
EBITDA before special items at the Bayer Group advanced by 28.5% to €8,600 million (H1 2021: €6,695 million). This figure included a positive currency effect of €367 million. The EBITDA margin before special items increased to 31.3%, with currency effects having a dilutive effect of 0.3 percentage points.
At Crop Science, EBITDA before special items rose year on year, mainly due to the division's very strong performance. We also benefited from higher volumes, as well as from contributions from ongoing efficiency programs. Pharmaceuticals posted a slight decline in EBITDA before special items as a result of high marketing investments in new products. EBITDA before special items at Consumer Health increased, mainly due to the considerable growth in sales.
Depreciation, amortization and impairment losses – net of impairment loss reversals – amounted to €3,562 million in the first six months of 2022 (H1 2021: €2,476 million). They comprised €2,781 million (H1 2021: €1,697 million) in amortization and impairments on intangible assets and €781 million (H1 2021: €779 million) in depreciation and impairments on property, plant and equipment. Impairment losses, net of impairment loss reversals, totaled €1,515 million (H1 2021: €524 million) and included €1,501 million in net impairment losses on intangible assets (H1 2021: €487 million) that were primarily attributable to the impairment losses in the Crop Science Division mentioned above.
A total of €1,414 million (H1 2021: €463 million) in impairment losses, net of impairment loss reversals, and accelerated depreciation of €0 million (H1 2021: €6 million) were included in special items.
EBIT at the Bayer Group in the first half of 2022 came in at €4,381 million (H1 2021: €802 million) after net special charges of €2,071 million (H1 2021: €3,886 million). The special charges were mainly related to the impairment losses in the Crop Science Division mentioned above, as well as ongoing litigations and restructuring measures. By contrast, special gains from divestments, especially at the Pharmaceuticals Division, had a positive impact. EBIT before special items rose by 37.6% to €6,452 million (H1 2021: €4,688 million).
After a financial result of minus €1,182 million (H1 2021: minus €447 million), income before income taxes in the first half of the year came in at €3,199 million (H1 2021: €355 million). The financial result largely comprised a loss of €163 million from investments in affiliated companies (H1 2021: income of €217 million), net interest expense of €583 million (H1 2021: €521 million) and interest cost of €210 million (H1 2021: €37 million) for pension and other provisions, as well as net miscellaneous financial expenses of €162 million (H1 2021: net miscellaneous financial income of €65 million). The financial result included net special charges of €198 million (H1 2021: net special gains of €53 million). After income tax expense of €194 million (H1 2021: €593 million), income after income taxes was €3,005 million (H1 2021: minus €238 million). After adjusting for income from discontinued operations after income taxes and income attributable to noncontrolling interest, net income came to €2,993 million (H1 2021: minus €246 million).
Core earnings per share rose by 30.0% to €5.46 (H1 2021: €4.20), mainly due to the very strong performance of the Crop Science Division, while the negative development of the financial result before special items had an opposing effect.
Earnings per share (total) came in at €3.05 (H1 2021: minus €0.25) and, in comparison with core earnings per share, were mainly diminished by the impairment losses described above.
| Key Data – Crop Science | |
|---|---|
| Change (%)1 | Change (%)1 | |||||||
|---|---|---|---|---|---|---|---|---|
| € million | Q2 2021 | Q2 2022 | Reported | Fx & p adj. | H1 2021 | H1 2022 | Reported | Fx & p adj. |
| Sales | 5,021 | 6,461 | + 28.7 | + 17.2 | 11,667 | 14,908 | + 27.8 | + 19.7 |
| Change in sales1 | ||||||||
| Volume | + 7.4% | – 2.4% | + 5.8% | + 2.2% | ||||
| Price | + 3.2% | + 19.6% | + 2.3% | + 17.5% | ||||
| Currency | – 6.0% | + 11.5% | – 7.8% | + 8.1% | ||||
| Portfolio | 0.0% | 0.0% | 0.0% | 0.0% | ||||
| Sales by region | ||||||||
| Europe/Middle East/Africa | 1,003 | 1,255 | + 25.1 | + 24.8 | 2,884 | 3,388 | + 17.5 | + 19.7 |
| North America | 2,532 | 3,056 | + 20.7 | + 7.8 | 5,963 | 7,417 | + 24.4 | + 13.8 |
| Asia/Pacific | 627 | 704 | + 12.3 | + 5.7 | 1,142 | 1,328 | + 16.3 | + 11.2 |
| Latin America | 859 | 1,446 | + 68.3 | + 44.8 | 1,678 | 2,775 | + 65.4 | + 46.5 |
| EBITDA1 | (2,496) | 1,701 | (69) | 5,416 | ||||
| Special items1 | (3,514) | (48) | - | (3,535) | (2) | - | ||
| EBITDA before special items1 | 1,018 | 1,749 | + 71.8 | 3,466 | 5,418 | + 56.3 | ||
| EBITDA margin before special items1 | 20.3% | 27.1% | 29.7% | 36.3% | ||||
| EBIT1 | (3,483) | (258) | – 92.6 | (1,730) | 2,770 | |||
| Special items1 | (3,945) | (1,369) | - | (3,997) | (1,324) | - | ||
| EBIT before special items1 | 462 | 1,111 | + 140.5 | 2,267 | 4,094 | + 80.6 | ||
| Net cash provided by (used in) operating activities |
1,734 | 2,551 | + 47.1 | (2,403) | 164 | |||
| Cash flow-relevant capital expenditures |
187 | 239 | + 27.8 | 303 | 389 | + 28.4 | ||
| Research and development expenses | 819 | 997 | + 21.7 | 1,282 | 1,575 | + 22.9 | ||
Fx & p adj. = currency- and portfolio-adjusted
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
Crop Science posted a significant 17.2% rise in sales (Fx & portfolio adj.) to €6,461 million in the second quarter of 2022, driven by a substantial improvement in the market environment. We recorded double-digit percentage growth in Latin America and Europe/Middle East/Africa, and also registered a strong expansion of business in North America and Asia/Pacific.
A 5
A 6
// Vegetable Seeds registered double-digit growth in all regions, with significant gains in Europe/Middle East/Africa in particular thanks to advance demand.
// We recorded an increase in sales in the reporting unit "Other", driven by the growth of our cotton seed business in North and Latin America.
| Sales by Strategic Business Entity | ||||||||
|---|---|---|---|---|---|---|---|---|
| Change (%)1 | Change (%)1 | |||||||
| € million | Q2 2021 | Q2 2022 | Reported | Fx & p adj. | H1 2021 | H1 2022 | Reported | Fx & p adj. |
| Crop Science | 5,021 | 6,461 | + 28.7 | + 17.2 | 11,667 | 14,908 | + 27.8 | + 19.7 |
| Corn Seed & Traits | 962 | 1,165 | + 21.1 | + 9.5 | 3,356 | 3,920 | + 16.8 | + 9.8 |
| Herbicides | 1,468 | 2,455 | + 67.2 | + 51.3 | 2,956 | 4,939 | + 67.1 | + 55.6 |
| Fungicides | 774 | 858 | + 10.9 | + 4.3 | 1,654 | 1,921 | + 16.1 | + 11.9 |
| Soybean Seed & Traits | 530 | 503 | – 5.1 | – 16.1 | 1,059 | 1,077 | + 1.7 | – 7.6 |
| Insecticides | 364 | 413 | + 13.5 | + 6.4 | 724 | 826 | + 14.1 | + 9.0 |
| Environmental Science | 316 | 353 | + 11.7 | + 1.1 | 601 | 730 | + 21.5 | + 12.1 |
| Vegetable Seeds | 168 | 210 | + 25.0 | + 18.8 | 325 | 372 | + 14.5 | + 10.1 |
| Other | 439 | 504 | + 14.8 | + 3.5 | 992 | 1,123 | + 13.2 | + 4.4 |
Fx & p adj. = currency- and portfolio-adjusted
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
EBITDA before special items at Crop Science increased to €1,749 million in the second quarter (Q2 2021: €1,018 million), mainly driven by the substantial improvement in business performance. We also benefited from contributions from ongoing efficiency programs. By contrast, earnings were diminished by an increase in costs, particularly in the cost of goods sold, which was mainly due to high inflation. We recorded a positive currency effect of €215 million (Q2 2021: minus €111 million). The EBITDA margin before special items increased by 6.8 percentage points to 27.1%.
EBIT came in at minus €258 million (Q2 2021: minus €3,483 million) after special charges of €1,369 million (Q2 2021: €3,945 million). These special charges mainly comprised impairments arising from an increase in the cost of capital in the cash-generating units Vegetable Seeds (€269 million) and Corn Seed & Traits (€202 million), as well as in the cash-generating unit cotton seed (€851 million), where updated business expectations were also a factor.
| EBIT Q2 2021 |
EBIT Q2 2022 |
EBIT H1 2021 |
EBIT H1 2022 |
EBITDA Q2 2021 |
EBITDA Q2 2022 |
EBITDA H1 2021 |
EBITDA H1 2022 |
|---|---|---|---|---|---|---|---|
| (44) | (11) | (40) | (34) | (44) | (11) | (38) | (34) |
| (4) | (2) | (1) | (1) | (4) | (2) | (1) | (1) |
| (8) | (29) | (18) | (48) | (8) | (29) | (18) | (48) |
| (3,458) | – | (3,477) | 91 | (3,458) | – | (3,477) | 91 |
| (431) | (1,324) | (461) | (1,325) | – | (3) | (1) | (3) |
| – | (3) | – | (7) | – | (3) | – | (7) |
| (3,945) | (1,369) | (3,997) | (1,324) | (3,514) | (48) | (3,535) | (2) |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
11
Sales at Crop Science increased by 19.7% (Fx & portfolio adj.) to €14,908 million in the first six months of 2022, with double-digit growth recorded across all regions. Corn Seed & Traits reported an increase in sales, largely as a result of higher prices. We also benefited from expanded volumes in all regions except North America, where a decrease in planted acres led to a decline in volumes. Sales at Herbicides rose significantly in all regions, mainly due to prices for our glyphosate-based products remaining high. Fungicides achieved a further expansion of business in Latin America, Europe/Middle East/Africa and Asia/Pacific thanks to an increase in volumes, but posted a decline in North America due to lower volumes. Sales at Soybean Seed & Traits were down due to lower volumes in North and Latin America. Sales at Insecticides rose in Latin America and Europe/Middle East/Africa, largely due to an increase in volumes, but declined in North America as a result of lower volumes. Sales at Environmental Science and Vegetable Seeds increased in all regions. Within the reporting unit "Other," our cotton seed business performed particularly well, especially in North and Latin America.
EBITDA before special items at Crop Science rose by 56.3% to €5,418 million in the first half of 2022 (H1 2021: €3,466 million), mainly due to the substantial improvement in business performance. We also benefited from higher volumes, as well as contributions from ongoing efficiency programs. As in the second quarter, earnings were diminished by a mainly inflation-related increase in the cost of goods sold. In addition, there was a positive currency effect of €313 million (H1 2021: minus €363 million). The EBITDA margin before special items advanced to 36.3%, with currency effects having a dilutive effect of 0.2 percentage points.
EBIT amounted to €2,770 million (H1 2021: minus €1,730 million) after special charges of €1,324 million (H1 2021: €3,997 million) that primarily comprised the impairments mentioned above.
| Key Data – Pharmaceuticals | ||
|---|---|---|
| -- | -- | ---------------------------- |
| Change (%)1 | Change (%)1 | |||||||
|---|---|---|---|---|---|---|---|---|
| € million | Q2 2021 | Q2 2022 | Reported | Fx & p adj. | H1 2021 | H1 2022 | Reported | Fx & p adj. |
| Sales | 4,494 | 4,818 | + 7.2 | + 2.1 | 8,859 | 9,442 | + 6.6 | + 2.4 |
| Change in sales1 | ||||||||
| Volume | + 16.5% | + 2.4% | + 9.8% | + 3.1% | ||||
| Price | – 0.3% | – 0.3% | – 2.4% | – 0.7% | ||||
| Currency | – 4.0% | + 5.1% | – 4.3% | + 4.0% | ||||
| Portfolio | + 0.4% | 0.0% | + 0.7% | + 0.2% | ||||
| Sales by region | ||||||||
| Europe/Middle East/Africa | 1,774 | 1,878 | + 5.9 | + 4.3 | 3,469 | 3,713 | + 7.0 | + 6.8 |
| North America | 1,032 | 1,149 | + 11.3 | – 0.6 | 2,028 | 2,169 | + 7.0 | – 3.2 |
| Asia/Pacific | 1,460 | 1,550 | + 6.2 | + 2.1 | 2,915 | 3,085 | + 5.8 | + 1.4 |
| Latin America | 228 | 241 | + 5.7 | – 2.9 | 447 | 475 | + 6.3 | – 0.6 |
| EBITDA1 | 1,564 | 1,559 | – 0.3 | 3,192 | 2,996 | – 6.1 | ||
| Special items1 | 155 | 81 | 285 | 129 | ||||
| EBITDA before special items1 | 1,409 | 1,478 | + 4.9 | 2,907 | 2,867 | – 1.4 | ||
| EBITDA margin before special items1 | 31.4% | 30.7% | 32.8% | 30.4% | ||||
| EBIT1 | 1,312 | 1,206 | – 8.1 | 2,681 | 2,408 | – 10.2 | ||
| Special items1 | 152 | (10) | 277 | 38 | ||||
| EBIT before special items1 | 1,160 | 1,216 | + 4.8 | 2,404 | 2,370 | – 1.4 | ||
| Net cash provided by operating activities |
570 | 35 | – 93.9 | 1,381 | 1,059 | – 23.3 | ||
| Cash flow-relevant capital expenditures |
236 | 229 | – 3.0 | 392 | 360 | – 8.2 | ||
| Research and development expenses | 762 | 864 | + 13.4 | 1,443 | 1,656 | + 14.8 |
Fx & portfolio adj. = currency- and portfolio-adjusted
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
Sales at Pharmaceuticals rose by 2.1% (Fx & portfolio adj.) to €4,818 million in the second quarter of 2022. Our new products, especially Nubeqa™ and Kerendia™, continued their successful market launch, with sales of our cancer treatment Nubeqa™ doubling compared with the prior-year quarter. However, overall sales growth was held back by additional tender procedures in China, particularly for Xarelto™ and Nexavar™.
A 8
// The increase in sales of our cancer drug Stivarga™ was mainly attributable to expanded volumes in China and the United States.
// Our radiology business, comprising the Gadovist™ and Ultravist™ product lines, posted a considerable increase in sales, largely driven by higher volumes in Europe, North and Latin America, and Asia/Pacific.
| Change (%)1 | Change (%)1 | |||||||
|---|---|---|---|---|---|---|---|---|
| € million | Q2 2021 | Q2 2022 | Reported | Fx & p adj. | H1 2021 | H1 2022 | Reported | Fx & p adj. |
| Xarelto™ | 1,164 | 1,113 | – 4.4 | – 6.4 | 2,302 | 2,200 | – 4.4 | – 5.7 |
| Eylea™ | 711 | 807 | + 13.5 | + 11.7 | 1,382 | 1,581 | + 14.4 | + 12.8 |
| Mirena™/Kyleena™/Jaydess™ | 293 | 306 | + 4.4 | – 5.4 | 612 | 601 | – 1.8 | – 9.2 |
| Adalat™ | 174 | 212 | + 21.8 | + 11.2 | 349 | 451 | + 29.2 | + 18.6 |
| Kogenate™/Kovaltry™/Jivi™ | 211 | 212 | + 0.5 | – 5.6 | 396 | 420 | + 6.1 | + 0.4 |
| YAZ™/Yasmin™/Yasminelle™ | 191 | 212 | + 11.0 | + 4.4 | 376 | 410 | + 9.0 | + 5.0 |
| Aspirin™ Cardio | 159 | 201 | + 26.4 | + 18.9 | 343 | 388 | + 13.1 | + 6.9 |
| Adempas™ | 140 | 162 | + 15.7 | + 7.8 | 268 | 315 | + 17.5 | + 11.2 |
| Stivarga™ | 112 | 155 | + 38.4 | + 27.6 | 233 | 299 | + 28.3 | + 20.0 |
| Gadovist™ product family | 104 | 128 | + 23.1 | + 17.5 | 204 | 236 | + 15.7 | + 12.9 |
| CT Fluid Delivery | 111 | 118 | + 6.3 | – 2.4 | 214 | 235 | + 9.8 | + 2.6 |
| Ultravist™ | 90 | 112 | + 24.4 | + 18.4 | 170 | 217 | + 27.6 | + 22.2 |
| Nubeqa™ | 49 | 105 | + 114.3 | + 101.5 | 93 | 181 | + 94.6 | + 82.3 |
| Nexavar™ | 110 | 83 | – 24.5 | – 29.5 | 231 | 165 | – 28.6 | – 32.2 |
| Betaferon™/Betaseron™ | 80 | 75 | – 6.3 | – 14.2 | 169 | 158 | – 6.5 | – 11.7 |
| Total best-selling products | 3,699 | 4,001 | + 8.2 | + 3.2 | 7,342 | 7,857 | + 7.0 | + 3.1 |
| Proportion of Pharmaceuticals sales | 82% | 83% | 83% | 83% | ||||
Fx & p adj. = currency- and portfolio-adjusted
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
EBITDA before special items at Pharmaceuticals rose by 4.9% to €1,478 million in the second quarter of 2022 (Q2 2021: €1,409 million). Increased raw material costs and higher marketing investments in our new products were largely offset by the growth in sales. We also generated income from the sale of noncore businesses. There were positive currency effects of €41 million (Q2 2021: minus €26 million). The EBITDA margin before special items amounted to 30.7%.
EBIT came in at €1,206 million (Q2 2021: €1,312 million) after net special charges of €10 million (Q2 2021: net special gains of €152 million), comprising special gains from the sale of our lormetazepam-based products and special charges from impairments on intangible assets due to changes in interest rates.
| A 9 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Special Items1 Pharmaceuticals | ||||||||
| € million | EBIT Q2 2021 |
EBIT Q2 2022 |
EBIT H1 2021 |
EBIT H1 2022 |
EBITDA Q2 2021 |
EBITDA Q2 2022 |
EBITDA H1 2021 |
EBITDA H1 2022 |
| Restructuring | (16) | (145) | (37) | (151) | (13) | (145) | (29) | (151) |
| Acquisition/integration | (2) | (1) | (2) | (2) | (2) | (1) | (2) | (2) |
| Divestments | 86 | 208 | 86 | 212 | 86 | 208 | 86 | 212 |
| Litigations/legal risks | 79 | 4 | 225 | 5 | 79 | 4 | 225 | 5 |
| Impairment losses/loss reversals | (2) | (92) | (2) | (92) | (2) | – | (2) | – |
| Other | 7 | 16 | 7 | 66 | 7 | 15 | 7 | 65 |
| Total special items | 152 | (10) | 277 | 38 | 155 | 81 | 285 | 129 |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
Sales at Pharmaceuticals rose by 2.4% (Fx & portfolio adj.) to €9,442 million in the first six months of 2022. This was mainly attributable to the expansion of business with our ophthalmology drug Eylea™ in all regions, and especially in Europe due to the ongoing launch of Eylea™ prefilled syringes. Sales of Xarelto™ declined, mainly due to tender procedures in China and the expiration of our patent in Brazil. We posted significant gains for Nubeqa™, largely thanks to expanded volumes in the United States.
EBITDA before special items at Pharmaceuticals declined slightly in the first half of 2022, falling 1.4% to €2,867 million (H1 2021: €2,907 million), largely due to increased raw material costs and higher marketing investments in our new products. We also incurred higher research and development expenses compared to the prior-year period, which benefited from the proportionate recognition of €52 million in proceeds from the sale of a priority review voucher in the United States. By contrast, earnings benefited from the growth in sales, as well as income from the sale of noncore businesses. We also recorded a positive currency effect of €7 million (H1 2021: minus €83 million). The EBITDA margin before special items came in at 30.4%, with currency effects having a dilutive effect of 1.1 percentage points.
EBIT amounted to €2,408 million (H1 2021: €2,681 million) after net special gains of €38 million (H1 2021: €277 million). Special gains from the sale of our lormetazepam-based products and from the measurement of contingent considerations at fair value were partly offset by special charges arising from impairments on intangible assets due to changes in interest rates.
| Q2 2021 Q2 2022 Reported Fx & p adj. H1 2021 H1 2022 Reported € million 1,496 3,008 Sales 1,290 + 16.0 + 6.8 2,542 + 18.3 Changes in sales1 Volume + 10.8% + 2.5% + 0.9% + 6.9% Price + 2.0% + 4.3% + 2.6% + 5.0% |
Fx & p adj. + 11.9 |
|---|---|
| Currency – 6.4% + 8.7% – 6.7% + 5.9% |
|
| Portfolio + 1.0% + 0.5% + 1.0% + 0.5% |
|
| Sales by region | |
| Europe/Middle East/Africa 419 462 + 10.3 + 6.4 852 953 + 11.9 |
+ 11.6 |
| North America 503 611 + 21.5 + 7.7 973 1,192 + 22.5 |
+ 11.3 |
| Asia/Pacific 214 238 + 11.2 + 3.0 423 490 + 15.8 |
+ 8.5 |
| Latin America 154 185 + 20.1 + 10.3 294 373 + 26.9 |
+ 20.1 |
| EBITDA1 269 327 + 21.6 555 697 + 25.6 |
|
| Special items1 (9) (3) (15) (21) |
|
| EBITDA before special items1 330 718 278 + 18.7 570 + 26.0 |
|
| EBITDA margin before special items1 21.6% 22.1% 22.4% 23.9% |
|
| EBIT1 187 239 + 27.8 388 523 + 34.8 |
|
| Special items1 (8) (3) (14) (21) |
|
| EBIT before special items1 195 242 + 24.1 402 544 + 35.3 |
|
| Net cash provided by operating activities 165 116 – 29.7 406 429 + 5.7 |
|
| Cash flow-relevant capital expenditures 43 35 – 18.6 67 58 – 13.4 |
|
| Research and development expenses 47 51 + 8.5 92 104 + 13.0 |
Fx & p adj. = currency- and portfolio-adjusted
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
Consumer Health posted strong growth in the second quarter of 2022. Sales advanced by 6.8% (Fx & portfolio adj.) year on year to €1,496 million, with business up in all regions. Sales of our cough and cold products grew significantly, especially in Europe and North America, due to continuously elevated cold incidence rates. In June, we also started selling Astepro™, a product that we switched from Rx to OTC status. It is the first and only steroid-free antihistamine nasal spray available over the counter on the U.S. market. After posting substantial gains since 2020, our Nutritionals category saw a slight decline but remained at a high level overall.
| Change (%)1 | Change (%)1 | |||||||
|---|---|---|---|---|---|---|---|---|
| € million | Q2 2021 | Q2 2022 | Reported | Fx & p adj. | H1 2021 | H1 2022 | Reported | Fx & p adj. |
| Consumer Health | 1,290 | 1,496 | + 16.0 | + 6.8 | 2,542 | 3,008 | + 18.3 | + 11.9 |
| Nutritionals | 357 | 378 | + 5.9 | – 3.7 | 710 | 797 | + 12.3 | + 5.8 |
| Allergy & Cold | 244 | 315 | + 29.1 | + 16.9 | 479 | 659 | + 37.6 | + 27.6 |
| Dermatology | 288 | 329 | + 14.2 | + 8.0 | 568 | 642 | + 13.0 | + 9.7 |
| Pain & Cardio | 198 | 233 | + 17.7 | + 7.3 | 389 | 443 | + 13.9 | + 7.3 |
| Digestive Health | 185 | 226 | + 22.2 | + 13.1 | 363 | 439 | + 20.9 | + 14.3 |
| Other | 18 | 15 | – 16.7 | – 10.8 | 33 | 28 | – 15.2 | – 15.9 |
Fx & p adj. = currency- and portfolio-adjusted
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
EBITDA before special items advanced by 18.7% to €330 million (Q2 2021: €278 million) in the second quarter of 2022. The growth in earnings was largely due to the strong rise in sales, as well as our continuous cost and price management efforts, which more than offset inflation-related increases in costs. Furthermore, we recorded one-time gains from the sale of a minor, nonstrategic brand. There were also positive currency effects of €49 million (Q2 2021: minus €20 million). The EBITDA margin before special items rose by 0.5 percentage points to 22.1%.
EBIT came in at €239 million (Q2 2021: €187 million) after special charges of €3 million (Q2 2021: €8 million) relating to restructuring measures.
15
| A 12 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Special Items1 Consumer Health | ||||||||
| EBIT | EBIT | EBIT | EBIT | EBITDA | EBITDA | EBITDA | EBITDA | |
| € million | Q2 2021 | Q2 2022 | H1 2021 | H1 2022 | Q2 2021 | Q2 2022 | H1 2021 | H1 2022 |
| Restructuring | (8) | (3) | (14) | (21) | (9) | (3) | (15) | (21) |
| Total special items | (8) | (3) | (14) | (21) | (9) | (3) | (15) | (21) |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
Sales at Consumer Health advanced by a substantial 11.9% (Fx & portfolio adj.) to €3,008 million in the first half of 2022. Our business grew in all regions and categories, with market-based demand shifts also contributing to this development. The major tailwinds came from the recovery of our business with cough and cold products following the lifting of heightened protection and hygiene measures, and the gains from continuously elevated cold incidence rates in the second quarter. The Dermatology and Digestive Health categories also performed well on the back of strong sales of Bepanthen™ and MiraLAX™. The Nutritionals category likewise contributed to the positive development of business.
EBITDA before special items increased to €718 million (H1 2021: €570 million) in the first half of 2022. The growth in earnings was largely due to the strong rise in sales, as well as our continuous cost and price management efforts, which more than offset the impact of additional investment in marketing our innovative products and inflation-related increases in costs. Furthermore, we recorded one-time gains from the sale of minor, nonstrategic brands. There were also positive currency effects of €55 million (H1 2021: minus €46 million). The EBITDA margin before special items improved significantly, rising by 1.5 percentage points to 23.9%. Currency effects had a positive effect of 0.7 percentage points.
EBIT came in at €523 million (H1 2021: €388 million) after special charges of €21 million (H1 2021: €14 million) relating to restructuring measures.
| Bayer Group Summary Statements of Cash Flows | ||||
|---|---|---|---|---|
| € million | Q2 2021 | Q2 2022 | H1 2021 | H1 2022 |
| Net cash provided by (used in) operating activities (total) | 1,997 | 2,104 | (768) | 1,378 |
| Net cash provided by (used in) investing activities (total) | 447 | (2,771) | 4,392 | (2,029) |
| Net cash provided by (used in) financing activities (total) | (4,603) | (1,814) | (4,490) | (739) |
| Change in cash and cash equivalents due to business activities | (2,159) | (2,481) | (866) | (1,390) |
| Cash and cash equivalents at beginning of period | 5,550 | 5,790 | 4,191 | 4,564 |
| Change due to exchange rate movements and to changes in scope of consolidation |
(2) | 106 | 64 | 241 |
| Cash and cash equivalents at end of period | 3,389 | 3,415 | 3,389 | 3,415 |
// Net operating cash flow in the second quarter of 2022 amounted to €2,104 million (Q2 2021: €1,997 million). This figure included settlement payments of €326 million (Q2 2021: €877 million) in connection with the glyphosate, PCB and Essure™ litigations.
// There was a net cash outflow of €1,814 million for financing activities in the second quarter of 2022 (Q2 2021: €4,603 million).
// Net borrowings led to a cash inflow of €588 million (Q2 2021: net loan repayments of €2,255 million).
// Net interest payments amounted to €436 million (Q2 2021: €383 million).
// The Bayer Group paid out €1,966 million (2021: €1,965 million) in dividends.
// Free cash flow (total) came in at €1,140 million in the second quarter of 2022 (Q2 2021: €1,152 million).
| Net Financial Debt1 | ||||
|---|---|---|---|---|
| € million | Dec. 31, 2021 |
March 31, 2022 |
June 30, 2022 |
Change vs March 31 (%) |
| Bonds and notes | 37,593 | 39,225 | 38,088 | – 2.9 |
| of which hybrid bonds2 | 4,537 | 5,824 | 4,526 | – 22.3 |
| Liabilities to banks3 | 773 | 890 | 3,928 | |
| Lease liabilities | 1,165 | 1,146 | 1,194 | + 4.2 |
| Liabilities from derivatives4 | 69 | 142 | 106 | – 25.4 |
| Other financial liabilities | 1,272 | 1,144 | 1,318 | + 15.2 |
| Receivables from derivatives4 | (114) | (129) | (207) | + 60.5 |
| Financial debt | 40,758 | 42,418 | 44,427 | + 4.7 |
| Cash and cash equivalents | (4,564) | (5,785) | (3,412) | – 41.0 |
| Current financial assets5 | (3,057) | (2,106) | (4,440) | + 110.8 |
| Net financial debt1 | 33,137 | 34,527 | 36,575 | + 5.9 |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
2 Classified as debt according to IFRS
3 Including both financial and nonfinancial liabilities
4 Including the market values of interest-rate and currency hedges of recorded transactions
5 Including short-term receivables with maturities between 3 and 12 months outstanding from banks and other companies, financial investments in debt, and equity instruments that were recorded as current on first-time recognition
// The rating agencies currently assess Bayer as follows:
| Rating | |||
|---|---|---|---|
| Rating agency | Long-term rating | Short-term rating | Outlook |
| S&P Global Ratings | BBB | A2 | stable |
| Moody's | Baa2 | P2 | negative |
| Fitch Ratings | BBB+ | F2 | stable |
| € million | Dec. 31, 2021 | March 31, 2022 | June 30, 2022 | Change vs. March 31 % |
|---|---|---|---|---|
| Noncurrent assets | 87,663 | 87,536 | 89,244 | + 2.0 |
| Assets held for sale | 76 | 1,359 | 1,600 | + 17.7 |
| Other current assets | 32,502 | 36,887 | 37,950 | + 2.9 |
| Current assets | 32,578 | 38,246 | 39,550 | + 3.4 |
| Total assets | 120,241 | 125,782 | 128,794 | + 2.4 |
| Equity | 33,168 | 37,607 | 38,204 | + 1.6 |
| Noncurrent liabilities | 57,670 | 57,156 | 56,947 | – 0.4 |
| Current liabilities | 29,403 | 31,019 | 33,643 | + 8.5 |
| Liabilities | 87,073 | 88,175 | 90,590 | + 2.7 |
| Total equity and liabilities | 120,241 | 125,782 | 128,794 | + 2.4 |
Prior-period figures restated
// Between the first quarter and June 30, 2022, total assets increased by €3.0 billion to €128.8 billion. // Noncurrent assets rose by €1.7 billion to €89.2 billion in the second quarter. This effect was mainly attributable to the foreign currency measurement as of the closing date, particularly for goodwill (€1.9 billion) and other intangible assets (€1.3 billion). At the same time, impairment losses at the Crop Science and Pharmaceuticals divisions caused noncurrent assets to drop by €1.5 billion.
A 15
In April, we announced the expansion of our strategic partnership with Ginkgo Bioworks. Under the agreement, the U.S. biotech company will acquire our West Sacramento Biologics Research & Development (R&D) site and internal discovery and lead optimization platform. The transaction will also bring the nitrogen-fixing technologies of the joint venture Joyn Bio to our company. Ginkgo Bioworks will become a multi-year strategic partner in our work to develop biological solutions in fields like nitrogen optimization, carbon sequestration and next-generation crop protection. The transaction will enable us to expand our leading biologicals position, strengthen our access to key enabling technology in synthetic biology, and maintain our role as the preferred research, development and commercial partner in the biologics segment.
We regularly review our research and development pipeline so that we can give priority to advancing the most promising pharmaceutical projects.
The following table shows our most important drug candidates currently in Phase II of clinical testing:
| A 17 | |
|---|---|
| Research and Development Projects (Phase II) | |
| Project | Indication |
| Adrenomedullin Pegol (PEG-ADM inhale) | Acute respiratory syndrome |
| Asundexian (FXIa inhibitor) | Prevention of stroke in atrial fibrillation patients |
| Asundexian (FXIa inhibitor) | Secondary prevention of stroke |
| Asundexian (FXIa inhibitor) | Prevention of major adverse cardiac events (MACE) |
| Gadoquatrane (BAY 1747846, high relaxivity contrast agent) | Magnetic resonance imaging |
| BAY 2395840 (BDKRB1 antagonist) | Neuropathic pain |
| Fesomersen (BAY 2976217, FXI LICA, IONIS-FXI-LRX) 1 |
Prevention of thrombosis in end-stage renal disease (ESRD) |
| Osocimab (anti-FXIa antibody) | Prevention of thrombosis in end-stage renal disease (ESRD) |
| Regorafenib + nivolumab combination2 | Recurrent or metastatic solid tumors |
| Regorafenib + pembrolizumab combination | Second-line therapy of unresectable hepatocellular carcinoma |
| Runcaciguat (sGC activator) | Chronic kidney disease |
| Runcaciguat (sGC activator) | Non-proliferative diabetic retinopathy |
As of June 17, 2022
1 In collaboration with Ionis Pharmaceuticals, Inc., United States
2 In collaboration with Bristol-Myers Squibb Company Co., United States, and Ono Pharmaceutical Co., Ltd., Japan
The following table shows our most important drug candidates currently in Phase III of clinical testing:
Finerenone (MR antagonist) Heart failure with mid-range or preserved ejection fraction
Vericiguat (sGC activator)2 Stable heart failure with reduced ejection fraction (HFrEF)
| A 18 | |
|---|---|
| Research and Development Projects (Phase III) | |
| Project | Indication |
| High-dose aflibercept (VEGF inhibitor)1 | Diabetic macular edema (DME) |
| High-dose aflibercept (VEGF inhibitor)1 | Neovascular age-related macular degeneration (nAMD) |
| Copanlisib (PI3K inhibitor) + chemotherapy combination | Second-line therapy of indolent non-Hodgkin lymphoma (iNHL) |
| Darolutamide (ODM-201, AR antagonist) | Hormone-sensitive metastatic prostate cancer |
| Darolutamide (ODM-201, AR antagonist)/ADT without chemotherapy |
Adjuvant treatment for localized prostate cancer with very high risk of recurrence |
As of June 17, 2022
1 In collaboration with Regeneron Pharmaceuticals, Inc., United States
2 In collaboration with Merck & Co., Inc., United States
The nature of drug discovery and development is such that not all compounds can be expected to meet the predefined 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 U.S. Food and Drug Administration (FDA), European Medicines Agency (EMA) or other regulatory approvals will not be granted for these compounds. Moreover, we regularly review our research and development pipeline so that we can give priority to advancing the most promising pharmaceutical projects.
The following material developments occurred in the first half of 2022:
Elinzanetant (neurokinin 1,3 receptor antagonist) Vasomotor symptoms
Finerenone (MR antagonist) Non-diabetic chronic kidney disease Regorafenib (multikinase inhibitor) Newly diagnosed or recurrent glioblastoma
// In April, we presented positive results from the first Phase IIb trial, PACIFIC-AF, on the safety of asundexian in patients with atrial fibrillation. By selectively modulating coagulation, once-daily FXIa inhibitor asundexian is being investigated to become a new treatment option in thrombosis prevention.
// In April, based on the results of the Spray Smart study, we decided to not pursue further development activities for the TASK (TWIK-related Acid-Sensitive K+) channel blocker in the indication of obstructive sleep apnea.
// In March, we decided to not pursue further development activities for pecavaptan, a dual vasopressin receptor antagonist, in the indication of heart failure due to scientific reasons.
The most important drug candidates in the approval process are:
| A 19 Main Products Submitted for Approval |
||||||
|---|---|---|---|---|---|---|
| Project | Region | Indication | ||||
| Aflibercept (VEGF inhibitor)1 | EU, Japan | Retinopathy of prematurity | ||||
| Darolutamide (ODM-201, AR antagonist)/ ADT with chemotherapy |
U.S.A., EU, Japan, China | Hormone-sensitive metastatic prostate cancer | ||||
| Rivaroxaban (FXa inhibitor) | China | Peripheral artery disease (PAD) | ||||
As of June 21, 2022
1 In collaboration with Regeneron Pharmaceuticals, Inc., United States
// In June, the oral Factor Xa inhibitor rivaroxaban (Xarelto™) was approved in Japan for the treatment of patients with peripheral artery disease (PAD) after revascularization (twice daily, used in combination with aspirin). The approval is based on data from the Phase III VOYAGER PAD trial.
// In May, vericiguat was approved in China under the brand name Verquvo™ for the treatment of adults with symptomatic chronic heart failure and reduced ejection fraction (less than 45%) who are stabilized after a recent decompensation event with intravenous therapy. In clinical studies, the drug lowered the risk of heart failure hospitalization or the need for intravenous diuretics in emergency care.
// In June, we announced the launch of Calantic™ Digital Solutions, a new platform delivering access to digital applications, including artificial intelligence enabled programs for medical imaging. The vendorneutral, cloud-hosted platform expands the company's radiology portfolio beyond contrast media, injection systems, software and services. It includes a growing number of medical imaging applications designed to aid in prioritization, lesion detection and quantification, as well as apps that automate routine tasks and measurements, improve the radiology suites' workflow, and free up time for radiologists and their teams. First launch markets will include the United States and several European countries including Germany, with more regions to follow upon local regulatory approvals.
We have invested more than €2.5 billion in recent years to assemble a cell and gene therapy platform. This includes the acquisitions of BlueRock and AskBio, as well as strategic collaborations (such as the partnership with Mammoth Biosciences), enabling us to establish a future-oriented innovation base and pipeline.
Our development portfolio already comprises seven projects in various stages of clinical development that cover several therapeutic areas with a high unmet medical need – with leading programs in Parkinson's disease, Pompe disease, hemophilia A and congestive heart failure.
The following material developments occurred in the first half of 2022:
In the first half of the year, we launched One-A-Day™ Multi+, a line of complete gummy multivitamins, on the North American market. These four additions to our portfolio make it easy to get daily nutritional support plus a choice of boost for immunity defense (Adults or Teens versions), brain support, and healthy hair, skin and nails.
We also switched Astepro™ from Rx to OTC status. Astepro™ relieves nasal congestion, sneezing and a runny or itchy nose due to hay fever or other upper respiratory allergies. The OTC switch for Astepro™ means that we are marketing the first and only steroid-free antihistamine nasal spray on the U.S. market that is available over the counter for adults and children aged six and above that works in 30 minutes and lasts 24 hours.
Leaps by Bayer, our impact investment unit, invested in six healthcare ventures in the first half of 2022. In January 2022, Leaps announced its investment in a financing round of Cellino Biotech. Cellino's nextgeneration manufacturing platform combines artificial intelligence (AI) and laser technology to automate cell therapy manufacturing with the aim of reducing expenditures, overcoming scaling limitations and thereby expanding patient access. Affini-T Therapeutics, Leaps' largest investment in the first half of the year, is leveraging the characteristics of T cells and targeting core oncogenic driver mutations to develop potentially curative medicines for patients with difficult-to-treat solid tumor cancers. With the addition of Woebot Health to its portfolio, Leaps expanded its investment areas and made its first investment in the mental health space. Woebot is developing scalable, engaging therapeutic solutions by combining AI, decades of clinically proven therapeutic research and an engaging relational agent.
| 3.1.1 Economic Outlook | |
|---|---|
| A 20 | |
| Economic Outlook1 |
| Growth 2021 |
Growth forecast 2022 |
|
|---|---|---|
| World | + 5.8% | + 2.7% |
| European Union2 | + 5.3% | + 2.6% |
| of which Germany | + 2.9% | + 1.7% |
| United States | + 5.7% | + 1.4% |
| Emerging Markets3 | + 6.9% | + 3.4% |
1 Real GDP growth, source: IHS Markit (as of July 2022)
Economic Outlook for Division-Specific Markets
2 EU excluding United Kingdom
3 Including about 50 countries defined by IHS Markit as Emerging Markets in line with the World Bank
The global economic climate has worsened considerably since the beginning of the year. The war in Ukraine has shaken industry and consumer confidence and driven up energy prices, particularly in Europe. Further lockdowns in China as a result of the country's zero-COVID policy have additionally hampered the already strained global supply chains and intensified the cost pressure. In view of high inflation rates, the central banks are compelled to end their expansionary monetary policy and hike interest rates. These developments are leading to much lower growth expectations worldwide. Some regions, including Europe and the United States, may even see a recession over the further course of the year. The economic outlook continues to involve a considerable degree of uncertainty, especially with respect to factors relating to the war in Ukraine.
| Growth 2021 |
Growth forecast 2022 |
|
|---|---|---|
| Seed and crop protection market1 | + 9% | + 10% |
| Pharmaceuticals market2 | + 8% | + 6% |
| Consumer health market3 | + 6% | + 5% |
1 Bayer's estimate (as of July 2022)
2 Source: IQVIA Market Prognosis (as of May 2022), all rights reserved; currency-adjusted
3 Source for outlook: Bayer's estimate (as of May 2022), taking into account external sources; currency-adjusted
We now expect increased growth of 10% (previously: +5%) in the seed and crop protection market for 2022, driven by continuously high commodity prices encouraging investment in high-quality seeds as well as inflation-related price increases for both seeds and crop protection products.
We expect the pharmaceuticals market to expand by about 6% (previously: +5%) in 2022. Innovative products will continue to drive growth and more than offset losses due to the expiration of patents.
We now expect growth of 5% (previously: +4%) in the consumer health market for 2022, mainly due to economic conditions resulting in price increases and consumers' continued focus on health and wellness.
Following the positive development of our business in the first half of 2022, we remain optimistic for the remainder of the year. We are therefore raising our guidance for the Crop Science and Consumer Health divisions, and thus also for the Group as a whole. To enhance the comparability of operational performance, we are presenting this guidance based on the average monthly exchange rates from 2021. We do not currently see any material financial impact on the development of our business in 2022 as a result of the uncertain geopolitical situation and gas supplies.
For fiscal 2022, we now expect to generate currency-adjusted sales of €47 billion to €48 billion (previously: approximately €46 billion). This now corresponds to an increase of about 8% on a currency- and portfolioadjusted basis (previously: about 5%). We are now targeting an EBITDA margin before special items of around 26% to 27% (previously: around 26%) on a currency-adjusted basis. Based on the aforementioned sales figure, this would now correspond to EBITDA before special items of around €12.5 billion (previously: around €12.0 billion) on a currency-adjusted basis. We now expect core earnings per share to come in at approximately €7.30 (previously: approximately €7.00) on a currency-adjusted basis.
Based on the closing exchange rates as of June 30, 2022, we now expect to generate sales of €50 billion to €51 billion (previously: approximately €47 billion). This now corresponds to an increase of about 8% on a currency- and portfolio-adjusted basis (previously: about 5%). We are now targeting an EBITDA margin before special items of approximately 26% to 27% (previously: approximately 26%). Based on the aforementioned sales figure, this would now correspond to EBITDA before special items of around €13.0 billion (previously: around €12.0 billion). We now expect core earnings per share to come in at approximately €7.70 (previously: approximately €7.10).
| Forecast for 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Initial currency-adjusted forecast for 2022 |
Revised currency adjusted forecast for 2022 |
Initial forecast for 2022 at closing rates on Dec. 31, 2021 |
Revised forecast for 2022 at closing rates on June 30, 2022 |
|||||
| € billion | Fx & p adj. change (%) |
€ billion | Fx & p adj. change (%) |
€ billion | Fx & p adj. change (%) |
€ billion | Fx & p adj. change (%) |
|
| Sales | ~46 | ~+5 | 47 to 48 | ~+8 | ~47 | ~+5 | 50 to 51 | ~+8 |
| Crop Science | ~+7 | ~+13 | ~+7 | ~+13 | ||||
| Pharmaceuticals | ~+3 to 4 | ~+3 to 4 | ~+3 to 4 | ~+3 to 4 | ||||
| Consumer Health | ~+4 to 5 | ~+6 to 7 | ~+4 to 5 | ~+6 to 7 | ||||
| Margin (%) |
Margin (%) |
Margin (%) |
Margin (%) | |||||
| EBITDA before special items1 | ~26 | ~26 to 27 | ~26 | ~26 to 27 | ||||
| Crop Science | ~25 to 26 | ~27 | ~25 to 26 | ~27 | ||||
| Pharmaceuticals | ~32 | ~32 | ~32 | ~31 | ||||
| Consumer Health | ~22 to 23 | ~22 to 23 | ~22 to 23 | ~22 to 23 | ||||
| Financial result (core)2 | ~-1.5 | ~-1.8 | ~-1.5 | ~-1.8 | ||||
| Tax rate (core)3 | 23% | 23% | 23% | 23% | ||||
| Free cash flow1 | ~2.0 to 2.5 | ~2.5 | ~2.0 to 2.5 | ~2.5 | ||||
| Net financial debt1 | ~33 to 34 | ~33 to 34 | ~33 to 34 | ~34 to 35 | ||||
| Special items in EBIT | ~-1.0 | ~-2.5 | ~-1.0 | ~-2.5 | ||||
| € | € | € | € | |||||
| Core earnings per share1 | ~7.00 | ~7.30 | ~7.10 | ~7.70 |
Fx & p adj. = currency- and portfolio-adjusted
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
2 Financial result before special items
3 (Income taxes + special items in income taxes + tax effects on adjustments) / (core EBIT + financial result + special items in financial result)
24
A 22
We now plan to take total special charges (currency-adjusted) in EBIT of around €2.5 billion (previously: around €1 billion). As before, we expect to take special charges in EBITDA of around €1.0 billion.
Potential estimation risks regarding litigations are referenced in the 2021 Annual Report, Note [30] "Legal Risks" and Chapter A 3.2 "Opportunity and Risk Report."
As a global enterprise with a diversified portfolio, the Bayer Group is exposed to a wide range of internal and external developments and events that could significantly impact the achievement of our financial and nonfinancial objectives. Opportunity and risk management at Bayer forms an integral part of the Groupwide corporate governance system. Our opportunity and risk management process and the fundamental opportunity and risk status are outlined in detail in the Annual Report 2021, A 3.2 "Opportunity and Risk Report."
In comparison to our Annual Report 2021, further geopolitical risks are arising in connection with Russia's war in Ukraine. Both the direct influence of the war as well as the influence due to applicable sanctions may negatively impact our business, for example, our (energy) costs, availability of energy – especially in case of a gas embargo/gas supply suspension – supply chain (disruptions), sales, earnings and cash flows. Generally, the implications of the war are unpredictable and have the potential to significantly impact financial markets and economies, leading, for example, to high volatility of foreign exchange rates and an economic slowdown. Thus, our market environment and, consequently, our business performance may be negatively impacted. We are preparing for these challenges with global and local operational crisis management, energy-related task forces and other interdisciplinary teams setting up mitigation measures such as building additional financial buffers and diversification of energy sources.
We currently have identified an increase in our risk situation compared with the assessment given in the 2021 Annual Report, as a result of Russia's war in Ukraine. In the opinion of the Board of Management, the Bayer Group's continued existence remains unendangered.
Significant developments that have occurred in respect of the legal risks since publication of the Bayer Annual Report 2021 (Note [30] to the Consolidated Financial Statements) are described in the Notes to the Condensed Consolidated Interim Financial Statements under "Legal Risks."
| B 1 | ||||
|---|---|---|---|---|
| € million | Q2 2021 | Q2 2022 | H1 2021 | H1 2022 |
| Net sales | 10,854 | 12,819 | 23,182 | 27,458 |
| Cost of goods sold | (4,546) | (5,680) | (9,244) | (10,856) |
| Gross profit | 6,308 | 7,139 | 13,938 | 16,602 |
| Selling expenses | (2,964) | (3,736) | (5,843) | (7,020) |
| Research and development expenses | (1,638) | (1,928) | (2,836) | (3,382) |
| General administration expenses | (783) | (736) | (1,425) | (1,397) |
| Other operating income | 537 | 780 | 887 | 1,289 |
| Other operating expenses | (3,741) | (1,350) | (3,919) | (1,711) |
| EBIT1 | (2,281) | 169 | 802 | 4,381 |
| Equity-method income (loss) | 105 | (39) | 79 | (59) |
| Financial income | 271 | 50 | 369 | 117 |
| Financial expenses | (475) | (703) | (895) | (1,240) |
| Financial result | (99) | (692) | (447) | (1,182) |
| Income before income taxes | (2,380) | (523) | 355 | 3,199 |
| Income taxes | 52 | 234 | (593) | (194) |
| Income after income taxes | (2,328) | (289) | (238) | 3,005 |
| of which attributable to noncontrolling interest | 7 | 9 | 8 | 12 |
| of which attributable to Bayer AG stockholders (net income) | (2,335) | (298) | (246) | 2,993 |
| € | ||||
| Earnings per share | ||||
| Basic | (2.38) | (0.30) | (0.25) | 3.05 |
| Diluted | (2.38) | (0.30) | (0.25) | 3.05 |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
| B 2 | ||||
|---|---|---|---|---|
| € million | Q2 2021 | Q2 2022 | H1 2021 | H1 2022 |
| Income after income taxes | (2,328) | (289) | (238) | 3,005 |
| of which attributable to noncontrolling interest | 7 | 9 | 8 | 12 |
| of which attributable to Bayer AG stockholders | (2,335) | (298) | (246) | 2,993 |
| Remeasurements of the net defined benefit liability for post-employment benefit plans |
50 | 1,100 | 1,128 | 1,286 |
| Income taxes | (4) | (406) | (312) | (511) |
| Other comprehensive income from remeasurements of the net defined benefit liability for post-employment benefit plans |
46 | 694 | 816 | 775 |
| Changes in the fair value of equity instruments measured at fair value |
135 | (47) | 212 | (104) |
| Income taxes | (4) | 14 | (4) | 15 |
| Other comprehensive income from equity instruments measured at fair value |
131 | (33) | 208 | (89) |
| Other comprehensive income relating to associates accounted for using the equity method |
25 | – | 25 | – |
| Other comprehensive income that will not be reclassified subsequently to profit or loss |
202 | 661 | 1,049 | 686 |
| Changes in the fair value of cash flow hedges | (62) | (185) | (13) | (182) |
| Reclassified to profit or loss | 5 | 139 | (50) | 147 |
| Income taxes | 20 | 6 | 20 | 13 |
| Other comprehensive income from cash flow hedges | (37) | (40) | (43) | (22) |
| Changes in time value of options used as hedging instrument | – | (1) | (2) | (8) |
| Income taxes | – | 3 | 1 | 3 |
| Other comprehensive income from time value of options | – | 2 | (1) | (5) |
| Other comprehensive income from available-for-sale financial assets |
– | – | – | 1 |
| Other comprehensive income from exchange differences | (70) | 2,226 | 1,077 | 3,333 |
| Other comprehensive income relating to associates accounted for using the equity method |
(4) | 1 | (2) | 2 |
| Other comprehensive income that may be reclassified subsequently to profit or loss |
(111) | 2,189 | 1,031 | 3,309 |
| Total other comprehensive income1 | 91 | 2,850 | 2,080 | 3,995 |
| of which attributable to noncontrolling interest | (6) | 6 | 3 | 7 |
| of which attributable to Bayer AG stockholders | 97 | 2,844 | 2,077 | 3,988 |
| Total comprehensive income | (2,237) | 2,561 | 1,842 | 7,000 |
| of which attributable to noncontrolling interest | 1 | 15 | 11 | 19 |
| of which attributable to Bayer AG stockholders | (2,238) | 2,546 | 1,831 | 6,981 |
2021 figures restated resulting from the completion of the purchase price allocation for AskBio in the fourth quarter of 2021
1 Other comprehensive income is recognized outside profit or loss in equity.
B 3
| € million | June 30, 2021 |
Dec. 31, 2021 |
June 30, 2022 |
|---|---|---|---|
| Noncurrent assets | |||
| Goodwill | 37,316 | 40,106 | 41,583 |
| Other intangible assets | 24,684 | 26,258 | 25,367 |
| Property, plant and equipment | 11,843 | 12,688 | 13,275 |
| Investments accounted for using the equity method | 576 | 629 | 762 |
| Other financial assets | 1,625 | 2,026 | 2,030 |
| Other receivables | 1,199 | 1,376 | 1,155 |
| Deferred taxes | 4,470 | 4,580 | 5,072 |
| 81,713 | 87,663 | 89,244 | |
| Current assets | |||
| Inventories | 10,125 | 11,314 | 11,371 |
| Trade accounts receivable | 13,071 | 10,047 | 14,785 |
| Other financial assets | 3,109 | 3,342 | 4,782 |
| Other receivables | 1,559 | 1,709 | 1,815 |
| Claims for income tax refunds | 1,182 | 1,526 | 1,785 |
| Cash and cash equivalents | 3,389 | 4,564 | 3,412 |
| Assets held for sale | 32 | 76 | 1,600 |
| 32,467 | 32,578 | 39,550 | |
| Total assets | 114,180 | 120,241 | 128,794 |
| Equity | |||
| Capital stock | 2,515 | 2,515 | 2,515 |
| Capital reserves | 18,261 | 18,261 | 18,261 |
| Other reserves | 9,613 | 12,244 | 17,243 |
| Equity attributable to Bayer AG stockholders | 30,389 | 33,020 | 38,019 |
| Equity attributable to noncontrolling interest | 166 | 148 | 185 |
| 30,555 | 33,168 | 38,204 | |
| Noncurrent liabilities | |||
| Provisions for pensions and other post-employment benefits | 7,512 | 7,175 | 5,665 |
| Other provisions | 7,182 | 8,776 | 8,294 |
| Refund liabilities | 142 | 283 | 166 |
| Contract liabilities | 650 | 770 | 635 |
| Financial liabilities | 36,669 | 36,481 | 38,061 |
| Income tax liabilities | 1,638 | 1,601 | 1,672 |
| Other liabilities | 1,184 | 1,653 | 1,618 |
| Deferred taxes | 679 | 931 | 836 |
| 55,656 | 57,670 | 56,947 | |
| Current liabilities | |||
| Other provisions | 7,947 | 6,823 | 7,152 |
| Refund liabilities | 6,877 | 4,564 | 7,985 |
| Contract liabilities | 1,305 | 4,052 | 2,174 |
| Financial liabilities | 3,707 | 4,391 | 6,573 |
| Trade accounts payable | 5,113 | 6,792 | 6,097 |
| Income tax liabilities | 926 | 686 | 1,036 |
| Other liabilities | 2,094 | 2,095 | 2,513 |
| Liabilities directly related to assets held for sale | – | – | 113 |
| 27,969 | 29,403 | 33,643 | |
| Total equity and liabilities | 114,180 | 120,241 | 128,794 |
2021 figures restated resulting from the completion of the purchase price allocation for AskBio in the fourth quarter of 2021
B 4
| € million | Q2 2021 | Q2 2022 | H1 2021 | H1 2022 |
|---|---|---|---|---|
| Income after income taxes | (2,328) | (289) | (238) | 3,005 |
| Income taxes | (52) | (234) | 593 | 194 |
| Financial result | 99 | 692 | 447 | 1,182 |
| Income taxes paid | (687) | (526) | (1,140) | (968) |
| Depreciation, amortization and impairment losses (loss reversals) | 1,390 | 2,482 | 2,476 | 3,562 |
| Change in pension provisions | (70) | (76) | (185) | (147) |
| (Gains) losses on retirements of noncurrent assets | (104) | (296) | (119) | (339) |
| Decrease (increase) in inventories | 308 | (225) | 841 | 219 |
| Decrease (increase) in trade accounts receivable | (64) | 353 | (3,335) | (3,833) |
| (Decrease) increase in trade accounts payable | (63) | 68 | (680) | (990) |
| Changes in other working capital, other noncash items | 3,568 | 155 | 572 | (507) |
| Net cash provided by (used in) operating activities | 1,997 | 2,104 | (768) | 1,378 |
| Cash outflows for additions to property, plant, equipment and intangible assets |
(493) | (550) | (822) | (899) |
| Cash inflows from the sale of property, plant, equipment and other assets | 115 | 261 | 272 | 457 |
| Cash outflows for divestments less divested cash | – | – | (57) | – |
| Cash inflows from noncurrent financial assets | 4 | 3 | 357 | 3 |
| Cash outflows for noncurrent financial assets | (121) | (231) | (267) | (314) |
| Cash outflows for acquisitions less acquired cash | (19) | (15) | (23) | (15) |
| Interest and dividends received | 31 | 22 | 41 | 47 |
| Cash inflows from (outflows for) current financial assets | 930 | (2,261) | 4,891 | (1,308) |
| Net cash provided by (used in) investing activities | 447 | (2,771) | 4,392 | (2,029) |
| Capital contributions | – | – | – | 15 |
| Dividend payments | (1,965) | (1,966) | (1,965) | (1,966) |
| Issuances of debt | 282 | 4,192 | 4,495 | 6,471 |
| Retirements of debt | (2,537) | (3,604) | (6,495) | (4,686) |
| Interest paid including interest-rate swaps | (391) | (441) | (547) | (614) |
| Interest received from interest-rate swaps | 8 | 5 | 22 | 41 |
| Net cash provided by (used in) financing activities | (4,603) | (1,814) | (4,490) | (739) |
| Change in cash and cash equivalents due to business activities | (2,159) | (2,481) | (866) | (1,390) |
| Cash and cash equivalents at beginning of period | 5,550 | 5,790 | 4,191 | 4,564 |
| Change in cash and cash equivalents due to changes in scope of consolidation |
– | – | – | 3 |
| Change in cash and cash equivalents due to exchange rate movements | (2) | 106 | 64 | 238 |
| Cash and cash equivalents at end of period | 3,389 | 3,415 | 3,389 | 3,415 |
B 5
| € million | Capital stock | Capital reserves |
Other reserves |
Equity attributable to Bayer AG stockholders |
Equity attributable to non controlling interest |
Equity |
|---|---|---|---|---|---|---|
| Jan. 1, 2021 | 2,515 | 18,261 | 9,747 | 30,523 | 152 | 30,675 |
| Total comprehensive income | ||||||
| Income after income taxes | (246) | (246) | 8 | (238) | ||
| Other comprehensive income | 2,077 | 2,077 | 3 | 2,080 | ||
| Miscellaneous other changes | ||||||
| Equity transactions with owners | ||||||
| Dividend payments | (1,965) | (1,965) | (1,965) | |||
| Other changes | 3 | 3 | ||||
| June 30, 2021 | 2,515 | 18,261 | 9,613 | 30,389 | 166 | 30,555 |
| Jan. 1, 2022 | 2,515 | 18,261 | 12,244 | 33,020 | 148 | 33,168 |
| Total comprehensive income | ||||||
| Income after income taxes | 2,993 | 2,993 | 12 | 3,005 | ||
| Other comprehensive income | 3,988 | 3,988 | 7 | 3,995 | ||
| Miscellaneous other changes | ||||||
| Equity transactions with owners | ||||||
| Dividend payments | (1,965) | (1,965) | (1) | (1,966) | ||
| Other changes | (17) | (17) | 19 | 2 | ||
| June 30, 2022 | 2,515 | 18,261 | 17,243 | 38,019 | 185 | 38,204 |
2021 figures restated resulting from the completion of the purchase price allocation for AskBio in the fourth quarter of 2021
The consolidated interim financial statements as of June 30, 2022, were prepared in condensed form in compliance with IAS 34 according to the International Financial Reporting Standards (IFRS) 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 2021 fiscal year, particularly with regard to the main recognition and valuation principles. As regards those Notes' listed standards, amendments and interpretations to be applied for the first time in fiscal 2022, none had any material impact on the Bayer Group this fiscal year.
Protective measures and contact restrictions have largely been lifted. Uncertainties remain, however, with the prospect of further COVID outbreaks as a result of new variants, for instance. We do not currently see any material negative impact on our business operations and thus the Group's financial position or results of operations.
We will continue to closely monitor the effects of the pandemic, including in particular the impact on inventories, customer receivables and significant estimates regarding goodwill and other intangible assets.
Group sales and earnings as well as its financial position and results of operations were only marginally impacted by the war and its direct consequences in the second quarter. We did not register any major increase in past-due receivables in Russia or Ukraine. Based on a risk analysis conducted at the level of individual customers, we wrote down the value of receivables by €35 million.
Gas and energy provision as well as global supply chains may also be disrupted as a result of the war. At Bayer, energy costs accounted for about 3% of the total cost of goods sold in fiscal 2021. We are in the process of analyzing the specific effects of various scenarios on our business and potential solutions and cannot yet conclusively quantify these. We have meanwhile developed a series of measures to reduce our natural gas needs and have already implemented some of these. We are also expanding our network of suppliers and building up additional inventories to continue to ensure supply security.
The stability of payment transactions both within Russia and at an international level is subject to considerable uncertainties, and we are evaluating suitable risk mitigation measures.
We are continually analyzing the future direct and indirect effects of economic developments and sanctions on the valuation of individual assets and liabilities.
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 | ||||||
|---|---|---|---|---|---|---|
| Closing rate | Average rate | |||||
| €1 | Dec. 31, 2021 June 30, 2021 June 30, 2022 | H1 2021 | H1 2022 | |||
| BRL | Brazil | 6.31 | 5.90 | 5.42 | 6.49 | 5.53 |
| CAD | Canada | 1.44 | 1.47 | 1.34 | 1.50 | 1.39 |
| CNY | China | 7.20 | 7.69 | 6.97 | 7.80 | 7.09 |
| GBP | United Kingdom | 0.84 | 0.86 | 0.86 | 0.87 | 0.84 |
| JPY | Japan | 130.41 | 131.47 | 141.63 | 129.76 | 134.08 |
| RUB | Russia | 85.35 | 86.75 | 56.38 | 89.58 | 81.00 |
| USD | United States | 1.13 | 1.19 | 1.04 | 1.21 | 1.09 |
| Company name | Place of business | Applied since |
|---|---|---|
| Bayer S. A. | Buenos Aires, Argentina | July 1, 2018 |
| Bayer Türk Kimya Sanayii Limited Sirketi | Istanbul, Turkey | April 1, 2022 |
| Monsanto Gida Ve Tarim Ticaret Ltd Sirketi | Istanbul, Turkey | April 1, 2022 |
The effects in initial and ongoing accounting have so far been immaterial for the Group.
The most important interest rates used to calculate the present value of pension obligations are given below:
| B 8 | |||
|---|---|---|---|
| Discount Rate for Pension Obligations | |||
| % | Dec. 31, 2021 |
June 30, 2021 |
June 30, 2022 |
| Germany | 1.20 | 1.10 | 3.30 |
| United Kingdom | 1.80 | 1.80 | 3.60 |
| United States | 2.80 | 2.70 | 4.60 |
The long-term trend for pensions in Germany was adjusted due to higher inflation expectations and had an impact of €1,400 million in the first half of 2022. Changes in discount rates had an opposing effect of €6,111 million.
32
B 6
As of June 30, 2022, the Bayer Group comprised the three reportable segments Crop Science, Pharmaceuticals and Consumer Health.
| € million | Crop Science | Pharmaceuticals | Consumer Health | |||
|---|---|---|---|---|---|---|
| Q2 2021 | Q2 2022 | Q2 2021 | Q2 2022 | Q2 2021 | Q2 2022 | |
| Net sales (external) | 5,021 | 6,461 | 4,494 | 4,818 | 1,290 | 1,496 |
| Currency- and portfolio-adjusted change1 | + 10.6% | + 17.2% | + 16.2% | + 2.1% | + 12.8% | + 6.8% |
| Intersegment sales | 3 | 2 | 3 | (2) | – | – |
| Net sales (total) | 5,024 | 6,463 | 4,497 | 4,816 | 1,290 | 1,496 |
| EBIT1 | (3,483) | (258) | 1,312 | 1,206 | 187 | 239 |
| EBITDA before special items1 | 1,018 | 1,749 | 1,409 | 1,478 | 278 | 330 |
| Net cash provided by operating activities | 1,734 | 2,551 | 570 | 35 | 165 | 116 |
| Depreciation, amortization, impairment losses/loss reversals |
987 | 1,959 | 252 | 353 | 82 | 88 |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
B 10
B 9
| All other segments | Enabling functions and consolidation |
Group | ||||
|---|---|---|---|---|---|---|
| € million | Q2 2021 | Q2 2022 | Q2 2021 | Q2 2022 | Q2 2021 | Q2 2022 |
| Net sales (external) | 40 | 42 | 9 | 2 | 10,854 | 12,819 |
| Currency- and portfolio-adjusted change1 | – 16.0% | – 10.8% | – | – | + 12.9% | + 9.6% |
| Intersegment sales | – | 1 | (6) | (2) | – | – |
| Net sales (total) | 40 | 43 | 3 | 0 | 10,854 | 12,819 |
| EBIT1 | 7 | (30) | (304) | (988) | (2,281) | 169 |
| EBITDA before special items1 | 25 | (11) | (153) | (197) | 2,577 | 3,349 |
| Net cash provided by (used in) operating activities |
35 | (8) | (507) | (590) | 1,997 | 2,104 |
| Depreciation, amortization, impairment losses/loss reversals |
18 | 19 | 51 | 63 | 1,390 | 2,482 |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
| Crop Science | Pharmaceuticals | Consumer Health | ||||
|---|---|---|---|---|---|---|
| € million | H1 2021 | H1 2022 | H1 2021 | H1 2022 | H1 2021 | H1 2022 |
| Net sales (external) | 11,667 | 14,908 | 8,859 | 9,442 | 2,542 | 3,008 |
| Currency- and portfolio-adjusted change1 | + 8.1% | + 19.7% | + 7.4% | + 2.4% | + 3.5% | + 11.9% |
| Intersegment sales | 5 | 4 | 5 | 3 | – | – |
| Net sales (total) | 11,672 | 14,912 | 8,864 | 9,445 | 2,542 | 3,008 |
| EBIT1 | (1,730) | 2,770 | 2,681 | 2,408 | 388 | 523 |
| EBITDA before special items1 | 3,466 | 5,418 | 2,907 | 2,867 | 570 | 718 |
| Net cash provided by (used by) operating activities |
(2,403) | 164 | 1,381 | 1,059 | 406 | 429 |
| Depreciation, amortization, impairment losses/loss reversals |
1,661 | 2,646 | 511 | 588 | 167 | 174 |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
33
| € million | All other segments | Enabling functions and consolidation |
Group | ||||
|---|---|---|---|---|---|---|---|
| H1 2021 | H1 2022 | H1 2021 | H1 2022 | H1 2021 | H1 2022 | ||
| Net sales (external) | 96 | 88 | 18 | 12 | 23,182 | 27,458 | |
| Currency- and portfolio-adjusted change1 | – 9.3% | – 13.0% | – | – | + 7.2% | + 12.1% | |
| Intersegment sales | – | 1 | (10) | (8) | – | – | |
| Net sales (total) | 96 | 89 | 8 | 4 | 23,182 | 27,458 | |
| EBIT1 | (9) | (29) | (528) | (1,291) | 802 | 4,381 | |
| EBITDA before special items1 | 26 | 7 | (274) | (410) | 6,695 | 8,600 | |
| Net cash provided by (used in) operating activities |
84 | – | (236) | (274) | (768) | 1,378 | |
| Depreciation, amortization, impairment losses/loss reversals |
35 | 36 | 102 | 118 | 2,476 | 3,562 |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
To simplify the consolidation process, leases between fully consolidated companies continue to be recognized as operating leases under IAS 17 within the segment data in the consolidated financial statements of the Bayer Group even after the first-time application of IFRS 16 as of January 1, 2019. This does not have any relevant impact on the respective key data used in the steering of the company and internal reporting to the Board of Management as the chief operating decision maker.
The following table shows the reconciliation of EBITDA before special items of the above-mentioned segments and the reconciliation to income before income taxes of the Group from continuing operations:
| B 11 | ||||
|---|---|---|---|---|
| Reconciliation of Segments' EBITDA Before Special Items to Group Income Before Income Taxes | ||||
| € million | Q2 2021 | Q2 2022 | H1 2021 | H1 2022 |
| EBITDA before special items of segments | 2,730 | 3,546 | 6,969 | 9,010 |
| EBITDA before special items of enabling functions and consolidation | (153) | (197) | (274) | (410) |
| EBITDA before special items1 | 2,577 | 3,349 | 6,695 | 8,600 |
| Depreciation, amortization and impairment losses/loss reversals before special items of segments |
(906) | (1,007) | (1,905) | (2,031) |
| Depreciation, amortization and impairment losses/loss reversals before special items of corporate functions and consolidation |
(51) | (62) | (102) | (117) |
| Depreciation, amortization and impairment losses/loss reversals before special items |
(957) | (1,069) | (2,007) | (2,148) |
| EBIT before special items of segments | 1,824 | 2,539 | 5,064 | 6,979 |
| EBIT before special items of enabling functions and consolidation | (204) | (259) | (376) | (527) |
| EBIT before special items1 | 1,620 | 2,280 | 4,688 | 6,452 |
| Special items of segments | (3,801) | (1,382) | (3,734) | (1,307) |
| Special items of enabling functions and consolidation | (100) | (729) | (152) | (764) |
| Special items1 | (3,901) | (2,111) | (3,886) | (2,071) |
| EBIT of segments | (1,977) | 1,157 | 1,330 | 5,672 |
| EBIT of enabling functions and consolidation | (304) | (988) | (528) | (1,291) |
| EBIT1 | (2,281) | 169 | 802 | 4,381 |
| Financial result | (99) | (692) | (447) | (1,182) |
| Income before income taxes | (2,380) | (523) | 355 | 3,199 |
1 For definition see Annual Report 2021, A 2.3 "Alternative Performance Measures Used by the Bayer Group."
The balance of other operating expenses and other operating income of minus €570 million in the second quarter of 2022 (Q2 2021: minus €3,204 million) was due to special charges of €476 million (Q2 2021: €3,238 million), which primarily related to ongoing legal proceedings.
The special items in the second quarter of 2021 were mainly related to the glyphosate litigations.
The consolidated financial statements as of June 30, 2022, included 369 companies (December 31, 2021: 374 companies). Six joint ventures (December 31, 2021: six) and 36 associates (December 31, 2021: 33) were accounted for in the consolidated financial statements using the equity method according to IAS 28 (Investments in Associates and Joint Ventures).
On June 28, 2022, Bayer acquired 30% of the shares in Natsana GmbH, Germany, for a purchase price of around €96 million. The acquired shares are accounted for using the equity method. Natsana is an onlineonly provider focused on the sale and development of natural supplements such as vitamins, minerals, nutrients and probiotics. Its portfolio comprises over 100 products under its three main brands: Feel Natural, Nature Love and Natural Elements. Bayer will acquire the other 70% of shares in 2025 based on a buy-out mechanism agreed to when closing the transaction. The company will be assigned to the Consumer Health segment.
On June 2, 2021, Bayer completed the acquisition of 100% of the shares in two biotech companies: Noria Therapeutics Inc., United States, and PSMA Therapeutics Inc., United States. Through these acquisitions, Bayer obtained exclusive rights to a differentiated alpha radionuclide therapy based on actinium-225 and a small molecule targeting prostate-specific membrane antigen (PSMA), and in doing so broadened its oncology portfolio of targeted alpha therapies (TAT). Bayer paid an upfront consideration of €8 million in total and will make potential milestone payments of up to around €120 million until launch followed by potential additional sales-based milestone payments that will also amount to up to around €120 million. Neither acquisition falls within the scope of IFRS 3 such that both are presented as a capital expenditure for intangible assets relating to R&D projects. The two companies have been assigned to the Pharmaceuticals segment.
There were no discontinued operations to report in 2022 or 2021.
The assets held for sale, net of directly related liabilities, totaled around €1,487 million as of June 30, 2022.
They primarily related to the planned sale of our Environmental Science Professional business to Cinven, United Kingdom, for around €2.4 billion. Environmental Science Professional is a global leader offering solutions to control pests, disease and weeds in nonagricultural areas such as vector control, professional pest management, vegetation management, forestry, and turf and ornamentals. The transaction is expected to be concluded in the second half of 2022 and relates to the Crop Science segment. Initial classification as assets and liabilities held for sale took effect March 31, 2022.
Assets held for sale also included an amount of around €51 million from the sale of office and administrative space in St. Louis, United States. These were attributable entirely to property, plant and equipment. In addition, assets held for sale contained intangible assets amounting to a total of some €38 million. These included around €16 million due to the divestment of our product Nebido™ to Grünenthal GmbH, Germany, as well as around €22 million for the planned divestment of the Marvelon™ and Mercilon™ trademarks in China, Hong Kong, Macau and Vietnam within the Pharmaceuticals segment. The transaction was completed for China, Hong Kong and Macau, and is expected to be completed for Vietnam in the third quarter of 2022.
The assets and liabilities held for sale as of June 30, 2022, were as follows:
| B 12 | ||
|---|---|---|
| Assets and Liabilities Held for Sale | ||
| € million | June 30, 2021 |
June 30, 2022 |
| Goodwill | – | 1,337 |
| Other intangible assets | – | 75 |
| Property, plant and equipment | 32 | 80 |
| Deferred taxes | – | 5 |
| Inventories | – | 92 |
| Trade accounts receivable | – | 4 |
| Other receivables | – | 2 |
| Claims for income tax refunds | – | 2 |
| Cash and cash equivalents | – | 3 |
| Assets held for sale | 32 | 1,600 |
| Provisions for pensions and other post-employment benefits | – | 5 |
| Other provisions | – | 2 |
| Refund liabilities | – | 84 |
| Financial liabilities | – | 8 |
| Deferred taxes | – | 13 |
| Trade accounts payable | – | 1 |
| Liabilities directly related to assets held for sale | – | 113 |
In 2021, recognition primarily related to the planned sale of a production facility in Brazil in the Pharmaceuticals segment. The transaction was completed in the second quarter of 2022.
Impairment testing was conducted in the second quarter of 2022 due to current interest-rate developments and their related impact on the weighted average cost of capital.
In the Pharmaceuticals segment, impairment testing resulted in impairment losses on R&D projects totaling around €92 million, particularly due to an increase in the weighted average cost of capital. The impairment losses were allocated to research and development expenses in each case.
The impairment testing did not give rise to any material impairment losses or impairment loss reversals in the Consumer Health segment.
Within the Crop Science segment, it resulted in the recognition of impairment losses of €1,322 million on intangible assets. This included impairment losses in the cash-generating units cotton seed (€851 million, comprising €67 million on research and development projects, €696 million on patents and technologies, €75 million on trademarks and €13 million on marketing and distribution rights), Vegetable Seeds (€269 million, comprising €78 million on research and development projects, €157 million on patents and technologies, €24 million on trademarks and €10 million on marketing and distribution rights) and Corn Seed & Traits (€202 million, comprising €37 million on research and development projects, €130 million on patents and technologies, €30 million on trademarks and €5 million on marketing and distribution rights). Whereas the impairment loss in the cash-generating unit cotton seed was primarily attributable to a change in business prospects as well as an increase in the cost of capital, the impairment losses in the cash-generating units Vegetable Seeds and Corn Seed & Traits were mostly due to a significant increase in the weighted average cost of capital. The impairment losses on the assets of the cash-generating units were allocated to the cost of goods sold, selling expenses, and research and development expenses, with the respective figures determined on the basis of fair value less costs of disposal.
The table below indicates the capital cost factors used in the impairment testing on the cash-generating units in the fourth quarter of 2021 and second quarter of 2022.
| Impairment Testing Parameters | ||
|---|---|---|
| After-tax cost of capital | ||
| % | Q4 2021 | Q2 2022 |
| Corn Seed & Traits | 8.5 | 9.7 |
| Soybean Seed & Traits | 8.1 | 9.1 |
| Glyphosate | 9.0 | 10.3 |
| Dicamba | 6.6 | 7.3 |
| Cotton seed | 6.8 | 7.3 |
| Canola | 7.1 | 8.2 |
| Vegetable Seeds | 8.5 | 10.1 |
The growth rates and capital cost factors used in the impairment testing of goodwill in the fourth quarter of 2021 and the second quarter of 2022 are shown in the following table:
| Impairment Testing Parameters | ||||||
|---|---|---|---|---|---|---|
| Growth rate | After-tax cost of capital | |||||
| % | Q4 2021 | Q2 2022 | Q4 2021 | Q2 2022 | ||
| Crop Science | 2.0 | 2.0 | 8.7 | 9.7 | ||
| Pharmaceuticals | 0.0 | 0.0 | 5.1 | 6.4 | ||
| Consumer Health | 1.0 | 1.0 | 6.3 | 8.6 |
Testing goodwill for impairment involves calculating the fair value less costs to sell. No impairment losses were recognized on goodwill in the second quarter of 2022 or 2021.
The following tables show the carrying amounts and fair values of the individual financial assets and liabilities by category of financial instrument under IFRS 9 and a reconciliation to the corresponding line items in the statements of financial position. Since the line items "Trade accounts receivable", "Other receivables", "Financial liabilities" and "Other liabilities" contain both financial instruments and nonfinancial assets or liabilities (such as other tax receivables), the reconciliation is shown in the column headed "Nonfinancial assets/liabilities."
37
B 13
| June 30, 2022 | ||||||
|---|---|---|---|---|---|---|
| Measured at fair value [fair value for information4] |
||||||
| Measurement category (IFRS 9)1 | Measured at amortized cost |
Based on quoted prices in active markets (Level 1) |
Based on observable market data (Level 2) |
Based on unobservable inputs (Level 3) |
Nonfinancial assets/liabilities |
|
| € million | Carrying amount |
Carrying amount |
Carrying amount |
Carrying amount |
Carrying amount |
Total |
| Trade accounts receivable | 14,268 | 165 | 352 | 14,785 | ||
| AC | 14,268 | 14,268 | ||||
| FVTPL, mandatory2 | 165 | 165 | ||||
| Nonfinancial assets | 352 | 352 | ||||
| Other financial assets | 673 | 4,406 | 352 | 1,381 | 6,812 | |
| AC | 643 | [643] | 643 | |||
| FVTPL, mandatory2 | 4,330 | 46 | 905 | 5,281 | ||
| FVTOCI (no recycling), designated3 | 61 | 461 | 522 | |||
| Derivatives | 15 | 306 | 15 | 336 | ||
| Lease receivables | 30 | [30] | 30 | |||
| Other receivables | 420 | 39 | 2,511 | 2,970 | ||
| AC | 420 | [420] | 420 | |||
| FVTPL, mandatory2 | 39 | 39 | ||||
| Nonfinancial assets | 2,511 | 2,511 | ||||
| Cash and cash equivalents | 3,412 | 3,412 | ||||
| AC | 3,412 | [3,412] | 3,412 | |||
| Total financial assets | 18,773 | 4,571 | 352 | 1,420 | 25,116 | |
| of which AC | 18,743 | 18,743 | ||||
| of which FVTPL | 4,495 | 46 | 944 | 5,485 | ||
| Financial liabilities | 44,434 | 106 | 94 | 44,634 | ||
| AC | 43,240 | [29,895] | [10,341] | 43,240 | ||
| Derivatives | 106 | 106 | ||||
| Lease liabilities | 1,194 | 1,194 | ||||
| Nonfinancial liabilities | 94 | 94 | ||||
| Trade accounts payable | 6,097 | 6,097 | ||||
| AC | 6,097 | 6,097 | ||||
| Other liabilities | 914 | 36 | 393 | 1,831 | 957 | 4,131 |
| AC | 914 | [914] | 914 | |||
| FVTPL (nonderivative), mandatory2 | 1,824 | 1,824 | ||||
| Derivatives | 36 | 393 | 7 | 436 | ||
| Nonfinancial liabilities | 957 | 957 | ||||
| Total financial liabilities | 51,445 | 36 | 499 | 1,831 | 53,811 | |
| of which AC | 50,251 | 50,251 | ||||
| of which derivatives | 36 | 499 | 7 | 542 |
1 AC: at amortized cost
FVTOCI: at fair value through other comprehensive income
FVTPL: at fair value through profit or loss
2 Measured at fair value through profit or loss as required by IFRS 9
3 Measured at fair value through other comprehensive income under IFRS 9, paragraph 5.7.5
4 Fair value of the financial instruments at amortized cost under IFRS 7 paragraph 29(a)
38
| Dec.31, 2021 | ||||||
|---|---|---|---|---|---|---|
| Measured at fair value [fair value for information4] |
||||||
| Measurement category (IFRS 9)1 | Measured at amortized cost |
Based on quoted prices in active markets (Level 1) |
Based on observable market data (Level 2) |
Based on unobservable inputs (Level 3) |
Nonfinancial assets/liabilities |
|
| € million | Carrying amount |
Carrying amount |
Carrying amount |
Carrying amount |
Carrying amount |
Total |
| Trade accounts receivable | 9,663 | 188 | 196 | 10,047 | ||
| AC | 9,663 | 9,663 | ||||
| FVTPL, mandatory2 | 188 | 188 | ||||
| Nonfinancial assets | 196 | 196 | ||||
| Other financial assets | 760 | 1,856 | 1,391 | 1,361 | 5,368 | |
| AC | 731 | [731] | 731 | |||
| FVTPL, mandatory2 | 1,745 | 1,236 | 942 | 3,923 | ||
| FVTOCI (no recycling), designated3 | 98 | 406 | 504 | |||
| Derivatives | 13 | 155 | 13 | 181 | ||
| Lease receivables | 29 | [29] | 29 | |||
| Other receivables | 303 | 67 | 2,715 | 3,085 | ||
| AC | 303 | [303] | 303 | |||
| FVTPL, mandatory2 | 67 | 67 | ||||
| Nonfinancial assets | 2,715 | 2,715 | ||||
| Cash and cash equivalents | 4,564 | 4,564 | ||||
| AC | 4,564 | [4,564] | 4,564 | |||
| Total financial assets | 15,290 | 2,044 | 1,391 | 1,428 | 20,153 | |
| of which AC | 15,261 | 15,261 | ||||
| of which FVTPL | 1,933 | 1,236 | 1,009 | 4,178 | ||
| Financial liabilities | 40,708 | 69 | 95 | 40,872 | ||
| AC | 39,543 | [32,202] | [9,999] | 39,543 | ||
| Derivatives | 69 | 69 | ||||
| Lease liabilities | 1,165 | 1,165 | ||||
| Nonfinancial liabilities | 95 | 95 | ||||
| Trade accounts payable | 6,792 | 6,792 | ||||
| AC | 6,792 | 6,792 | ||||
| Other liabilities | 771 | 31 | 260 | 1,771 | 915 | 3,748 |
| AC | 771 | [771] | 771 | |||
| FVTPL (nonderivative), mandatory2 | 1,769 | 1,769 | ||||
| Derivatives | 31 | 260 | 2 | 293 | ||
| Nonfinancial liabilities | 915 | 915 | ||||
| Total financial liabilities | 48,271 | 31 | 329 | 1,771 | 50,402 | |
| of which AC | 47,106 | 47,106 | ||||
| of which derivatives | 31 | 329 | 2 | 362 |
1 AC: at amortized cost
FVTOCI: at fair value through other comprehensive income
FVTPL: at fair value through profit or loss
2 Measured at fair value through profit or loss as required by IFRS 9
3 Measured at fair value through other comprehensive income under IFRS 9, paragraph 5.7.5
4 Fair value of the financial instruments at amortized cost under IFRS 7 paragraph 29(a)
39
Due to 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 do not significantly differ from the fair values.
The fair values of financial assets and liabilities measured at amortized cost that are given for information are the present values of the respective future cash flows. The present values are determined by discounting the cash flows at a closing-date interest rate, taking into account the term of the assets or liabilities and also the creditworthiness of the counterparty in certain cases. Where a market price is available, however, this is deemed to be the fair value.
The fair values of financial assets measured at fair value correspond to quoted prices in active markets (Level 1) or are determined using valuation techniques based on observable market data as of the end of the reporting period (Level 2) or are the present values of the respective future cash flows, determined on the basis of unobservable inputs (Level 3).
The fair values of derivatives for which no publicly quoted prices exist in active markets (Level 1) are determined using valuation techniques based on observable market data as of the end of the reporting period (Level 2). In applying valuation techniques, credit or debt value adjustments are determined to account for the credit risk of the contractual party or Bayer.
Currency and commodity forward contracts are 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 in certain cases.
Fair values measured using unobservable inputs are categorized within Level 3 of the fair value hierarchy. This essentially applies to certain debt or equity instruments, in some cases to the fair values of embedded derivatives, and to obligations for contingent consideration in business combinations. Credit risk is frequently the principal unobservable input used to determine the fair values of debt instruments classified as "FVTPL – at fair value through profit or loss" by the discounted cash flow method. Here the credit spreads of comparable issuers are applied. A significant increase in credit risk could result in a lower fair value, whereas a significant decrease could result in a higher fair value. However, a relative change of 10% in the credit spread does not materially affect the fair value.
When determining the fair values of other liabilities for contingent consideration within the "FVTPL (nonderivative) – at fair value through profit or loss" category, the principal unobservable input is the estimation of the probability that, for example, predefined milestones for research and development projects will be achieved or that sales targets will be attained, as well as the timing of the payments. Changes in these estimates may lead to significant increases or decreases in fair value.
Embedded derivatives are separated from their respective host contracts, provided these are not financial instruments. Such host contracts are generally sale or purchase agreements relating to the operational business. The embedded derivatives cause the cash flows from the contracts to vary with exchange-rate or price fluctuations, for example. The internal measurement of embedded derivatives is mainly performed using the discounted cash flow method, which is based on unobservable inputs. These include 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 amount of financial assets and liabilities recognized at fair value based on unobservable inputs (Level 3) for each financial instrument category were as follows:
| € million | Assets – FVTPL1 |
FVTOCI (no recycling)1 |
Derivatives (net) |
Liabilities – FVTPL (nonderivative)1 |
Total |
|---|---|---|---|---|---|
| Carrying amounts (net), January 1, 2022 | 1,009 | 406 | 11 | (1,769) | (343) |
| Gains (losses) recognized in profit or loss | (72) | – | (5) | 68 | (9) |
| of which related to assets/liabilities recognized in the statements of financial position |
(72) | – | (5) | 68 | (9) |
| Gains (losses) recognized outside profit or loss | – | (33) | – | – | (33) |
| Additions of assets (liabilities) | 13 | 74 | – | – | 87 |
| Settlements of (assets) liabilities | – | (13) | – | 29 | 16 |
| Changes in scope of consolidation | (18) | – | – | – | (18) |
| Exchange differences | 12 | 27 | 2 | (152) | (111) |
| Carrying amounts (net), June 30, 2022 | 944 | 461 | 8 | (1,824) | (411) |
1 See table B 15 for definitions of measurement categories.
| € million | Assets – FVTPL1 |
FVTOCI (no recycling)1 |
Derivatives (net) |
Liabilities – FVTPL (nonderivative)1 |
Total |
|---|---|---|---|---|---|
| Carrying amounts (net), January 1, 2021 | 1,008 | 344 | 11 | (1,261) | 102 |
| Gains (losses) recognized in profit or loss | 1 | – | (1) | 40 | 40 |
| of which related to assets/liabilities recognized in the statements of financial position |
1 | – | (1) | 40 | 40 |
| Gains (losses) recognized outside profit or loss | – | 25 | – | – | 25 |
| Additions of assets (liabilities) | 5 | 20 | – | – | 25 |
| Settlements of (assets) liabilities | (1) | (1) | – | 23 | 21 |
| Transfers to Level 1 | – | (42) | – | – | (42) |
| Exchange differences | 3 | 7 | 1 | (39) | (28) |
| Carrying amounts (net), June 30, 2021 | 1,016 | 353 | 11 | (1,237) | 143 |
2021 figures restated resulting from the completion of the purchase price allocation for AskBio in the fourth quarter of 2021 1 See table B 16 for definitions of measurement categories.
The changes recognized in profit or loss were included in other operating income/expenses, as well as in the financial result in interest income, exchange gains or losses and other financial income and expenses.
Bayer AG placed new hybrid bonds with a total volume of €1.3 billion in March 2022. The proceeds were used for general corporate purposes including financing the early repayment of the €1.3 billion hybrid bond that was callable on October 2, 2022. The repayment took place in April and May 2022. In addition, two bonds with a total volume of US\$250 million (US\$229 million) were redeemed before maturity, while one bond with a nominal volume of €750 million and one with a nominal volume of JPY10 billion (€73 million) were redeemed at maturity in the second quarter of 2022.
In May 2022, Bayer AG agreed and drew on a credit line of €3 billion. The liquidity is invested in money market funds and is intended to help the company manage risks in the event the current geopolitical situation deteriorates.
The investments in money market funds are measured at fair value through profit or loss (Level 1 of the fair value hierarchy) and recognized under "Other financial assets".
41
B 17
To find out more about the Bayer Group's legal risks, please see Note 30 to the consolidated financial statements in the Bayer Annual Report 2021, which can be downloaded free of charge at www.bayer.com. Since the Bayer Annual Report 2021, the following significant changes have occurred in respect of the legal risks:
Roundup™ (glyphosate): A large number of lawsuits from plaintiffs claiming to have been exposed to glyphosate-based products manufactured by Bayer's subsidiary Monsanto have been served upon Monsanto in the United States. Glyphosate is the active ingredient contained in a number of Monsanto's herbicides, including Roundup™-branded products. Plaintiffs allege personal injuries resulting from exposure to those products, including non-Hodgkin lymphoma (NHL), and seek compensatory and punitive damages. Additional lawsuits are anticipated. In 2020, Monsanto reached an agreement in principle with plaintiffs, without admission of liability, to settle most of the current Roundup™ litigation and to put in place a mechanism to resolve potential future claims. The three adverse verdicts – Johnson, Hardeman and Pilliod – are not covered by the settlement. The Company petitioned the Supreme Court for review in both the Hardeman and Pilliod cases. In Hardeman, the Supreme Court invited the U.S. Solicitor General to file a brief in the matter; that brief recommended the Supreme Court deny review of the Hardeman appeal. In June 2022, the Supreme Court denied review of both Hardeman and Pilliod. There may be future cases in the Roundup™ litigation (or other unrelated actions) that present the Supreme Court with preemption questions, and the Company will continue to review its legal options regarding further proceedings.
In June 2022, juries in two state court cases – Shelton (Circuit Court for Jackson County, Missouri (Kansas City)) and Larry Johnson (Circuit Court for Jackson County, Oregon) – issued verdicts in Monsanto's favor, determining that Roundup™ did not cause either plaintiff's cancer. These cases are the third and fourth consecutive trial wins for the company.
Dicamba: In 2016, Bader Peach Farms filed a lawsuit against Monsanto and BASF in Missouri state court. Bader claims that off-target movement from the dicamba herbicide and/or the Xtend™ system has damaged Bader's crops. In 2020, the jury rendered a verdict for plaintiffs in the amount of US\$15 million in compensatory damages and US\$250 million in punitive damages, jointly and severally against defendants Monsanto and BASF. Monsanto filed post-trial motions resulting in the punitive damages being reduced to US\$60 million, thereby reducing the total verdict to US\$75 million. Monsanto appealed. In July 2022, the 8th Circuit Court of Appeals affirmed all aspects of the trial court judgment except for the finding of joint liability for punitive damages between BASF and Monsanto. Monsanto disagrees with the decision and is considering its legal options.
BASF arbitration: In 2019, Bayer was served with a request for arbitration by BASF SE. BASF maintained to have indemnification claims under the asset purchase agreements signed in 2017 and 2018 related to the divestment of certain Crop Science businesses to BASF. We expect the decision by the arbitral tribunal to be issued shortly.
PCBs: Bayer's subsidiary Monsanto has been named in lawsuits brought by various governmental entities in the United States claiming that Monsanto, Pharmacia and Solutia, collectively as a manufacturer of PCBs, should be responsible for a variety of damages due to PCBs in the environment, including bodies of water, regardless of how PCBs came to be located there. In 2020, Bayer reached an agreement for a nationwide class settlement to settle claims of approximately 2,500 municipal government entities across the United States for a total payment, including class benefits and attorney fees, of approximately US\$650 million. In March 2022, the court preliminarily approved the settlement. In July 2022, the Superior Court of Delaware dismissed, in its entirety, the Delaware State Attorney General's individual lawsuit that alleged environmental damages from PCBs. With regard to Oregon, we are considering a settlement with the Attorney General reflecting the unique circumstances in that state.
Monsanto also faces numerous lawsuits claiming personal injury and/or property damage due to use of and exposure to PCB products. In the Sky Valley Education Center ("SVEC") personal injury cases, a third trial concluded in June 2022 with the jury awarding a total of approximately US\$21.3 million (compensatory and punitive damages) in total to four plaintiffs. Bayer disagrees with this verdict based on many of the same errors seen in the first two trials and plans to appeal. A fourth SVEC trial (Soley), which concluded in July 2022, resulted in a mistrial when the jury was unable to reach a verdict. It is unknown whether there will be a retrial. A fifth SVEC trial (Allison) is currently scheduled to begin in August 2022.
Shareholder litigation concerning Monsanto acquisition: In Germany and the United States, investors have filed lawsuits against Bayer claiming damages based on allegedly flawed capital market communication in connection with the acquisition of Monsanto Company. In Germany, as of June 30, 2022, 30 claims by approximately 340 plaintiffs had been filed and served upon Bayer. In July 2022, the Regional Court Cologne initiated a model case proceeding in accordance with the Capital Markets Model Case Act. This does not include a decision on the merits of the matter.
Net operating cash flow in the first half of 2022 amounted to €1,378 million (H1 2021: minus €768 million). The increase compared with the prior-year period was due in particular to lower net settlement payments of €791 million (H1 2021: €3,103 million) to resolve glyphosate, PCB, Essure™ and dicamba litigations.
The net cash outflow for investing activities in the first half of the year amounted to €2,029 million (H1 2021: net cash inflow of €4,392 million). The net cash outflow for current financial assets came to €1,308 million (H1 2021: inflow of €4,891 million). These cash outflows were largely attributable to investments in money market funds.
There was a net cash outflow of €739 million for financing activities (H1 2021: €4,490 million). This included net borrowings of €1,785 million (H1 2021: net loan repayments of €2,000 million). Net interest payments came to €573 million (H1 2021: €525 million). We paid out €1,966 million in dividends (H1 2021: €1,965 million).
Related parties as defined in IAS 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 joint control or have a significant influence. They include, in particular, nonconsolidated subsidiaries, joint ventures and associates included in the consolidated financial statements at cost of acquisition or using the equity method, post-employment benefit plans and the corporate officers of Bayer AG.
Business transactions involving related parties were not material from the viewpoint of the Bayer Group.
On April 29, 2022, the Annual Stockholders' Meeting approved the proposal by the Board of Management and the Supervisory Board that a dividend of €2.00 per share carrying dividend rights be paid for the 2021 fiscal year and that the remaining amount of €90,197,520.07 be allocated to other retained earnings.
The actions of the members of the Board of Management and the Supervisory Board serving in 2021 were ratified in accordance with the proposals by the Board of Management and the Supervisory Board.
Three stockholder representatives were elected to the Supervisory Board in accordance with the nominations submitted by the Supervisory Board.
The proposal by the Board of Management and the Supervisory Board to approve the Compensation Report for the 2021 fiscal year prepared and audited in accordance with Section 162 of the German Stock Corporation Act (AktG) was rejected.
The Annual Stockholders' Meeting accepted the proposal by the Board of Management and the Supervisory Board to approve the revised Control and Profit and Loss Transfer Agreement between the company and Bayer Chemicals GmbH dated February 18, 2022.
In accordance with the proposal by the Supervisory Board, Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Munich, Germany, was elected auditor of the annual and consolidated financial statements for 2022, and also to review, if applicable, the condensed financial statements and interim management report as of June 30, 2022, and if applicable, the condensed financial statements and interim management reports as of September 30, 2022, and March 31, 2023, if these are prepared.
On August 1, 2022, Bayer acquired an additional 59% of the shares in CoverCress Inc., United States, for a purchase price of around US\$118 million. Bayer had already held 6.3% of the shares outstanding. CoverCress Inc. is an innovative startup company developing a new winter oilseed crop under the CoverCress™ brand. CoverCress™ has the potential to decrease nitrogen loss, help store carbon in the soil and improve soil health.
Leverkusen, August 2, 2022 Bayer Aktiengesellschaft
The Board of Management
Werner Baumann Sarena Lin Wolfgang Nickl
Stefan Oelrich Rodrigo Santos Heiko Schipper
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the consolidated interim financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group in line with generally accepted accounting principles, and the interim Group management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.
Leverkusen, August 2, 2022 Bayer Aktiengesellschaft
The Board of Management
Werner Baumann Sarena Lin Wolfgang Nickl
Stefan Oelrich Rodrigo Santos Heiko Schipper
To Bayer Aktiengesellschaft, Leverkusen
We have reviewed the condensed interim consolidated financial statements of Bayer Aktiengesellschaft, Leverkusen, which comprise the consolidated income statement and the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of cash flows, the consolidated statement of changes in equity as well as selected explanatory notes to the consolidated financial statements, and the interim group management report for the period from 1 January to 30 June 2022, that are part of the semi-annual financial information under Section 115 German Securities Trading Act (WpHG). The preparation of the interim consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) applicable to interim financial reporting as adopted by the EU and of the interim group management report in accordance with the requirements of the WpHG applicable to interim group management reports is the responsibility of the executive directors of the Company. Our responsibility is to issue a review report on the interim consolidated financial statements and on the interim group management report based on our review.
We conducted our review of the interim consolidated financial statements and of the interim group management report in compliance with the German Generally Accepted Standards for Reviews of Financial Statements promulgated by the Institut der Wirtschaftsprüfer (IDW) and in supplementary compliance with the International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". Those standards require that we plan and perform the review to obtain a certain level of assurance to preclude through critical evaluation that the condensed interim consolidated financial statements have not been prepared, in material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU, or that the interim group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports. A review is limited primarily to inquiries of company personnel and to analytical procedures applied to financial data and thus provides less assurance than an audit. Since, in accordance with our engagement, we have not performed an audit, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim consolidated financial statements of Bayer AG, Leverkusen, have not been prepared, in material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU or that the interim group management report has not been prepared, in material respects, in accordance with the requirements of the WpHG applicable to interim group management reports.
Munich, 2 August 2022
Deloitte GmbH Wirtschaftsprüfungsgesellschaft
(Andreas Wermelt) (Michael Mehren) Wirtschaftsprüfer Wirtschaftsprüfer (German Public Auditor) (German Public Auditor)
| Q3 2022 Quarterly Statement | November 8, 2022 |
|---|---|
| 2022 Annual Report | February 28, 2023 |
| Annual Stockholders' Meeting 2023 | April 28, 2023 |
| Q1 2023 Quarterly Statement | May 11, 2023 |
This Bayer AG Interim Report is a half-year financial report that satisfies the requirements of Section 115, Paragraph 2, No. 1 and No. 2, Paragraph 3 and Paragraph 4 of the German Securities Trading Act (WpHG). Bayer has prepared the condensed consolidated interim financial statements according to the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and endorsed by the European Union (EU). This report should be read in conjunction with the Annual Report for the 2021 fiscal year and the additional information about the company provided therein. The Annual Report 2021 is available on our website at www.bayer.com.
Published by Date of publication Bayer AG, 51368 Leverkusen, Germany Thursday, August 4, 2022
Danielle Staudt-Gersdorf, phone +49 214 30 46309 Translation Operations Email: [email protected] SCGermany
Peter Dahlhoff, phone +49 214 30 33022 www.bayer.com Email: [email protected]
Editor English edition
Investor Relations Bayer on the internet
This half-year financial report may contain forward-looking statements based on current assumptions and forecasts made by Bayer management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in Bayer's public reports which are available on the Bayer website at www.bayer.com. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.
The product names designated with ™ are brands of the Bayer Group or our distribution partners and are registered trademarks in many countries.
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