Interim / Quarterly Report • Jul 27, 2017
Interim / Quarterly Report
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Second Quarter of 2017
| € million | Q2 2016 | Q2 2017 Change % | H1 2016 | H1 2017 Change % | Full Year 2016 |
||
|---|---|---|---|---|---|---|---|
| Sales | 11,833 | 12,193 | + 3.0 | 23,687 | 25,437 | + 7.4 | 46,769 |
| Change (adjusted for currency and portfolio effects) 1 | + 1.9 | + 5.7 | + 3.5% | ||||
| Change in sales 1 | |||||||
| Volume | + 4.4% | – 1.9% | + 4.8% | + 2.0% | + 4.2% | ||
| Price | – 2.1% | + 3.8% | – 2.0% | + 3.7% | – 0.7% | ||
| Currency | – 3.8% | + 1.0% | – 3.3% | + 1.7% | – 2.0% | ||
| Portfolio | + 0.1% | + 0.1% | 0.0% | 0.0% | 0.0% | ||
| EBITDA 1 | 2,952 | 2,983 | + 1.1 | 6,311 | 6,829 | + 8.2 | 10,785 |
| Special items 1 | (102) | (73) | (130) | (120) | (517) | ||
| EBITDA before special items 1 | 3,054 | 3,056 | + 0.1 | 6,441 | 6,949 | + 7.9 | 11,302 |
| EBITDA margin before special items 1 | 25.8% | 25.1% | 27.2% | 27.3% | 24.2% | ||
| EBIT 1 | 2,138 | 2,151 | + 0.6 | 4,458 | 5,267 | + 18.1 | 7,042 |
| Special items 1 | (104) | (205) | (376) | (290) | (1,088) | ||
| EBIT before special items 1 | 2,242 | 2,356 | + 5.1 | 4,834 | 5,557 | + 15.0 | 8,130 |
| Financial result | (314) | (405) | – 29.0 | (629) | (754) | – 19.9 | (1,155) |
| Net income (from continuing and discontinued operations) |
1,380 | 1,224 | – 11.3 | 2,891 | 3,307 | + 14.4 | 4,531 |
| Earnings per share (from continuing and discontinued operations) (€) 1 |
1.67 | 1.40 | – 16.2 | 3.50 | 3.79 | + 8.3 | 5.44 |
| Core earnings per share (from continuing operations) (€) 1 | 2.07 | 1.81 | – 12.6 | 4.42 | 4.44 | + 0.5 | 7.32 |
| Net cash provided by operating activities (from continuing and discontinued operations) |
1,982 | 2,313 | + 16.7 | 3,304 | 3,154 | – 4.5 | 9,089 |
| Cash outflows for capital expenditures | 589 | 476 | – 19.2 | 952 | 891 | – 6.4 | 2,578 |
| Research and development expenses | 1,122 | 1,165 | + 3.8 | 2,231 | 2,323 | + 4.1 | 4,666 |
| Depreciation, amortization and impairments | 814 | 832 | + 2.2 | 1,853 | 1,562 | – 15.7 | 3,743 |
| Number of employees at end of period 2 | 115,576 | 115,680 | + 0.1 | 115,576 | 115,680 | + 0.1 | 115,200 |
| Personnel expenses (including pension expenses) | 2,789 | 2,826 | + 1.3 | 5,621 | 5,950 | + 5.9 | 11,357 |
2016 figures restated
1 For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
2 Employees calculated as full-time equivalents (FTEs)
| Bayer Group Key Data | 2 | |
|---|---|---|
| Bayer Interim Group Management Report as of June 30, 2017 | 4 | |
| 1. | Overview of Sales, Earnings and Financial Position | 5 |
| 1.1 | Earnings Performance of the Bayer Group | 5 |
| 1.2 | Business Development by Segment | 9 |
| 1.3 | Asset and Financial Position of the Bayer Group | 21 |
| 2. | Research, Development, Innovation | 24 |
| 3. | Report on Future Perspectives and on Opportunities and Risks | 28 |
| 3.1 | Future Perspectives | 28 |
| 3.2 | Opportunities and risks | 29 |
| Condensed Consolidated Interim Financial Statements as of June 30, 2017 | 30 | |
| Bayer Group Consolidated Income Statements | 30 | |
| Bayer Group Consolidated Statements of Comprehensive Income | 31 | |
| Bayer Group Consolidated Statements of Financial Position | 32 | |
| Bayer Group Consolidated Statements of Cash Flows | 33 | |
| Bayer Group Consolidated Statements of Changes in Equity | 34 | |
| Notes to the Condensed Consolidated Interim Financial Statements | 35 | |
| Responsibility Statement | 52 | |
| Review Report | 53 | |
| Financial Calendar | 55 |
Reporting Principles
The Bayer Interim Report complies with the requirements made of a half-year financial report in accordance with the applicable provisions of the German Securities Trading Act (WpHG) and, pursuant to Section 37w of the WpHG, comprises condensed consolidated interim financial statements and an interim group management report, as well as a responsibility statement. 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 (E.U.). The condensed consolidated interim financial statements also comply with the IFRS published by the IASB. The interim group management report should be read in conjunction with our Annual Report 2016, which contains a detailed description of our business operations.
Masthead 55
The Bayer Group increased sales by 1.9% (Fx & portfolio adj.) to €12.2 billion in the second quarter of 2017. EBITDA before special items matched the prior-year period, coming in at €3.1 billion (+ 0.1%). We achieved encouraging growth in earnings and margins at Pharmaceuticals and Animal Health. Business declined at Consumer Health, in particular due to the difficult market environment in the United States. Against the backdrop of high inventories in Brazil, the world's second-largest agriculture market, we posted substantial declines in sales and earnings at Crop Science. As such, sales and earnings of our Life Science businesses were down. Covestro once again posted substantial growth in sales and earnings.
On June 7, 2017, Bayer reduced its directly held interest in Covestro from 53.3% to 44.9%, by placing 17.25 million shares at a price of €62.25 per share. Bayer AG's interest in Covestro was reduced by a further 4 percentage points through the contribution of Covestro shares to the Bayer Pension Trust e. V. In addition, Bayer has issued €1 billion in bonds maturing in 2020 that can be redeemed in cash, Covestro shares or a combination of the two. Covestro continues to be fully consolidated in Bayer's financial statements, as, even with these transactions having been completed, Bayer will still hold the de facto majority at a Covestro stockholders' meeting.
On June 30, 2017, Bayer filed an application with the European Commission seeking approval for the planned acquisition of Monsanto, representing a further significant milestone in the transaction.
Bayer also announced on June 30, 2017, that it was revising its annual guidance.
Sales of the Bayer Group increased by 1.9% (Fx & portfolio adj.) to €12,193 million in the second quarter of 2017 (reported: + 3.0%). Germany accounted for €1,216 million of this figure. Sales of the Life Science businesses declined by 2.8% (Fx & portfolio adj.) to €8,714 million.
Pharmaceuticals posted sales growth of 4.4% (Fx & portfolio adj.) to €4,304 million, mainly due to our key growth products continuing to deliver strong performance. Sales at Consumer Health declined year on year, falling by 2.2% (Fx. & portfolio adj.) to €1,542 million. Sales at Crop Science fell by a significant 15.8% (Fx & portfolio adj.) to €2,163 million, primarily due to its Brazil business. Excluding Brazil, sales matched the prior-year level. Animal Health achieved growth of 2.1% (Fx & portfolio adj.), with sales rising to €450 million. Sales at Covestro improved considerably, increasing by 15.8% (Fx & portfolio adj.) to €3,479 million.
At €3,056 million, EBITDA before special items of the Bayer Group matched the prior-year level (+ 0.1%). EBITDA before special items at Pharmaceuticals improved by a very encouraging 9.5% to €1,481 million. At Consumer Health, EBITDA before special items declined by 4.3% to €314 million. EBITDA before special items at Crop Science decreased by a significant 52.2% to €317 million, mainly due to provisions for product returns in Brazil. EBITDA before special items of Animal Health climbed by 16.0% to €116 million. Overall, EBITDA before special items of our Life Science businesses declined by 10.5% to €2,247 million. Covestro raised EBITDA before special items by a considerable 49.0% to €809 million.
Depreciation, amortization and impairment losses were 2.2% higher in the second quarter of 2017, at €832 million (Q2 2016: €814 million), comprising €422 million (Q2 2016: €447 million) in amortization and impairments on intangible assets and €410 million (Q2 2016: €367 million) in depreciation and impairments on property, plant and equipment. Impairment losses and impairment loss reversals amounted to €126 million, of which €122 million (Q2 2016: €0 million) constituted special items. In addition, an amount of €10 million was included in special items as accelerated depreciation.
EBIT of the Bayer Group came to €2,151 million, matching the prior-year period (Q2 2016: €2,138 million; + 0.6%). This figure reflected net special charges of €205 million (Q2 2016: €104 million). These mainly comprised €118 million in value adjustments in the Pharmaceuticals segment, €47 million in charges in conjunction with the agreed acquisition of Monsanto, and €37 million in charges related to efficiency improvement programs. EBIT before special items moved forward by 5.1% to €2,356 million (Q2 2016: €2,242 million).
In the second quarter of 2017, the following special effects were taken into account in calculating EBIT and EBITDA:
A 1
| Special Items Reconciliation1 | ||||||||
|---|---|---|---|---|---|---|---|---|
| € million | EBIT Q2 2016 |
EBIT Q2 2017 |
EBIT H1 2016 |
EBIT H1 2017 |
EBITDA Q2 2016 |
EBITDA Q2 2017 |
EBITDA H1 2016 |
EBITDA H1 2017 |
| Before special items | 2,242 | 2,356 | 4,834 | 5,557 | 3,054 | 3,056 | 6,441 | 6,949 |
| Pharmaceuticals | (11) | (120) | (242) | (156) | (10) | (7) | (10) | (10) |
| Consumer Health | (32) | (15) | (64) | (24) | (31) | (7) | (50) | (15) |
| Crop Science | (30) | (95) | (33) | (132) | (30) | (84) | (33) | (108) |
| Animal Health | – | – | (1) | – | – | – | (1) | – |
| Reconciliation | (31) | (14) | (36) | (34) | (31) | (14) | (36) | (34) |
| Restructuring | (26) | (14) | (31) | (29) | (26) | (14) | (31) | (29) |
| Litigations | (5) | – | (5) | (5) | (5) | – | (5) | (5) |
| Total special items Life Sciences | (104) | (244) | (376) | (346) | (102) | (112) | (130) | (167) |
| Covestro | – | 39 | – | 56 | – | 39 | – | 47 |
| Total special items | (104) | (205) | (376) | (290) | (102) | (73) | (130) | (120) |
| of which cost of goods sold | (16) | (66) | (199) | (74) | (14) | (42) | (22) | (44) |
| of which selling expenses | (30) | (40) | (71) | (41) | (30) | (8) | (35) | (9) |
| of which research and development expenses |
(18) | (77) | (53) | (113) | (18) | (3) | (20) | (6) |
| of which general administration expenses |
(31) | (58) | (44) | (93) | (31) | (58) | (44) | (93) |
| of which other operating income / expenses |
(9) | 36 | (9) | 31 | (9) | 38 | (9) | 32 |
| After special items | 2,138 | 2,151 | 4,458 | 5,267 | 2,952 | 2,983 | 6,311 | 6,829 |
| 1 |
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
Including a financial result of minus €405 million (Q2 2016: minus €314 million), income before income taxes was €1,746 million (Q2 2016: €1,824 million). After income tax expense of €417 million (Q2 2016: €431 million) and adjusting for income from discontinued operations after income taxes and noncontrolling interest, net income for the second quarter of 2017 amounted to €1,224 million (Q2 2016: €1,380 million).
Earnings per share (total) declined by 16.2% in the second quarter of 2017, to €1.40 (Q2 2016: €1.67), while core earnings per share from continuing operations fell by 12.6% to €1.81 (Q2 2016: €2.07). Material effects included the reduction of our interest in Covestro and the increased number of shares following the issuance of the mandatory convertible notes.
| Core Earnings per Share1 | ||||
|---|---|---|---|---|
| € million | Q2 2016 | Q2 2017 | H1 2016 | H1 2017 |
| EBIT (as per income statements) | 2,138 | 2,151 | 4,458 | 5,267 |
| Amortization and impairment losses / loss reversals on intangible assets |
447 | 422 | 1,114 | 771 |
| Impairment losses /loss reversals on property, plant and equipment, and accelerated depreciation included in special items |
(1) | 33 | 17 | 39 |
| Special items (other than amortization and impairment losses / loss reversals) |
102 | 73 | 130 | 120 |
| Core EBIT | 2,686 | 2,679 | 5,719 | 6,197 |
| Financial result (as per income statements) | (314) | (405) | (629) | (754) |
| Special items in the financial result | – | 164 | (10) | 199 |
| Income taxes (as per income statements) | (431) | (417) | (905) | (1,012) |
| Special items in income taxes | – | – | – | – |
| Tax effects related to amortization, impairment losses / loss reversals and special items |
(156) | (195) | (374) | (332) |
| Income after income taxes attributable to noncontrolling interest (as per income statements) |
(68) | (253) | (138) | (441) |
| Above-mentioned adjustments attributable to noncontrolling interest |
(5) | 9 | (7) | 12 |
| Core net income from continuing operations | 1,712 | 1,582 | 3,656 | 3,869 |
| Shares | ||||
| Weighted average number of shares | 826,947,808 | 872,107,808 | 826,947,808 | 871,747,808 |
| € | ||||
| Core earnings per share from continuing operations | 2.07 | 1.81 | 4.42 | 4.44 |
| Core earnings per share from discontinued operations | 0.13 | 0.17 | 0.20 | 0.28 |
| Core earnings per share from continuing and discontinued operations 1 |
2.20 | 1.98 | 4.62 | 4.72 |
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
In calculating net income and core earnings per share, the sale of a further 17.25 million shares in Covestro AG to institutional investors in the second quarter, at a price of €62.25 per share, was taken into consideration. In addition, 8 million shares of Covestro AG were deposited in Bayer Pension Trust e.V. at a price of €63.04 per share. Bayer thus reduced its interest from 53.3% to 40.9% of the issued stock.
As of June 30, 2017, personnel expenses rose by 1.3% compared with June 30, 2016, to €2,826 million (Q2 2016: €2,789 million). As of the closing date, the number of employees in the Bayer Group was largely unchanged year on year, at 115,680 (June 30, 2016: 115,576; + 0.1%).
Sales of the Bayer Group in the first half of 2017 increased by 5.7% (Fx & portfolio adj.) to €25,437 million (reported: + 7.4%), with Germany accounting for €2,610 million of this figure. Our Life Science businesses grew sales by 1.1% (Fx & portfolio adj.) to €18,394 million.
Sales of Pharmaceuticals advanced by 5.8% (Fx & portfolio adj.) to €8,567 million. At Consumer Health, sales were flat year on year at €3,143 million (Fx & portfolio adj.: + 0.2%). Crop Science sales declined by 5.4% (Fx & portfolio adj.) to €5,283 million. Animal Health posted a 2.5% increase (Fx & portfolio adj.) in sales to €890 million. At Covestro, sales improved by a substantial 19.6% (Fx & portfolio adj.) to €7,043 million.
EBITDA before special items of the Bayer Group advanced by 7.9% to €6,949 million (H1 2016: €6,441 million). Pharmaceuticals increased EBITDA before special items by a substantial 14.2% to €2,983 million. EBITDA before special items of Consumer Health came to €706 million, matching the prioryear period (– 0.7%). EBITDA before special items at Crop Science declined by a substantial 18.3% to €1,432 million, while Animal Health registered a significant earnings increase of 13.1% to €251 million. Overall, EBITDA before special items of the Life Science businesses declined slightly by 1.7% compared with the prior-year period, to €5,301 million. Covestro raised EBITDA before special items by a considerable 57.4% to €1,648 million.
In the first half of 2017, depreciation, amortization and impairments amounted to €1,562 million (H1 2016: €1,853 million), comprising €771 million (H1 2016: €1,114 million) in amortization and impairments on intangible assets and €791 million (H1 2016: €739 million) in depreciation and impairments on property, plant and equipment. Impairment losses and impairment loss reversals amounted to €166 million (H1 2016: €298 million). Impairment losses and impairment loss reversals in the amount of €160 million (H1 2016: €244 million) as well as accelerated depreciation in the amount of €10 million constituted special items.
EBIT of the Bayer Group rose by a substantial 18.1% to €5,267 million (H1 2016: €4,458 million), after net special charges of €290 million (H1 2016: €376 million). These mainly comprised €151 million in value adjustments, €68 million in charges in conjunction with the agreed acquisition of Monsanto, and €63 million in charges related to efficiency improvement programs. EBIT before special items moved forward by a significant 15.0% to €5,557 million (H1 2016: €4,834 million).
Including a financial result of minus €754 million (H1 2016: minus €629 million), income before income taxes amounted to €4,513 million (H1 2016: €3,829 million). The financial result comprised in particular a net interest expense of €268 million (H1 2016: €260 million), currency hedging costs in the amount of €233 million (H1 2016: €177 million), and interest cost of €115 million (H1 2016: €143 million) for pension and other provisions. After tax expense of €1,012 million (H1 2016: €905 million), income after income taxes was €3,501 million (H1 2016: €2,924 million). Adjusted for income from discontinued operations after income taxes and noncontrolling interest, net income came to €3,307 million (H1 2016: €2,891 million).
Earnings per share (total) increased to €3.79 (H1 2016: €3.50), while core earnings per share from continuing operations amounted to €4.44, in line with the prior-year period (H1 2016: €4.42).
| Change % | Change % | |||||||
|---|---|---|---|---|---|---|---|---|
| € million | Q2 2016 | Q2 2017 | Reported | Fx & p adj. |
H1 2016 | H1 2017 | Reported | Fx & p adj. |
| Sales | 4,104 | 4,304 | + 4.9 | + 4.4 | 7,993 | 8,567 | + 7.2 | + 5.8 |
| Change in sales 1 | ||||||||
| Volume | + 9.6% | + 4.7% | + 11.1% | + 6.2% | ||||
| Price | – 1.2% | – 0.3% | – 0.9% | – 0.4% | ||||
| Currency | – 2.9% | + 0.5% | – 2.9% | + 1.4% | ||||
| Portfolio | 0.0% | 0.0% | 0.0% | 0.0% | ||||
| Reported | Fx adj. | Reported | Fx adj. | |||||
| Sales by region | ||||||||
| Europe / Middle East / Africa | 1,602 | 1,647 | + 2.8 | + 3.3 | 3,144 | 3,253 | + 3.5 | + 3.6 |
| North America | 1,027 | 1,101 | + 7.2 | + 5.3 | 2,016 | 2,174 | + 7.8 | + 5.1 |
| Asia / Pacific | 1,219 | 1,290 | + 5.8 | + 5.7 | 2,349 | 2,602 | + 10.8 | + 9.5 |
| Latin America | 256 | 266 | + 3.9 | + 1.6 | 484 | 538 | + 11.2 | + 5.8 |
| EBITDA 1 | 1,342 | 1,474 | + 9.8 | 2,603 | 2,973 | + 14.2 | ||
| Special items 1 | (10) | (7) | (10) | (10) | ||||
| EBITDA before special items 1 | 1,352 | 1,481 | + 9.5 | 2,613 | 2,983 | + 14.2 | ||
| EBITDA margin before special items 1 |
32.9% | 34.4% | 32.7% | 34.8% | ||||
| EBIT 1 | 988 | 1,102 | + 11.5 | 1,686 | 2,321 | + 37.7 | ||
| Special items 1 | (11) | (120) | (242) | (156) | ||||
| EBIT before special items 1 | 999 | 1,222 | + 22.3 | 1,928 | 2,477 | + 28.5 | ||
| Net cash provided by operating activities |
310 | 528 | + 70.3 | 1,044 | 1,501 | + 43.8 |
A 3
2016 figures restated; Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted
1 For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
Sales of Pharmaceuticals increased by 4.4% (Fx & portfolio adj.) to €4,304 million in the second quarter of 2017. Our key growth products Xarelto™, Eylea™, Xofigo™, Stivarga™ and Adempas™ once again delivered strong performance, with their combined sales rising by 16.6% (Fx adj.) to €1,555 million (Q2 2016: €1,332 million). Combined sales of the 15 best-selling Pharmaceuticals products advanced by 7.7% (Fx adj.). Our Pharmaceuticals business expanded in all regions.
| Change % | Change % | |||||||
|---|---|---|---|---|---|---|---|---|
| € million | Q2 2016 Q2 2017 Reported | Fx adj.1 | H1 2016 H1 2017 Reported | Fx adj.1 | ||||
| Xarelto™ | 703 | 834 | + 18.6 | + 18.4 | 1,320 | 1,585 | + 20.1 | + 19.0 |
| of which U.S.A.2 | 103 | 117 | + 13.6 | + 13.1 | 189 | 203 | + 7.4 | + 7.2 |
| Eylea™ | 418 | 458 | + 9.6 | + 10.6 | 790 | 904 | + 14.4 | + 14.7 |
| of which U.S.A.3 | 0 | 0 | 0 | 0 | ||||
| Xofigo™ | 81 | 105 | + 29.6 | + 28.0 | 156 | 205 | + 31.4 | + 29.2 |
| of which U.S.A. | 56 | 62 | + 10.7 | + 7.6 | 106 | 124 | + 17.0 | + 12.8 |
| Stivarga™ | 67 | 83 | + 23.9 | + 20.8 | 134 | 158 | + 17.9 | + 14.9 |
| of which U.S.A. | 33 | 46 | + 39.4 | + 35.9 | 68 | 85 | + 25.0 | + 21.0 |
| Adempas™ | 63 | 75 | + 19.0 | + 17.9 | 119 | 148 | + 24.4 | + 22.2 |
| of which U.S.A. | 30 | 38 | + 26.7 | + 24.1 | 56 | 76 | + 35.7 | + 31.8 |
| Total key growth products | 1,332 | 1,555 | + 16.7 | + 16.6 | 2,519 | 3,000 | + 19.1 | + 18.2 |
| Mirena™ product family | 258 | 276 | + 7.0 | + 4.5 | 506 | 591 | + 16.8 | + 13.4 |
| of which U.S.A. | 168 | 176 | + 4.8 | + 2.2 | 337 | 395 | + 17.2 | + 13.6 |
| Kogenate™ / Kovaltry™ | 280 | 260 | – 7.1 | – 7.7 | 576 | 535 | – 7.1 | – 8.1 |
| of which U.S.A. | 87 | 91 | + 4.6 | + 2.8 | 183 | 185 | + 1.1 | – 1.3 |
| Nexavar™ | 221 | 229 | + 3.6 | + 2.1 | 434 | 436 | + 0.5 | – 1.7 |
| of which U.S.A. | 78 | 86 | + 10.3 | + 5.9 | 159 | 161 | + 1.3 | – 2.2 |
| Betaferon™ / Betaseron™ | 196 | 185 | – 5.6 | – 6.4 | 386 | 356 | – 7.8 | – 9.2 |
| of which U.S.A. | 111 | 108 | – 2.7 | – 4.1 | 211 | 202 | – 4.3 | – 6.6 |
| Adalat™ | 161 | 171 | + 6.2 | + 7.3 | 321 | 345 | + 7.5 | + 7.9 |
| of which U.S.A. | 0 | 0 | 1 | 0 | ||||
| YAZ™ / Yasmin™ / Yasminelle™ | 166 | 158 | – 4.8 | – 6.3 | 338 | 328 | – 3.0 | – 6.8 |
| of which U.S.A. | 31 | 25 | – 19.4 | – 20.7 | 71 | 45 | – 36.6 | – 38.3 |
| Aspirin™ Cardio | 138 | 148 | + 7.2 | + 8.0 | 275 | 305 | + 10.9 | + 10.9 |
| of which U.S.A. | 0 | 0 | 0 | 0 | ||||
| Glucobay™ | 128 | 139 | + 8.6 | + 10.5 | 267 | 297 | + 11.2 | + 12.6 |
| of which U.S.A. | 1 | 0 | 2 | 1 | ||||
| Avalox™ / Avelox™ | 88 | 87 | – 1.1 | + 0.1 | 186 | 187 | + 0.5 | + 1.2 |
| of which U.S.A. | 0 | 2 | 0 | 5 | ||||
| Gadavist™ / Gadovist™ | 89 | 97 | + 9.0 | + 7.9 | 171 | 186 | + 8.8 | + 7.1 |
| of which U.S.A. | 27 | 34 | + 25.9 | + 23.7 | 54 | 61 | + 13.0 | + 10.4 |
| Total best-selling products | 3,057 | 3,305 | + 8.1 | + 7.7 | 5,979 | 6,566 | + 9.8 | + 8.6 |
| Proportion of Pharmaceuticals sales | 74% | 77% | 75% | 77% | ||||
| Total best-selling products in U.S.A. | 725 | 785 | 1,437 | 1,543 |
A 4
Fx adj. = currency-adjusted; for definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group." 2
Marketing rights owned by an affiliate of Johnson & Johnson, U.S.A.
3 Marketing rights owned by Regeneron Pharmaceuticals Inc., U.S.A.
Sales by product
> We once again recorded substantial sales gains for our cancer drug Xofigo™, with business benefiting from a successful market launch in Japan and growth in the United States and Europe.
Overview of Sales, Earnings and Financial Position
> Sales of the pulmonary hypertension treatment Adempas™ advanced significantly on a currencyadjusted basis, and, as in the past, reflected the proportionate recognition of the one-time payment resulting from the sGC collaboration with Merck & Co., United States. Business continued to benefit mainly from positive performance in the United States.
EBITDA before special items of Pharmaceuticals improved by a very encouraging 9.5% to €1,481 million in the second quarter of 2017 (Q2 2016: €1,352 million). Positive earnings effects resulted primarily from higher volumes, while the cost of goods sold and expenses for research and development were lower.
EBIT increased by a substantial 11.5% to €1,102 million, and included special charges of €120 million (Q2 2016: €11 million). These largely comprised €69 million in impairments on intangible assets in the area of oncology (OncoMed), and €49 million in value adjustments in the area of women's health.
A 5
| Special Items 1 Pharmaceuticals |
||||||||
|---|---|---|---|---|---|---|---|---|
| € million | EBIT Q2 2016 |
EBIT Q2 2017 |
EBIT H1 2016 |
EBIT H1 2017 |
EBITDA Q2 2016 |
EBITDA Q2 2017 |
EBITDA H1 2016 |
EBITDA H1 2017 |
| Restructuring | (10) | (2) | (12) | (5) | (9) | (1) | (11) | (4) |
| Litigations | (1) | – | 1 | – | (1) | – | 1 | – |
| Value adjustments | – | (118) | (231) | (151) | – | (6) | – | (6) |
| Total special items | (11) | (120) | (242) | (156) | (10) | (7) | (10) | (10) |
| 1 |
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
Sales of Pharmaceuticals rose by 5.8% (Fx & portfolio adj.) to €8,567 million in the first half of 2017. Our key growth products Xarelto™, Eylea™, Stivarga™, Xofigo™ and Adempas™ delivered strong performance, with their combined sales rising by 18.2% (Fx adj.) to €3,000 million (H1 2016: €2,519 million). Pharmaceuticals sales developed positively in all regions.
EBITDA before special items improved by a substantial 14.2% in the first half of 2017, to €2,983 million. This positive earnings performance was the result of the good development of business, while the cost of goods sold and expenses for research and development were lower. In addition, selling expenses increased at a slower rate than sales.
EBIT increased substantially, rising by 37.7% to €2,321 million. Special charges amounted to €156 million (H1 2016: €242 million) and were primarily the result of value adjustments.
A 6
| Key Data – Consumer Health | ||||||||
|---|---|---|---|---|---|---|---|---|
| Change % | Change % | |||||||
| € million | Q2 2016 | Q2 2017 | Reported | Fx & p adj. |
H1 2016 | H1 2017 | Reported | Fx & p adj. |
| Sales | 1,553 | 1,542 | – 0.7 | – 2.2 | 3,073 | 3,143 | + 2.3 | + 0.2 |
| Changes in sales 1 | ||||||||
| Volume | + 1.2% | – 4.6% | – 0.1% | – 2.2% | ||||
| Price | + 2.8% | + 2.4% | + 3.2% | + 2.4% | ||||
| Currency | – 6.3% | + 1.5% | – 5.4% | + 2.1% | ||||
| Portfolio | 0.0% | 0.0% | 0.0% | 0.0% | ||||
| Reported | Fx adj. | Reported | Fx adj. | |||||
| Sales by region | ||||||||
| Europe / Middle East / Africa | 480 | 503 | + 4.8 | + 2.7 | 962 | 1,041 | + 8.2 | + 5.8 |
| North America | 701 | 661 | – 5.7 | – 7.8 | 1,378 | 1,362 | – 1.2 | – 4.1 |
| Asia / Pacific | 201 | 195 | – 3.0 | – 3.0 | 402 | 415 | + 3.2 | + 1.7 |
| Latin America | 171 | 183 | + 7.0 | + 8.8 | 331 | 325 | – 1.8 | 0.0 |
| EBITDA 1 | 297 | 307 | + 3.4 | 661 | 691 | + 4.5 | ||
| Special items 1 | (31) | (7) | (50) | (15) | ||||
| EBITDA before special items 1 | 328 | 314 | – 4.3 | 711 | 706 | – 0.7 | ||
| EBITDA margin before special items 1 |
21.1% | 20.4% | 23.1% | 22.5% | ||||
| EBIT 1 | 190 | 195 | + 2.6 | 433 | 473 | + 9.2 | ||
| Special items 1 | (32) | (15) | (64) | (24) | ||||
| EBIT before special items 1 | 222 | 210 | – 5.4 | 497 | 497 | 0.0 | ||
| Net cash provided by operating activities |
241 | 297 | + 23.2 | 438 | 562 | + 28.3 |
2016 figures restated; Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted
1 For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
Sales of Consumer Health in the second quarter of 2017 fell by 2.2% (Fx & portfolio adj.) to €1,542 million. We recorded substantial declines in sales in North America, particularly in the United States, due to the difficult market environment. In contrast, we expanded our business in Latin America and Europe / Middle East / Africa.
| Change % | Change % | |||||||
|---|---|---|---|---|---|---|---|---|
| € million | Q2 2016 Q2 2017 Reported | Fx adj.1 | H1 2016 | H1 2017 Reported | Fx adj.1 | |||
| Claritin™ | 178 | 159 | – 10.7 | – 12.3 | 365 | 349 | – 4.4 | – 6.9 |
| Aspirin™ | 102 | 104 | + 2.0 | + 0.7 | 218 | 221 | + 1.4 | + 0.1 |
| Bepanthen™ / Bepanthol™ | 95 | 100 | + 5.3 | + 4.9 | 187 | 195 | + 4.3 | + 3.6 |
| Aleve™ | 110 | 101 | – 8.2 | – 10.5 | 200 | 183 | – 8.5 | – 11.1 |
| Coppertone™ ² | 94 | 80 | – 14.9 | – 16.7 | 175 | 182 | + 4.0 | + 0.8 |
| Canesten™ | 75 | 74 | – 1.3 | + 3.1 | 139 | 144 | + 3.6 | + 7.0 |
| Alka-Seltzer™ product family | 45 | 44 | – 2.2 | – 4.8 | 102 | 114 | + 11.8 | + 8.7 |
| One A Day™ | 55 | 55 | 0.0 | + 0.2 | 99 | 110 | + 11.1 | + 8.7 |
| Dr Scholl's™ ² | 65 | 65 | 0.0 | – 3.2 | 125 | 106 | – 15.2 | – 17.8 |
| Elevit™ | 40 | 44 | + 10.0 | + 9.9 | 83 | 96 | + 15.7 | + 11.7 |
| Total | 859 | 826 | – 3.8 | – 4.9 | 1,693 | 1,700 | + 0.4 | – 1.5 |
| Proportion of Consumer Health sales | 55% | 54% | 55% | 54% | ||||
| 1 |
A 7
Fx adj. = currency-adjusted; for definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
2 Trademark rights and distribution only in certain countries outside the European Union
Sales by product
EBITDA before special items of Consumer Health declined by 4.3% to €314 million in the second quarter of 2017 (Q2 2016: €328 million). The fall in earnings is mainly attributable to lower volumes and the higher cost of goods sold, which resulted in part from inventory write-offs.
EBIT increased by 2.6% to €195 million, and included special charges of €15 million (Q2 2016: €32 million).
| Special Items 1 Consumer Health |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| € million | EBIT Q2 2016 |
EBIT Q2 2017 |
EBIT H1 2016 |
EBIT H1 2017 |
EBITDA Q2 2016 |
EBITDA Q2 2017 |
EBITDA H1 2016 |
EBITDA H1 2017 |
|||||
| Restructuring | (3) | (15) | (17) | (24) | (2) | (7) | (3) | (15) | |||||
| Integration costs | (29) | – | (47) | – | (29) | – | (47) | – | |||||
| Total special items | (32) | (15) | (64) | (24) | (31) | (7) | (50) | (15) | |||||
| 1 |
A 8
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
In the first half of 2017, Consumer Health posted sales of €3,143 million (Fx & portfolio adj. + 0.2%). Business developed positively in Europe in particular, while sales fell in North America due to a difficult market environment in the United States.
EBITDA before special items decreased by 0.7% in the first half of 2017, to €706 million (H1 2016: €711 million). Earnings contributions from the development of business stood against the higher cost of goods sold, which was due in part to inventory write-offs.
EBIT moved ahead by a clear 9.2% to €473 million (H1 2016: €433 million). Special charges amounted to €24 million (H1 2016: €64 million).
A 9
| Key Data – Crop Science | ||||||||
|---|---|---|---|---|---|---|---|---|
| Change % | Change % | |||||||
| € million | Q2 2016 | Q2 2017 Reported | Fx & p adj. |
H1 2016 | H1 2017 Reported | Fx & p adj. |
||
| Sales | 2,518 | 2,163 | – 14.1 | – 15.8 | 5,454 | 5,283 | – 3.1 | – 5.4 |
| Change in sales 1 | ||||||||
| Volume | – 1.0% | – 13.7% | – 0.8% | – 4.3% | ||||
| Price | + 1.4% | – 2.1% | + 1.6% | – 1.1% | ||||
| Currency | – 5.2% | + 1.7% | – 4.3% | + 2.3% | ||||
| Portfolio | + 0.3% | 0.0% | + 0.2% | 0.0% | ||||
| Reported | Fx adj. | Reported | Fx adj. | |||||
| Sales by region | ||||||||
| Europe / Middle East / Africa | 897 | 908 | + 1.2 | – 0.2 | 2,317 | 2,370 | + 2.3 | + 1.4 |
| North America | 812 | 865 | + 6.5 | + 5.0 | 1,721 | 1,907 | + 10.8 | + 7.1 |
| Asia / Pacific | 455 | 459 | + 0.9 | – 2.0 | 797 | 825 | + 3.5 | + 0.3 |
| Latin America | 354 | (69) | 619 | 181 | – 70.8 | – 73.5 | ||
| EBITDA 1 | 633 | 233 | – 63.2 | 1,719 | 1,324 | – 23.0 | ||
| Special items 1 | (30) | (84) | (33) | (108) | ||||
| EBITDA before special items 1 | 663 | 317 | – 52.2 | 1,752 | 1,432 | – 18.3 | ||
| EBITDA margin before special items 1 |
26.3% | 14.7% | 32.1% | 27.1% | ||||
| EBIT 1 | 512 | 117 | – 77.1 | 1,467 | 1,087 | – 25.9 | ||
| Special items 1 | (30) | (95) | (33) | (132) | ||||
| EBIT before special items 1 | 542 | 212 | – 60.9 | 1,500 | 1,219 | – 18.7 | ||
| Net cash provided by operating activities |
1,088 | 1,170 | + 7.5 | 422 | 491 | + 16.4 |
2016 figures restated; Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted
1 For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
Sales of Crop Science in the second quarter of 2017 fell by 15.8% (Fx & portfolio adj.) to €2,163 million. This decline is mainly due to significantly higher provisions for product returns – specifically crop-protection products – in Brazil. At the end of the harvest season, regular stocktaking revealed high channel inventories in the Brazilian market, requiring measures to be taken to normalize the situation. Excluding the €428 million decline in sales in Brazil, business at Crop Science was up slightly year on year on a currencyadjusted basis. Environmental Science delivered positive performance, in part due to the delivery of products to the company that acquired our consumer business.
A 10
| Sales by Business Unit | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Change % | Change % | ||||||||
| € million | Q2 2016 | Q2 2017 Reported | Fx & p adj. |
H1 2016 | H1 2017 Reported | Fx & p adj. |
|||
| Crop Protection / Seeds | 2,363 | 1,971 | – 16.6 | – 18.2 | 5,182 | 4,944 | – 4.6 | – 6.8 | |
| Crop Protection | 2,055 | 1,637 | – 20.3 | – 21.6 | 4,237 | 3,888 | – 8.2 | – 9.8 | |
| Herbicides | 769 | 742 | – 3.5 | – 6.0 | 1,614 | 1,654 | + 2.5 | + 0.2 | |
| Fungicides | 840 | 502 | – 40.2 | – 40.2 | 1,667 | 1,289 | – 22.7 | – 23.3 | |
| Insecticides | 302 | 256 | – 15.2 | – 16.9 | 586 | 557 | – 4.9 | – 6.7 | |
| SeedGrowth | 144 | 137 | – 4.9 | – 6.3 | 370 | 388 | + 4.9 | + 1.9 | |
| Seeds | 308 | 334 | + 8.4 | + 4.6 | 945 | 1,056 | + 11.7 | + 6.8 | |
| Environmental Science | 155 | 192 | + 23.9 | + 20.6 | 272 | 339 | + 24.6 | + 21.0 |
Fx & p adj. = currency- and portfolio-adjusted;
for definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
EBITDA before special items of Crop Science declined by 52.2% to €317 million in the second quarter of 2017 (Q2 2016: €663 million), in particular due to the situation in Brazil, where we recorded a substantial negative impact on earnings in the amount of €355 million in total. This included provisions for product returns in the amount of €173 million, impairment losses recognized on receivables in the amount of €53 million, inventory write-offs in the amount of €56 million, and other effects totaling €73 million. Excluding our business in Brazil, earnings were up slightly year on year.
EBIT decreased by 77.1% to €117 million, and included special charges in the amount of €95 million (Q2 2016: €30 million) related mainly to the agreed acquisition of Monsanto and the completion of a divestiture project.
| Special Items 1 Crop Science |
||||||||
|---|---|---|---|---|---|---|---|---|
| € million | EBIT Q2 2016 |
EBIT Q2 2017 |
EBIT H1 2016 |
EBIT H1 2017 |
EBITDA Q2 2016 |
EBITDA Q2 2017 |
EBITDA H1 2016 |
EBITDA H1 2017 |
| Restructuring | (28) | (6) | (28) | (22) | (28) | (5) | (28) | (8) |
| Litigations | (2) | (2) | (5) | (2) | (2) | (2) | (5) | (2) |
| Acquisition costs | – | (47) | – | (68) | – | (47) | – | (68) |
| Divestments | – | (40) | – | (40) | – | (30) | – | (30) |
| Total special items 1 |
(30) | (95) | (33) | (132) | (30) | (84) | (33) | (108) |
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
Sales of Crop Science in the first half of 2017 declined by 5.4% (Fx & portfolio adj.) to €5,283 million. Sales fell at Fungicides and Insecticides in particular due to the aforementioned adjustments made to provisions for product returns and weak business in Brazil. In contrast, we achieved gains at Seeds and Environmental Science. Higher sales in North America and Europe / Middle East / Africa were insufficient to offset the substantial decline in business in Latin America. Sales in Asia / Pacific came in at the prior-year level. Excluding Brazil, sales increased slightly overall.
EBITDA before special items of Crop Science declined by 18.3% to €1,432 million (H1 2016: €1,752 million) in the first half of 2017, significantly weighed down by the aforementioned effects in Brazil. Excluding Brazil, earnings were higher than in the prior-year period.
EBIT declined by 25.9% to €1,087 million. Earnings were held back by special charges of €132 million (H1 2016: €33 million) largely related to the agreed acquisition of Monsanto, the completion of a divestiture project and efficiency improvement programs.
| Key Data – Animal Health | ||||||||
|---|---|---|---|---|---|---|---|---|
| Change % | Change % | |||||||
| € million | Q2 2016 | Q2 2017 Reported | Fx & p adj. |
H1 2016 | H1 2017 Reported | Fx & p adj. |
||
| Sales | 426 | 450 | + 5.6 | + 2.1 | 834 | 890 | + 6.7 | + 2.5 |
| Change in sales 1 | ||||||||
| Volume | + 1.4% | – 0.7% | + 4.7% | – 0.5% | ||||
| Price | + 2.8% | + 2.8% | + 1.7% | + 3.0% | ||||
| Currency | – 4.7% | + 1.6% | – 3.9% | + 2.3% | ||||
| Portfolio | 0.0% | + 1.9% | 0.0% | + 1.9% | ||||
| Reported | Fx adj. | Reported | Fx adj. | |||||
| Sales by region | ||||||||
| Europe / Middle East / Africa | 123 | 122 | – 0.8 | + 2.4 | 261 | 266 | + 1.9 | + 2.3 |
| North America | 193 | 208 | + 7.8 | + 4.7 | 355 | 385 | + 8.5 | + 5.1 |
| Asia / Pacific | 71 | 80 | + 12.7 | + 9.9 | 138 | 156 | + 13.0 | + 9.4 |
| Latin America | 39 | 40 | + 2.6 | – 2.6 | 80 | 83 | + 3.8 | – 1.3 |
| EBITDA 1 | 100 | 116 | + 16.0 | 221 | 251 | + 13.6 | ||
| Special items 1 | – | – | (1) | – | ||||
| EBITDA before special items 1 | 100 | 116 | + 16.0 | 222 | 251 | + 13.1 | ||
| EBITDA margin before special items 1 |
23.5% | 25.8% | 26.6% | 28.2% | ||||
| EBIT 1 | 93 | 107 | + 15.1 | 207 | 233 | + 12.6 | ||
| Special items 1 | – | – | (1) | – | ||||
| EBIT before special items 1 | 93 | 107 | + 15.1 | 208 | 233 | + 12.0 | ||
| Net cash provided by operating activities |
48 | 97 | + 102.1 | 28 | 66 | + 135.7 |
A 12
2016 figures restated; Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted
1 For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
Sales of Animal Health in the second quarter of 2017 moved ahead by 2.1% (Fx & portfolio adj.) to €450 million. The development of business in the Asia / Pacific region was encouraging. In North America, the Cydectin™ product portfolio that was acquired in January 2017 contributed to sales growth on a currency-adjusted basis. We recorded a slight increase in sales in Europe / Middle East / Africa on a currencyadjusted basis, while the performance of our Latin America business matched the prior-year period.
A 13
| Best-Selling Animal Health Products | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Change % | Change % | |||||||||
| € million | Q2 2016 | Q2 2017 Reported | Fx adj.1 | H1 2016 | H1 2017 Reported | Fx adj.1 | ||||
| Advantage™ product family | 157 | 146 | – 7.0 | – 7.7 | 305 | 282 | – 7.5 | – 8.8 | ||
| Seresto™ | 67 | 81 | + 20.9 | + 17.4 | 121 | 157 | + 29.8 | + 26.6 | ||
| Drontal™ product family | 32 | 33 | + 3.1 | + 4.8 | 64 | 68 | + 6.3 | + 5.4 | ||
| Baytril™ | 24 | 31 | + 29.2 | + 25.8 | 52 | 58 | + 11.5 | + 8.9 | ||
| Total | 280 | 291 | + 3.9 | + 2.6 | 542 | 565 | + 4.2 | + 2.5 | ||
| Proportion of Animal Health sales | 66% | 65% | 65% | 63% | ||||||
| 1 Fx adj. = currency-adjusted; for definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group." |
Sales by product
EBITDA before special items of Animal Health increased by 16.0% to €116 million in the second quarter of 2017 (Q2 2016: €100 million). Positive earnings contributions resulted from price increases, the lower cost of goods sold as well as the Cydectin™ business that Bayer acquired. These more than offset a decline in volumes and slightly higher expenses for research and development.
EBIT climbed by 15.1% to €107 million, with no special items (Q2 2016: €0 million) recorded.
| Special Items 1 | Animal Health | |||||||
|---|---|---|---|---|---|---|---|---|
| € million | EBIT Q2 2016 |
EBIT Q2 2017 |
EBIT H1 2016 |
EBIT H1 2017 |
EBITDA Q2 2016 |
EBITDA Q2 2017 |
EBITDA H1 2016 |
EBITDA H1 2017 |
| Restructuring | – | – | (1) | – | – | – | (1) | – |
| Total special items 1 |
– | - | (1) | – | – | – | (1) | – |
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
Sales of Animal Health rose by 2.5% (Fx & portfolio adj.) to €890 million in the first half of 2017. Development in the Asia / Pacific region was especially positive. We also recorded sales gains in North America and Europe / Middle East / Africa, while business in Latin America declined slightly on a currency-adjusted basis.
EBITDA before special items increased by 13.1% to €251 million in the first half of 2017. Performance was driven by positive price effects and the newly acquired Cydectin™ business. This development stood against higher expenses for research and development.
EBIT improved by 12.6% to €233 million, with no special items (Q2 2016: special charges of €1 million) recorded.
| Key Data – Covestro | ||||||||
|---|---|---|---|---|---|---|---|---|
| Change % | Change % | |||||||
| € million | Q2 2016 Q2 2017 Reported | Fx & p adj. |
H1 2016 | H1 2017 Reported | Fx & p adj. |
|||
| Sales | 2,975 | 3,479 | + 16.9 | + 15.8 | 5,825 | 7,043 | + 20.9 | + 19.6 |
| Change in sales 1 | ||||||||
| Volume | + 5.0% | + 0.6% | + 5.4% | + 5.3% | ||||
| Price | – 8.9% | + 15.2% | – 9.7% | + 14.3% | ||||
| Currency | – 2.7% | + 1.1% | – 1.7% | + 1.3% | ||||
| Portfolio | 0.0% | 0.0% | 0.0% | 0.0% | ||||
| Reported | Fx adj. | Reported | Fx adj. | |||||
| Sales by region | ||||||||
| Europe / Middle East / Africa | 1,254 | 1,380 | + 10.0 | + 9.9 | 2,464 | 2,793 | + 13.4 | + 13.2 |
| North America | 686 | 756 | + 10.2 | + 7.3 | 1,369 | 1,517 | + 10.8 | + 7.5 |
| Asia / Pacific | 866 | 1,129 | + 30.4 | + 29.8 | 1,659 | 2,311 | + 39.3 | + 38.2 |
| Latin America | 169 | 214 | + 26.6 | + 23.1 | 333 | 422 | + 26.7 | + 24.6 |
| EBITDA 1 | 543 | 848 | + 56.2 | 1,047 | 1,695 | + 61.9 | ||
| Special items 1 | – | 39 | – | 47 | ||||
| EBITDA before special items 1 | 543 | 809 | + 49.0 | 1,047 | 1,648 | + 57.4 | ||
| EBITDA margin before special items 1 | 18.3% | 23.3% | 18.0% | 23.4% | ||||
| EBIT1 | 367 | 688 | + 87.5 | 703 | 1,377 | + 95.9 | ||
| Special items 1 | – | 39 | – | 56 | ||||
| EBIT before special items 1 | 367 | 649 | + 76.8 | 703 | 1,321 | + 87.9 | ||
| Net cash provided by operating activities |
309 | 415 | + 34.3 | 478 | 690 | + 44.4 |
A 15
2016 figures restated; Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted
1 For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
Sales of Covestro in the second quarter of 2017 increased by 15.8% (Fx & portfolio adj.) to €3,479 million. Selling prices were much higher overall, especially at Polyurethanes, while volumes matched the prior-year period overall.
A 16
| Change % | Change % | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| € million | Q2 2016 | Q2 2017 Reported | Fx & p adj. |
H1 2016 | H1 2017 Reported | Fx & p adj. |
|||
| Polyurethanes | 1,482 | 1,889 | + 27.5 | + 26.1 | 2,883 | 3,783 | + 31.2 | + 29.7 | |
| Polycarbonates | 831 | 912 | + 9.7 | + 8.7 | 1,617 | 1,866 | + 15.4 | + 14.2 | |
| Coatings, Adhesives, Specialties | 532 | 532 | – | – 0.8 | 1,044 | 1,096 | + 5.0 | + 3.9 | |
| Other Covestro business | 130 | 146 | + 12.3 | + 12.4 | 281 | 298 | + 6.0 | + 5.7 | |
| Total | 2,975 | 3,479 | + 16.9 | + 15.8 | 5,825 | 7,043 | + 20.9 | + 19.6 |
Fx & p adj. = currency- and portfolio-adjusted;
for definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
EBITDA before special items of Covestro improved by 49.0% to €809 million in the second quarter of 2017 (Q2 2016: €543 million). Substantially higher selling prices more than offset the effect of increased raw material prices.
EBIT increased by 87.5% to €688 million, and included a special gain in the amount of €39 million (Q2 2016: €0 million) resulting from the sale of the segment's North American spray polyurethane foam system house.
| Special Items 1 Covestro |
||||||||
|---|---|---|---|---|---|---|---|---|
| € million | EBIT Q2 2016 |
EBIT Q2 2017 |
EBIT H1 2016 |
EBIT H1 2017 |
EBITDA Q2 2016 |
EBITDA Q2 2017 |
EBITDA H1 2016 |
EBITDA H1 2017 |
| Divestitures | – | 39 | – | 39 | – | 39 | – | 39 |
| Restructuring | – | – | – | 17 | – | – | – | 8 |
| Total special items 1 |
– | 39 | – | 56 | – | 39 | – | 47 |
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
Sales of Covestro increased by 19.6% (Fx & portfolio adj.) in the first half of 2017 compared with the prioryear period, to €7,043 million, due to significantly higher selling prices, especially at Polyurethanes. All business units reported higher volumes.
EBITDA before special items of Covestro improved by 57.4% to €1,648 million in the first half of 2017 (H1 2016: €1,047 million). A significant increase in selling prices and higher volumes more than offset higher raw material costs.
EBIT climbed by 95.9% to €1,377 million, and included special gains of €56 million (H1 2016: €0 million) related to the aforementioned sale and the decision made in the first quarter of 2017 to postpone the closure of a production facility until further notice.
| A 18 | |||||
|---|---|---|---|---|---|
| Q2 2016 | Q2 2017 | Change % | H1 2016 | H1 2017 | Change % |
| 1,992 | 2,316 | + 16.3 | 2,544 | 3,142 | + 23.5 |
| (10) | (3) | + 70.0 | 760 | 12 | – 98.4 |
| 1,982 | 2,313 | + 16.7 | 3,304 | 3,154 | – 4.5 |
| (1,245) | (1,178) | + 5.4 | (1,707) | (2,314) | – 35.6 |
| (3,235) | (549) | + 83.0 | (2,412) | 62 | |
| (2,498) | 586 | (815) | 902 | ||
| 3,552 | 2,224 | – 37.4 | 1,859 | 1,899 | + 2.2 |
| 1 | (37) | 11 | (28) | ||
| 1,055 | 2,773 | + 162.8 | 1,055 | 2,773 | + 162.8 |
| Bayer Group Summary Statements of Cash Flows |
2016 figures restated
A 19
> Net interest expense rose by €101 million to €352 million.
| € million | Dec. 31, 2016 |
March 31, 2017 |
June 30, 2017 |
Change vs. March 31, 2017 (%) |
|---|---|---|---|---|
| Bonds and notes / promissory notes | 15,991 | 15,421 | 15,871 | + 2.9 |
| of which hybrid bonds 2 | 4,529 | 4,530 | 4,531 | |
| Liabilities to banks | 1,837 | 1,846 | 1,756 | – 4.9 |
| Liabilities under finance leases | 436 | 435 | 412 | – 5.3 |
| Liabilities from derivatives 3 | 587 | 534 | 369 | – 30.9 |
| Other financial liabilities | 730 | 751 | 797 | + 6.1 |
| Receivables from derivatives 3 | (313) | (235) | (299) | + 27.2 |
| Financial liabilities | 19,268 | 18,752 | 18,906 | + 0.8 |
| Cash and cash equivalents | (1,899) | (2,224) | (2,773) | + 24.7 |
| Current financial assets 4 | (5,591) | (6,128) | (6,691) | + 9.2 |
| Net financial debt | 11,778 | 10,400 | 9,442 | – 9.2 |
| 1 |
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
2 Classified as debt according to IFRS
3 These include the market values of interest-rate and currency hedges of recorded transactions.
4 These include short-term loans and receivables with maturities between 3 and 12 months outstanding from banks and other companies as well as available-for-sale financial assets that were recorded as current on initial recognition.
> In June 2017, Bayer AG issued debt instruments with a nominal value of €1.0 billion that will mature in 2020. These bonds can be redeemed in cash, Covestro shares or a combination of the two. The annual interest rate is 0.05%.
> Other financial liabilities as of June 30, 2017, included €657 million in connection with the mandatory convertible notes issued in November 2016.
| Bayer Group Summary Statements of Financial Position | ||||
|---|---|---|---|---|
| € million | Dec. 31, 2016 |
March 31, 2017 |
June 30, 2017 |
Change vs. March 31, 2017 (%) |
| Noncurrent assets | 51,791 | 51,664 | 49,988 | – 3.2 |
| Current assets | 30,437 | 33,362 | 32,649 | – 2.1 |
| Assets held for sale | 10 | 28 | 3 | – 89.3 |
| Total current assets | 30,447 | 33,390 | 32,652 | – 2.2 |
| Total assets | 82,238 | 85,054 | 82,640 | – 2.8 |
| Equity | 31,897 | 35,857 | 35,483 | – 1.0 |
| Noncurrent liabilities | 31,804 | 29,625 | 28,397 | – 4.1 |
| Current liabilities | 18,537 | 19,572 | 18,760 | – 4.1 |
| Liabilities | 50,341 | 49,197 | 47,157 | – 4.1 |
| Total equity and liabilities | 82,238 | 85,054 | 82,640 | – 2.8 |
> Between March 31, 2017, and June 30, 2017, total assets decreased by €2.4 billion to €82.6 billion.
> Noncurrent assets decreased by €1.7 billion to €50.0 billion due particularly to currency effects. Total current assets declined by €0.7 billion to €32.7 billion.
Bayer Group expenses for research and development rose by 3.0% (Fx adj.) to €1,165 million in the second quarter of 2017, with the Life Science businesses accounting for €1,097 million (Fx adj. +2,6%) of this figure.
A 21
| R&D expenses before special items | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Change % |
% | Change % |
Change % |
||||||||
| Q2 2016 |
Q2 2017 |
Fx. adj. |
H1 2016 |
H1 2017 |
Fx. adj. |
Q2 2016 |
Q2 2017 |
Fx. adj. |
H1 2016 |
H1 2017 |
Fx. adj. |
| 679 | 707 | + 3.5 | 1,379 | 1,419 | + 1.9 | 679 | 638 | – 6.6 | 1,346 | 1,317 | – 3.1 |
| 71 | 65 | – 8.6 | 129 | 124 | – 5.5 | 60 | 59 | – 3.3 | 116 | 116 | – 2.1 |
| 272 | 275 | – 0.4 | 533 | 558 | + 2.6 | 265 | 273 | + 1.5 | 526 | 555 | + 3.5 |
| 34 | 38 | + 10.3 | 64 | 71 | + 9.2 | 34 | 38 | + 10.3 | 64 | 71 | + 9.2 |
| 4 | 12 | 0 | 19 | 4 | 12 | 0 | 19 | ||||
| 1,060 | 1,097 | + 2.6 | 2,105 | 2,191 | + 2.8 | 1,042 | 1,020 | – 3.0 | 2,052 | 2,078 | |
| 62 | 68 | + 9.7 | 126 | 132 | + 4.0 | 62 | 68 | + 9.7 | 126 | 132 | + 4.0 |
| 1,122 | 1,165 | + 3.0 | 2,231 | 2,323 | + 2.8 | 1,104 | 1,088 | – 2.4 | 2,178 | 2,210 | + 0.2 |
| Research and Development Expenses | R&D expenses Change |
We are conducting clinical trials with a number of drug candidates from our research and development pipeline.
The following table shows our most important drug candidates currently in Phase II of clinical testing:
A 22
| Research and Development Projects (Phase II) 1 | |
|---|---|
| Projects | Indication |
| Anetumab ravtansine (mesothelin ADC) | Cancer |
| BAY 1142524 (chymase inhibitor) | Heart failure |
| BAY 1193397 (AR alpha 2c Rec Ant.) | Peripheral artery disease (PAD) |
| BAY 2306001 (IONIS-FXIRx) | Prevention of thrombosis 2 |
| Copanlisib (PI3K inhibitor) | Relapsed / refractory diffuse large B-cell lymphoma |
| Molidustat (HIF-PH inhibitor) | Renal anemia |
| Neladenoson bialanate (BAY 1067197) | Chronic heart failure |
| Nesvacumab (previously: Ang2 antibody) + aflibercept | Serious eye diseases 3 |
| Radium-223 dichloride | Breast cancer with bone metastases |
| Radium-223 dichloride | Cancer, various studies |
| Regorafenib | Cancer |
| Riociguat | Diffuse systemic sclerosis |
| Riociguat | Cystic fibrosis |
| Vilaprisan (S-PRM) | Endometriosis |
1 As of July 3, 2017
2 Sponsored by Ionis Pharmaceuticals, Inc.
3 Sponsored by Regeneron Pharmaceuticals, Inc.
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 pharmaceuticals projects.
Based on the results of the GEMINI trial conducted by Janssen Research & Development, LLC, which had investigated rivaroxaban (tradename: Xarelto™) used in connection with a single antiplatelet therapy (SAPT) for the secondary prophylaxis of acute coronary syndrome (ACS), the decision was made to no longer pursue the development of rivaroxaban in this indication.
The following table shows our most important drug candidates currently in Phase III of clinical testing:
A 23
| Research and Development Projects (Phase III) 1 | |
|---|---|
| Projects | Indication |
| Amikacin Inhale | Pulmonary infection |
| Ciprofloxacin DPI | Non-cystic fibrosis bronchiectasis |
| Copanlisib (PI3K inhibitor) | Various forms of non-Hodgkin lymphoma (NHL) |
| Damoctocog alfa pegol (BAY 94-9027, long-acting rFVIII) |
Hemophilia A |
| Darolutamide (previously: ODM-201, AR antagonist) | Nonmetastatic castration-resistant prostate cancer |
| Darolutamide (previously: ODM-201, AR antagonist) | Metastatic hormone-sensitive prostate cancer |
| Finerenone (MR antagonist) | Diabetic kidney disease |
| Radium-223 dichloride | Combination treatment of castration-resistant prostate cancer |
| Regorafenib | Colon cancer, adjuvant therapy |
| Rivaroxaban | Prevention of major adverse cardiac events (MACE) |
| Rivaroxaban | Anticoagulation in patients with chronic heart failure 2 |
| Rivaroxaban | Prevention of venous thromboembolism in high-risk patients after discharge from hospital 2 |
| Rivaroxaban | Embolic stroke of undetermined source (ESUS) |
| Rivaroxaban | Peripheral artery disease (PAD) |
| Tedizolid | Pulmonary infection |
| Vericiguat (BAY 1021189, sGC stimulator) | Chronic heart failure 3 |
| Vilaprisan (S-PRM) | Symptomatic uterine fibroids |
As of July 03, 2017
2 Sponsored by Janssen Research & Development, LLC
3 Sponsored by Merck & Co., Inc., USA
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 pharmaceuticals projects.
In July 2017, Bayer initiated the Phase III clinical trial program ASTEROID, which is investigating the development candidate vilaprisan in women with symptomatic uterine fibroids. The product of Bayer's research efforts, vilaprisan is a novel oral and selective progesterone receptor modulator that is aimed at treating uterine fibroids long term.
The most important drug candidates in the approval process are:
| Projects | Indication | ||||
|---|---|---|---|---|---|
| Copanlisib (PI3K inhibitor) | USA: Recurrent / resistant non-Hodgkin lymphoma (NHL) | ||||
| Regorafenib | Europe: second-line treatment for unresectable liver cancer | ||||
| Rivaroxaban | Europe, U.S.A.: long-term prevention of venous thromboembolic events | ||||
| Rivaroxaban 2 | U.S.A.: secondary prophylaxis of acute coronary syndrome (ACS), Rivaroxaban in combination with dual antiplatelet therapy (DAPT); ATLAS trial |
A 24
1 As of July 3, 2017
2 Submitted by Janssen Research & Development, LLC
In April 2017, Bayer and its development partner Janssen Research & Development submitted an additional dose option for the oral Factor Xa inhibitor rivaroxaban (tradename: Xarelto™) to the U.S. Food and Drug Administration (FDA), seeking an expansion of indications. The application is supported by data from the EINSTEIN CHOICE trial. The new dose of 10mg of rivaroxaban once a day is to supplement the current therapy of 20mg once a day and is intended for use as an anticoagulation therapy to reduce the risk of recurrent venous thromboembolism after at least six months of standard therapy with anticoagulants.
In May 2017, the FDA granted priority review status to the development candidate copanlisib in the registration process, based on the Phase II data presented in the first quarter of 2017. The substance is being reviewed for the treatment of relapsed or refractory follicular lymphoma.
In April and June 2017, Bayer received approvals from the FDA and Japanese Ministry of Health, Labour and Welfare (MHLW) for the use of its oral multikinase inhibitor Stivagra™ (active ingredient: regorafenib) for the second-line treatment of patients with hepatocellular carcinoma who previously had been treated with Nexavar™ (active ingredient: sorafenib). Stivarga™ is the first drug product to show a significant improvement in overall survival in the second-line treatment of patients with hepatocellular carcinoma.
In June 2017, the European Committee for Medicinal Products for Human Use recommended the approval of Bayer's cancer drug Stivarga™ (active ingredient: regorafenib) for the treatment of adult patients with hepatocellular carcinoma in the European Union who had previously been treated with Nexavar™ (active ingredient: sorafenib). The European Commission is expected to make a decision in the third quarter of 2017.
On April 6, 2017, Bayer decided to not exercise its option to further develop and market Wnt signaling pathway inhibitors, a class of biologics, as part of its collaboration with OncoMed Pharmaceuticals Inc., United States.
In April 2017, we received regulatory approval for the biological nematicide BioAct™ Prime DC in Greece. The new substance is intended for use in a variety of fruit and vegetables and directly targets eggs and larvae from nematode pests. The product is scheduled to be launched in Greece in 2017 and there are plans to gain approvals in other European countries, too.
In June 2017, Bayer and KWS SAAT SE, Germany – in line with their research cooperation which began in 2012 – granted a long-term license to the Belgian company SESVanderHave for their new CONVISO™SMART sugar beet cultivation system. The technology, which is based on conventionally cultivated sugar beet varieties that are tolerant to certain herbicides, makes weed management easier. It will initially be made available to farmers in 2018, mainly in Eastern and Northern Europe, and is to be introduced in the following years in Germany, France and Poland, among other countries.
We also signed a two-year research agreement with the Shanghai Institutes for Biological Sciences (SIBS) of the Chinese Academy of Sciences in June 2017. The purpose of the agreement is to increase wheat yields using new mathematical models and computer simulations for more efficient photosynthesis. The improvement in photosynthesis is considered to be a promising approach to considerably increasing plant productivity.
In June 2017, Bayer also signed an agreement with the Sumitomo Chemical Company, which is headquartered in Tokyo, Japan, for fungicide mixes used to control soybean diseases in Brazil. The companies plan to develop an effective substance to control widespread plant diseases such as soybean rust by combining a new fungicide produced by Sumitomo Chemical with established Bayer fungicides. Both companies expect to file a product registration application at the end of 2017.
Covestro and its partners have developed a new procedure for producing the basic chemical aniline using industrial sugar. The chemical is used in the production of plastics. This means that benzene, a raw material derived from crude oil, can be replaced by biomass. The laboratory-tested procedure is now to be transferred to a larger pilot facility with the goal of manufacturing aniline on an industrial scale using renewable raw materials.
| Economic Outlook1 | |||||
|---|---|---|---|---|---|
| Growth 2016 |
Growth forecast 2017 |
||||
| World | + 2.5% | + 3.0% | |||
| European Union | + 1.8% | + 1.9% | |||
| of which Germany | + 1.8% | + 2.0% | |||
| United States | + 1.6% | + 2.3% | |||
| Emerging Markets 2 | + 3.8% | + 4.5% |
A 25
2016 figures restated
Real growth of gross domestic product, source: IHS Global Insight
2 Including about 50 countries defined by IHS Global Insight as emerging markets in line with the World Bank
As of June 2017
The economic prospects further improved in the first half of 2017, and the global economy is likely to expand at a faster pace than in the previous year. In the United States, particularly, we expect more favorable economic development. We now expect a slightly faster pace of growth in the European Union despite uncertainty surrounding future political development there. Economic output in the Emerging Markets will probably pick up considerably overall compared with the previous year. We continue to expect strong growth in China but at a slightly slower pace.
| A 26 | |
|---|---|
| -- | ------ |
| Economic Outlook for the Segments 1 | ||
|---|---|---|
| Growth 2016 |
Growth forecast 2017 |
|
| Pharmaceuticals market | + 5% | + 4% |
| Consumer health market | + 4% | + 3 – 4% |
| Seed and crop protection market | 0% | + 1% |
| Animal health market | + 5% | + 5% |
2016 figures restated
1 Bayer's estimate, except pharmaceuticals; source for pharmaceuticals market: 2017-2021 IMS Market Prognosis, Latest Update May 2017; all rights reserved; currency-adjusted
As of June 2017
In 2017, Covestro expects a continuation of the growth trend in its main customer industries – construction, electrical engineering and electronics, and furniture. Growth in the automotive industry is still expected to be weaker than in the previous year.
Due to the current business and currency development, we are adjusting our forecast for the fiscal year 2017.
The forecast for the second half is based on the exchange rates as of June 30, 2017, including a rate of US\$1.14 (previously: US\$1.07) to the euro. A 1% appreciation (depreciation) of the euro against all other currencies would decrease (increase) sales on an annual basis by €300 million and EBITDA before special items by €80 million.
This results in the following changes overall for the Bayer Group: Sales are now expected to increase to more than €49 billion (previously: around €51 billion). This now corresponds to a mid-single-digit (previously: mid- to high-single-digit) percentage increase on a currency- and portfolio-adjusted basis. EBITDA before special items is now targeted to increase by a high-single-digit percentage (previously: low-teens percentage). We now aim to grow core earnings per share from continuing operations by a low- to mid-single-digit percentage (previously: mid- to high-single-digit percentage). Here it must be noted that Bayer's interest in Covestro amounts to only 41% as of June 2017 (previously: 53%). Excluding capital and portfolio measures, net financial debt is targeted to be around €7 billion at the end of 2017 (previously: around €8 billion).
We are now budgeting for sales of between €35 billion and €36 billion (previously: approximately €37 billion) for our Life Science businesses. This corresponds to a low-single-digit percentage (previously: midsingle-digit percentage) increase on a currency- and portfolio-adjusted basis. We expect EBITDA before special items to come in slightly above the level of the previous year (previously: rise by a mid- to highsingle-digit percentage).
Despite negative currency development, we confirm the forecast we published in February for Pharmaceuticals and continue to expect sales of more than €17 billion. This corresponds to a mid-single-digit percentage increase on a currency- and portfolio-adjusted basis. As before, we plan to raise sales of our key growth products to more than €6 billion. We continue to expect a high-single-digit percentage increase in EBITDA before special items. There is no change in our expectation of further improving the EBITDA margin before special items.
For Consumer Health, we forecast a weak second half of the year and now expect to generate full-year sales of about €6 billion (previously: more than €6 billion). This would be in line with the prior-year level on both a reported and a currency- and portfolio-adjusted basis (previously: low- to mid-single-digit percentage increase on a currency- and portfolio-adjusted basis). We now expect EBITDA before special items to decline by a high-single-digit percentage (previously: increase by a low- to mid-single-digit percentage).
We are now budgeting for sales of below €10 billion (previously: more than €10 billion) for Crop Science. This corresponds to low-single-digit-percentage decline on a currency- and portfolio-adjusted basis (previously: low-single-digit percentage increase). We now expect EBITDA before special items to decline by a mid-teens percentage (previously: at the prior-year level).
We confirm the forecasts published in February and April 2017 for Animal Health, the Reconciliation and Covestro. This also applies to the forecasts for the other key data.
As a global enterprise with a diversified portfolio, the Bayer Group is exposed to a wide range of internal or external developments and events that could significantly impact the achievement of our financial and nonfinancial objectives.
Bayer regards opportunity and risk management as an integral part of corporate governance. Our risk management process and the opportunities / risks are outlined in detail in the Annual Report 2016 (Combined Management Report, A 3.2 "Opportunity and Risk Report"). For risks related to the acquisition of Monsanto Company, United States, we refer specifically to A 3.2.3 "Planned Acquisition of Monsanto." There have been no material changes to Bayer's overall risk situation.
From the current perspective, no risks have been identified that could endanger the Bayer Group's continued existence. There are also no risks with mutually reinforcing dependencies that could combine to endanger the Group's continued existence.
Significant developments that have occurred in respect of the legal risks since publication of the Bayer Annual Report 2016 (Note [32] to the Consolidated Financial Statements) are described in the Notes to the Condensed Consolidated Interim Financial Statements under "Legal Risks."
B 1
| € million | Q2 2016 | Q2 2017 | H1 2016 | H1 2017 |
|---|---|---|---|---|
| Net sales | 11,833 | 12,193 | 23,687 | 25,437 |
| Cost of goods sold | (5,028) | (5,119) | (10,072) | (10,464) |
| Gross profit | 6,805 | 7,074 | 13,615 | 14,973 |
| Selling expenses | (3,092) | (3,175) | (5,980) | (6,188) |
| Research and development expenses | (1,122) | (1,165) | (2,231) | (2,323) |
| General administration expenses | (489) | (608) | (984) | (1,180) |
| Other operating income | 159 | 271 | 362 | 446 |
| Other operating expenses | (123) | (246) | (324) | (461) |
| EBIT 1 | 2,138 | 2,151 | 4,458 | 5,267 |
| Equity-method loss | (6) | (11) | (11) | (24) |
| Financial income | 42 | 101 | 79 | 136 |
| Financial expenses | (350) | (495) | (697) | (866) |
| Financial result | (314) | (405) | (629) | (754) |
| Income before income taxes | 1,824 | 1,746 | 3,829 | 4,513 |
| Income taxes | (431) | (417) | (905) | (1,012) |
| Income from continuing operations after income taxes | 1,393 | 1,329 | 2,924 | 3,501 |
| Income from discontinued operations after income taxes | 55 | 148 | 105 | 247 |
| Income after income taxes | 1,448 | 1,477 | 3,029 | 3,748 |
| of which attributable to noncontrolling interest | 68 | 253 | 138 | 441 |
| of which attributable to Bayer AG stockholders (net income) | 1,380 | 1,224 | 2,891 | 3,307 |
| € | ||||
| Earnings per share | ||||
| From continuing operations | ||||
| Basic | 1.60 | 1.23 | 3.37 | 3.51 |
| Diluted | 1.60 | 1.23 | 3.37 | 3.51 |
| From discontinued operations | ||||
| Basic | 0.07 | 0.17 | 0.13 | 0.28 |
| Diluted | 0.07 | 0.17 | 0.13 | 0.28 |
| From continuing and discontinued operations | ||||
| Basic | 1.67 | 1.40 | 3.50 | 3.79 |
| Diluted 1 |
1.67 | 1.40 | 3.50 | 3.79 |
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
| € million | Q2 2016 | Q2 2017 | H1 2016 | H1 2017 |
|---|---|---|---|---|
| Income after income taxes | 1,448 | 1,477 | 3,029 | 3,748 |
| of which attributable to noncontrolling interest | 68 | 253 | 138 | 441 |
| of which attributable to Bayer AG stockholders | 1,380 | 1,224 | 2,891 | 3,307 |
| Remeasurements of the net defined benefit liability for post-employment benefit plans |
(844) | 300 | (3,407) | 905 |
| Income taxes | 235 | (132) | 991 | (327) |
| Other comprehensive income from remeasurements of the net defined benefit liability for post-employment benefit plans |
(609) | 168 | (2,416) | 578 |
| Other comprehensive income that will not be reclassified subsequently to profit or loss |
(609) | 168 | (2,416) | 578 |
| Changes in fair values of derivatives designated as cash flow hedges |
(129) | 10 | (76) | (78) |
| Reclassified to profit or loss | (19) | (27) | (35) | 27 |
| Income taxes | 49 | 8 | 49 | 23 |
| Other comprehensive income from cash flow hedges | (99) | (9) | (62) | (28) |
| Changes in fair values of available-for-sale financial assets | 14 | (27) | 26 | (34) |
| Reclassified to profit or loss | – | – | – | – |
| Income taxes | (5) | (1) | (9) | 8 |
| Other comprehensive income from available-for-sale financial assets |
9 | (28) | 17 | (26) |
| Changes in exchange differences recognized on translation of operations outside the eurozone |
301 | (1,213) | (208) | (1,384) |
| Reclassified to profit or loss | – | – | – | – |
| Other comprehensive income from exchange differences | 301 | (1,213) | (208) | (1,384) |
| Other comprehensive income relating to associates accounted for using the equity method |
(6) | 40 | 12 | 47 |
| Other comprehensive income that may be reclassified subsequently to profit or loss |
205 | (1,210) | (241) | (1,391) |
| Total other comprehensive income 1 | (404) | (1,042) | (2,657) | (813) |
| of which attributable to noncontrolling interest | (9) | (86) | (110) | (63) |
| of which attributable to Bayer AG stockholders | (395) | (956) | (2,547) | (750) |
| Total comprehensive income | 1,044 | 435 | 372 | 2,935 |
| of which attributable to noncontrolling interest | 59 | 167 | 28 | 378 |
| of which attributable to Bayer AG stockholders 1 |
985 | 268 | 344 | 2,557 |
B 2
Total changes recognized outside profit or loss
Bayer Group Consolidated Statements of Financial Position
B 3
| € million | June 30, 2016 | June 30, 2017 | Dec. 31, 2016 |
|---|---|---|---|
| Noncurrent assets | |||
| Goodwill | 15,982 | 15,823 | 16,312 |
| Other intangible assets | 14,167 | 12,685 | 13,567 |
| Property, plant and equipment | 12,275 | 12,672 | 13,114 |
| Investments accounted for using the equity method | 505 | 548 | 584 |
| Other financial assets | 1,246 | 1,402 | 1,281 |
| Other receivables | 398 | 526 | 583 |
| Deferred taxes | 6,238 | 6,332 | 6,350 |
| 50,811 | 49,988 | 51,791 | |
| Current assets | |||
| Inventories | 8,334 | 8,459 | 8,408 |
| Trade accounts receivable | 11,792 | 12,077 | 10,969 |
| Other financial assets | 913 | 7,233 | 6,275 |
| Other receivables | 2,074 | 1,652 | 2,210 |
| Claims for income tax refunds | 495 | 455 | 676 |
| Cash and cash equivalents | 1,055 | 2,773 | 1,899 |
| Assets held for sale | – | 3 | 10 |
| 24,663 | 32,652 | 30,447 | |
| Total assets | 75,474 | 82,640 | 82,238 |
| Equity | |||
| Capital stock | 2,117 | 2,117 | 2,117 |
| Capital reserves | 6,167 | 9,658 | 9,658 |
| Other reserves | 14,435 | 20,875 | 18,558 |
| Equity attributable to Bayer AG stockholders | 22,719 | 32,650 | 30,333 |
| Equity attributable to noncontrolling interest | 1,316 | 2,833 | 1,564 |
| 24,035 | 35,483 | 31,897 | |
| Noncurrent liabilities | |||
| Provisions for pensions and other post-employment benefits | 13,838 | 9,618 | 11,134 |
| Other provisions | 1,586 | 1,631 | 1,780 |
| Financial liabilities | 16,488 | 14,168 | 16,180 |
| Income tax liabilities | 387 | 505 | 423 |
| Other liabilities | 1,095 | 985 | 957 |
| Deferred taxes | 989 | 1,490 | 1,330 |
| 34,383 | 28,397 | 31,804 | |
| Current liabilities | |||
| Other provisions | 5,243 | 5,631 | 5,421 |
| Financial liabilities | 3,220 | 5,037 | 3,401 |
| Trade accounts payable | 5,055 | 5,211 | 6,410 |
| Income tax liabilities | 983 | 935 | 884 |
| Other liabilities | 2,537 | 1,946 | 2,421 |
| Liabilities directly related to assets held for sale | 18 | – | – |
| 17,056 | 18,760 | 18,537 | |
| Total equity and liabilities | 75,474 | 82,640 | 82,238 |
B 4
| € million | Q2 2016 | Q2 2017 | H1 2016 | H1 2017 |
|---|---|---|---|---|
| Income from continuing operations after income taxes | 1,393 | 1,329 | 2,924 | 3,501 |
| Income taxes | 431 | 417 | 905 | 1,012 |
| Financial result | 314 | 405 | 629 | 754 |
| Income taxes paid | (621) | (524) | (1,099) | (1,046) |
| Depreciation, amortization and impairments | 814 | 832 | 1,853 | 1,562 |
| Change in pension provisions | (112) | (65) | (211) | (119) |
| (Gains) losses on retirements of noncurrent assets | (3) | (24) | (5) | (81) |
| Decrease (increase) in inventories | 190 | (12) | 71 | (269) |
| Decrease (increase) in trade accounts receivable | 170 | 280 | (1,498) | (1,690) |
| (Decrease) increase in trade accounts payable | 39 | (290) | (854) | (984) |
| Changes in other working capital, other noncash items | (623) | (32) | (171) | 502 |
| Net cash provided by (used in) operating activities from continuing operations |
1,992 | 2,316 | 2,544 | 3,142 |
| Net cash provided by (used in) operating activities from discontinued operations |
(10) | (3) | 760 | 12 |
| Net cash provided by (used in) operating activities (total) | 1,982 | 2,313 | 3,304 | 3,154 |
| Cash outflows for additions to property, plant, equipment and intangible assets |
(589) | (476) | (952) | (891) |
| Cash inflows from the sale of property, plant, equipment and other assets |
18 | 19 | 39 | 73 |
| Cash inflows from divestitures | 8 | 54 | 8 | 54 |
| Cash inflows from (outflows for) noncurrent financial assets | (356) | (42) | (608) | (96) |
| Cash outflows for acquisitions less acquired cash | – | – | 2 | (158) |
| Interest and dividends received | 15 | 43 | 37 | 63 |
| Cash inflows from (outflows for) current financial assets | (341) | (776) | (233) | (1,359) |
| Net cash provided by (used in) investing activities (total) | (1,245) | (1,178) | (1,707) | (2,314) |
| Proceeds from shares of Covestro AG | – | 1,045 | – | 2,505 |
| Dividend payments | (2,120) | (2,361) | (2,120) | (2,361) |
| Issuances of debt | 3,346 | 1,424 | 7,668 | 1,716 |
| Retirements of debt | (4,296) | (410) | (7,709) | (1,446) |
| Interest paid including interest-rate swaps | (199) | (275) | (300) | (389) |
| Interest received from interest-rate swaps | 34 | 28 | 49 | 37 |
| Cash outflows for the purchase of additional interests in subsidiaries | – | – | – | – |
| Net cash provided by (used in) financing activities (total) | (3,235) | (549) | (2,412) | 62 |
| Change in cash and cash equivalents due to business activities (total) | (2,498) | 586 | (815) | 902 |
| Cash and cash equivalents at beginning of period | 3,552 | 2,224 | 1,859 | 1,899 |
| Change in cash and cash equivalents due to changes in scope of consolidation |
(1) | – | (2) | – |
| Change in cash and cash equivalents due to exchange rate movements | 2 | (37) | 13 | (28) |
| Cash and cash equivalents at end of period | 1,055 | 2,773 | 1,055 | 2,773 |
2016 figures restated
| € million | Capital stock | Capital reserves |
Other reserves |
Equity attributable to Bayer AG stockholders |
Equity attributable to non controlling interest |
Equity |
|---|---|---|---|---|---|---|
| Dec. 31, 2015 | 2,117 | 6,167 | 15,981 | 24,265 | 1,180 | 25,445 |
| Equity transactions with owners | ||||||
| Capital increase / decrease | ||||||
| Dividend payments | (2,067) | (2,067) | (52) | (2,119) | ||
| Other changes | 177 | 177 | 160 | 337 | ||
| Total comprehensive income | 344 | 344 | 28 | 372 | ||
| June 30, 2016 | 2,117 | 6,167 | 14,435 | 22,719 | 1,316 | 24,035 |
| Dec. 31, 2016 | 2,117 | 9,658 | 18,558 | 30,333 | 1,564 | 31,897 |
| Equity transactions with owners | ||||||
| Capital increase / decrease | ||||||
| Dividend payments | (2,233) | (2,233) | (129) | (2,362) | ||
| Other changes | 1,993 | 1,993 | 1,020 | 3,013 | ||
| Total comprehensive income | 2,557 | 2,557 | 378 | 2,935 | ||
| June 30, 2017 | 2,117 | 9,658 | 20,875 | 32,650 | 2,833 | 35,483 |
| Pharmaceuticals | Consumer Health | Crop Science | Animal Health | |||||
|---|---|---|---|---|---|---|---|---|
| € million | Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 |
| Net sales (external) | 4,104 | 4,304 | 1,553 | 1,542 | 2,518 | 2,163 | 426 | 450 |
| Change 1 | + 5.5% | + 4.9% | – 2.3% | – 0.7% | – 4.5% | – 14.1% | – 0.5% | + 5.6% |
| Currency-adjusted change 1 | + 8.4% | + 4.4% | + 4.0% | – 2.2% | + 0.7% | – 15.8% | + 4.2% | + 4.0% |
| Intersegment sales | 8 | 11 | 3 | 4 | 8 | 8 | 1 | 1 |
| Net sales (total) | 4,112 | 4,315 | 1,556 | 1,546 | 2,526 | 2,171 | 427 | 451 |
| EBIT 1 | 988 | 1,102 | 190 | 195 | 512 | 117 | 93 | 107 |
| EBIT before special items 1 | 999 | 1,222 | 222 | 210 | 542 | 212 | 93 | 107 |
| EBITDA before special items 1 | 1,352 | 1,481 | 328 | 314 | 663 | 317 | 100 | 116 |
| Net cash provided by operating activities |
310 | 528 | 241 | 297 | 1,088 | 1,170 | 48 | 97 |
| Depreciation, amortization, impairment losses / loss reversals |
354 | 372 | 107 | 112 | 121 | 116 | 7 | 9 |
| 1 |
B 6
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
| Reconciliation | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| All Other Segments | Corporate Functions and Consolidation |
Life Sciences | Covestro | Group | ||||||
| € million | Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 |
| Net sales (external) | 256 | 252 | 1 | 3 | 8,858 | 8,714 | 2,975 | 3,479 | 11,833 | 12,193 |
| Change 1 | – 6.2% | – 1.6% | – | – | + 0.5% | – 1.6% | – 6.6% | + 16.9% | – 1.4% | + 3.0% |
| Currency-adjusted change 1 | – 5.5% | – 0.8% | – | – | + 4.7% | – 2.7% | – 3.9% | + 15.8% | + 2.4% | + 2.0% |
| Intersegment sales | 478 | 508 | (516) | (551) | – | – | 18 | 19 | – | – |
| Net sales (total) | 734 | 760 | (515) | (548) | – | – | 2,993 | 3,498 | 11,833 | 12,193 |
| EBIT1 | 18 | 45 | (30) | (103) | 1,771 | 1,463 | 367 | 688 | 2,138 | 2,151 |
| EBIT before special items 1 | 40 | 58 | (21) | (102) | 1,875 | 1,707 | 367 | 649 | 2,242 | 2,356 |
| EBITDA before special items 1 | 88 | 118 | (20) | (99) | 2,511 | 2,247 | 543 | 809 | 3,054 | 3,056 |
| Net cash provided by operating activities |
170 | (74) | (174) | (117) | 1,683 | 1,901 | 309 | 415 | 1,992 | 2,316 |
| Depreciation, amortization, impairment losses / loss reversals |
48 | 60 | 1 | 3 | 638 | 672 | 176 | 160 | 814 | 832 |
| 1 |
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
B 6 continued
Key Data by Segment
| Pharmaceuticals | Consumer Health | Crop Science | Animal Health | |||||
|---|---|---|---|---|---|---|---|---|
| € million | H1 2016 | H1 2017 | H1 2016 | H1 2017 | H1 2016 | H1 2017 | H1 2016 | H1 2017 |
| Net sales (external) | 7,993 | 8,567 | 3,073 | 3,143 | 5,454 | 5,283 | 834 | 890 |
| Change 1 | + 7.3% | + 7.2% | – 2.3% | + 2.3% | – 3.3% | – 3.1% | + 2.5% | + 6.7% |
| Currency-adjusted change 1 | + 10.2% | + 5.8% | + 3.1% | + 0.2% | + 1.0% | – 5.4% | + 6.4% | + 4.4% |
| Intersegment sales | 15 | 21 | 4 | 9 | 17 | 16 | 2 | 2 |
| Net sales (total) | 8,008 | 8,588 | 3,077 | 3,152 | 5,471 | 5,299 | 836 | 892 |
| EBIT 1 | 1,686 | 2,321 | 433 | 473 | 1,467 | 1,087 | 207 | 233 |
| EBIT before special items 1 | 1,928 | 2,477 | 497 | 497 | 1,500 | 1,219 | 208 | 233 |
| EBITDA before special items 1 | 2,613 | 2,983 | 711 | 706 | 1,752 | 1,432 | 222 | 251 |
| Net cash provided by operating activities |
1,044 | 1,501 | 438 | 562 | 422 | 491 | 28 | 66 |
| Depreciation, amortization, impairment losses / loss reversals |
917 | 652 | 228 | 218 | 252 | 237 | 14 | 18 |
| Number of employees (as of June 30) 2 |
40,197 | 37,999 | 13,085 | 11,898 | 22,839 | 20,969 | 3,859 | 3,621 |
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
2 Full-time equivalents
Reconciliation All Other Segments Corporate Functions and Consolidation Life Sciences Covestro Group € million H1 2016 H1 2017 H1 2016 H1 2017 H1 2016 H1 2017 H1 2016 H1 2017 H1 2016 H1 2017 Net sales (external) 506 504 2 7 17,862 18,394 5,825 7,043 23,687 25,437 Change 1 – 6.5% – 0.4% – – + 1.5% + 3.0% – 6.0% + 20.9% – 0.5% + 7.4% Currency-adjusted change 1 – 5.9% + 0.6% – – + 5.3% + 1.2% – 4.3% + 19.6% + 2.8% + 5.7% Intersegment sales 903 1,218 (980) (1,307) – – 39 41 – – Net sales (total) 1,409 1,722 (978) (1,300) – – 5,864 7,084 23,687 25,437 EBIT1 21 19 (59) (243) 3,755 3,890 703 1,377 4,458 5,267 EBIT before special items 1 46 50 (48) (240) 4,131 4,236 703 1,321 4,834 5,557 EBITDA before special items 1 141 163 (45) (234) 5,394 5,301 1,047 1,648 6,441 6,949 Net cash provided by operating activities 167 (241) (33) 73 2,066 2,452 478 690 2,544 3,142 Depreciation, amortization, impairment losses / loss reversals 95 113 3 6 1,509 1,244 344 318 1,853 1,562 Number of employees
(as of June 30) 2 19,114 24,640 752 593 99,846 99,720 15,730 15,960 115,576 115,680 1 For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
2 Full-time equivalents
B 7 continued
| Middle East / Africa | Asia / Pacific | ||||
|---|---|---|---|---|---|
| Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 |
| 4,599 | 4,806 | 3,417 | 3,591 | 2,816 | 3,156 |
| + 0.0% | + 4.5% | – 4.8% | + 5.1% | + 3.1% | + 12.1% |
| + 3.2% | + 4.2% | – 2.0% | + 3.0% | + 6.6% | + 11.3% |
| 4,811 | 5,059 | 3,332 | 3,477 | 2,758 | 3,101 |
| + 0.5% | + 5.2% | – 5.9% | + 4.4% | + 3.2% | + 12.4% |
| + 3.5% | + 4.9% | – 3.1% | + 2.1% | + 6.8% | + 11.6% |
| 2,712 | 2,699 | 1,078 | 1,105 | 229 | 296 |
| 1,391 | 1,601 | 431 | 408 | 336 | 530 |
| Europe / | North America |
B 8
2016 figures restated
1 For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
| Key Data by Region | B 8 continued | |||||
|---|---|---|---|---|---|---|
| Latin America | Reconciliation | Total | ||||
| € million | Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 |
| Net sales (external) – by market | 1,001 | 640 | – | – | 11,833 | 12,193 |
| Change 1 | – 7.7% | – 36.1% | – | – | – 1.4% | + 3.0% |
| Currency-adjusted change 1 | + 2.9% | – 37.9% | – | – | + 2.4% | + 2.0% |
| Net sales (external) – by point of origin | 932 | 556 | – | – | 11,833 | 12,193 |
| Change 1 | – 6.9% | – 40.3% | – | – | – 1.4% | + 3.0% |
| Currency-adjusted change 1 | + 4.7% | – 42.1% | – | – | + 2.4% | + 2.0% |
| Interregional sales | 128 | 129 | (4,147) | (4,229) | – | – |
| EBIT 1 | 10 | (285) | (30) | (103) | 2,138 | 2,151 |
2016 figures restated
1 For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
| € million | Middle East / Africa | North America | Asia / Pacific | |||
|---|---|---|---|---|---|---|
| H1 2016 | H1 2017 | H1 2016 | H1 2017 | H1 2016 | H1 2017 | |
| Net sales (external) – by market | 9,627 | 10,219 | 6,839 | 7,346 | 5,352 | 6,312 |
| Change 1 | + 1.0% | + 6.1% | – 1.3% | + 7.4% | + 2.5% | + 17.9% |
| Currency-adjusted change 1 | + 3.6% | + 5.8% | 0.0% | + 4.3% | + 4.9% | + 16.3% |
| Net sales (external) – by point of origin | 10,014 | 10,714 | 6,690 | 7,141 | 5,244 | 6,181 |
| Change 1 | + 1.2% | + 7.0% | – 2.1% | + 6.7% | + 3.0% | + 17.9% |
| Currency-adjusted change 1 | + 3.8% | + 6.6% | – 0.8% | + 3.5% | + 5.4% | + 16.2% |
| Interregional sales | 5,377 | 5,552 | 2,122 | 2,213 | 427 | 545 |
| EBIT 1 | 2,977 | 3,643 | 920 | 1,077 | 568 | 1,126 |
| Number of employees (as of June 30) 2 |
59,213 | 60,638 | 16,106 | 15,719 | 27,697 | 27,239 |
B 9
2016 figures restated
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
2 Full-time equivalents
B 9 continued
| Latin America | Reconciliation | Total | ||||
|---|---|---|---|---|---|---|
| € million | H1 2016 | H1 2017 | H1 2016 | H1 2017 | H1 2016 | H1 2017 |
| Net sales (external) – by market | 1,869 | 1,560 | – | – | 23,687 | 25,437 |
| Change 1 | – 11.5% | – 16.5% | – | – | – 0.5% | + 7.4% |
| Currency-adjusted change 1 | + 3.1% | – 19.2% | – | – | + 2.8% | + 5.7% |
| Net sales (external) – by point of origin | 1,739 | 1,401 | – | – | 23,687 | 25,437 |
| Change 1 | – 12.1% | – 19.4% | – | – | – 0.5% | + 7.4% |
| Currency-adjusted change 1 | + 3.7% | – 22.1% | – | – | + 2.8% | + 5.7% |
| Interregional sales | 199 | 217 | (8,125) | (8,527) | – | – |
| EBIT 1 | 52 | (336) | (59) | (243) | 4,458 | 5,267 |
| Number of employees (as of June 30) 2 |
12,560 | 12,084 | – | – | 115,576 | 115,680 |
2016 figures restated
1 For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
2 Full-time equivalents
The consolidated interim financial statements as of June 30, 2017, 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 2016 fiscal year, particularly with regard to the main recognition and valuation principles.
IFRS 15 (Revenue from Contracts with Customers) is the new standard for revenue recognition that is to be applied for annual reporting periods beginning on or after January 1, 2018.
Bayer will implement IFRS 15 on the basis of the modified retrospective method, accounting for the aggregate amount of any transition effects by way of an adjustment to retained earnings as of January 1, 2018, and presenting the comparative period in line with previous rules. All of the established business models for the Bayer Group's Life Science divisions were examined in the course of the implementation project. The previous assessment that the new standard is not expected to materially affect the timing of revenue recognition for the transactions concerned or their components has been confirmed for companies examined since then. The analysis has not yet been completed in a number of material consolidated companies. Possible but currently not quantifiable effects in the Covestro segment can result with regard to the timing of revenue recognition for certain storage agreements, a number of customer-specific products and the provision of services such as transport or freight services. Furthermore, the evaluation of certain individual licensing agreements has not yet been completed for Bayer. With regard to total Group sales, there are indications of immaterial transition effects due to the different accounting of milestone payments in connection with right-to-access licenses that would result in an increase in retained earnings on the transition date. IFRS 15 clarifies the allocation of individual topics to (new) line items in the statement of financial position and to functional cost items in the income statement, and whether gross or net amounts are to be presented. Determination of the effects on the level of sales or selling expenses has not yet been completed. Based on current knowledge, however, we do not anticipate any material effects on these items. Overall, based on current knowledge, we do not anticipate any material effects on the presentation of the Life Science businesses' financial position or results of operations, or on earnings per share. A similar statement concerning the Covestro segment cannot yet be made at the present point in time.
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, 2016 | June 30, 2016 | June 30, 2017 | H1 2016 | H1 2017 | |
| BRL | Brazil | 3.43 | 3.59 | 3.76 | 4.13 | 3.43 |
| CAD | Canada | 1.42 | 1.44 | 1.48 | 1.48 | 1.44 |
| CHF | Switzerland | 1.07 | 1.09 | 1.09 | 1.10 | 1.08 |
| CNY | China | 7.35 | 7.40 | 7.73 | 7.30 | 7.42 |
| GBP | United Kingdom | 0.86 | 0.83 | 0.88 | 0.78 | 0.86 |
| JPY | Japan | 123.36 | 114.05 | 127.72 | 124.50 | 121.60 |
| MXN | Mexico | 21.78 | 20.63 | 20.57 | 20.12 | 20.99 |
| RUB | Russia | 64.30 | 71.52 | 67.47 | 78.07 | 62.69 |
| USD | United States | 1.05 | 1.11 | 1.14 | 1.12 | 1.08 |
The most important interest rates used to calculate the present value of pension obligations are given below:
| Discount Rate for Pension Obligations | ||||||
|---|---|---|---|---|---|---|
| June 30, 2017 | ||||||
| 1.80 | 1.90 | 2.00 | ||||
| 2.65 | 2.55 | 2.60 | ||||
| 3.70 | 3.80 | 3.50 | ||||
| Dec. 31, 2016 March 31, 2017 |
B 11
Since January 1, 2016, the Bayer Group has comprised the five reportable segments Pharmaceuticals, Consumer Health, Crop Science, Animal Health and Covestro.
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:
B 10
| Q2 2017 | H1 2016 | H1 2017 |
|---|---|---|
| 3,155 | 6,486 | 7,183 |
| (99) | (45) | (234) |
| 3,056 | 6,441 | 6,949 |
| (697) | (1,604) | (1,386) |
| (3) | (3) | (6) |
| (700) | (1,607) | (1,392) |
| 2,458 | 4,882 | 5,797 |
| (102) | (48) | (240) |
| 2,356 | 4,834 | 5,557 |
| (204) | (365) | (287) |
| (1) | (11) | (3) |
| (205) | (376) | (290) |
| 2,254 | 4,517 | 5,510 |
| (103) | (59) | (243) |
| 2,151 | 4,458 | 5,267 |
| (405) | (629) | (754) |
| 1,746 | 3,829 | 4,513 |
For definition see Annual Report 2016, A 2.4 "Alternative Performance Measures Used by the Bayer Group."
The consolidated financial statements as of June 30, 2017, included 293 companies (December 31, 2016: 301 companies). As in the statements as of December 31, 2016, one of these companies was accounted for as a joint operation in line with Bayer's interest in its assets, liabilities, revenues and expenses in accordance with IFRS 11 (Joint Arrangements). Six (December 31, 2016: six) joint ventures and five (December 31, 2016: five) associates were accounted for in the consolidated financial statements using the equity method according to IAS 28 (Investments in Associates and Joint Ventures).
On January 3, 2017, Bayer acquired the Cydectin™ portfolio in the United States from Boehringer Ingelheim Vetmedica Inc., St. Joseph, United States. The acquisition comprises the CYDECTIN Pour-On, CYDECTIN Injectable and CYDECTIN Oral Drench endectocides for cattle and sheep. The acquisition is intended to strengthen the antiparasitics portfolio in the United States, and will see endectocides added to the portfolio. A purchase price of €158 million was agreed, which is subject to the usual price adjustment mechanisms. The purchase price was provisionally allocated mainly to trademarks and goodwill. The purchase price allocation currently remains incomplete pending compilation and review of the relevant financial information. It is therefore possible that changes will be made in the allocation of the purchase prices to the individual assets.
The effects of this transaction – as of the acquisition date – on the Group's assets and liabilities in the first half of 2017 are shown in the following table. The transaction resulted in the following cash outflow:
B 13
| € million | H1 2017 |
|---|---|
| Goodwill | 51 |
| Trademarks | 85 |
| Production rights | 4 |
| Inventories | 18 |
| Net assets | 158 |
| Changes in noncontrolling interest | – |
| Purchase price | 158 |
| Net cash outflow for acquisitions | 158 |
Details of the planned acquisition of Monsanto are given in our Annual Report 2016.
On April 3, 2017, Covestro completed the sale of a North American spray polyurethane foam system house to Accella Polyurethane Systems LLC, Maryland Heights, United States. A purchase price of €47 million was agreed. Income of €39 million was reported in special items.
On April 1, 2017, Consumer Health completed the sale of a production facility in Pointe-Claire, Canada, to Famar Montréal Inc., Montréal, Canada. The base sale price was CAD1 million.
The effects of these divestments made in the first half of 2017 were as follows:
| B 14 | |
|---|---|
| Divested Assets and Liabilities | |
| € million | H1 2017 |
| Goodwill | 2 |
| Property, plant and equipment | 3 |
| Inventories | 12 |
| Other liabilities | (3) |
| Divested net assets | 14 |
The divested assets were reported in previous quarters as assets held for sale.
The sale of the Diabetes Care business to Panasonic Healthcare Holdings Co., Ltd., Tokyo, Japan, for around €1 billion was completed on January 4, 2016. The sale includes the leading Contour™ portfolio of blood glucose monitoring meters and strips, as well as other products such as Breeze™2, Elite™ and Microlet™ lancing devices.
The sale of the Diabetes Care business also comprises further significant obligations by Bayer that will be fulfilled over a period of up to two years subsequent to the date of divestment. The sale proceeds will be recognized accordingly over this period and reported as income from discontinued operations. Deferred income has been recognized in the statement of financial position and will be dissolved as the obligations are fulfilled. An amount of €287 million was recognized in sales in the first half of 2017.
The obligations to be fulfilled over a period of up to two years after the divestment of the Diabetes Care business are also reported as discontinued operations in the income statement and the statement of cash flows. They resulted in sales of €25 million in the first half of 2017.
The items in the statement of financial position pertaining to the Diabetes Care business are shown in the segment reporting under "All Other Segments." In addition to the aforementioned deferred income (€177 million), the statement of financial position includes other receivables (net: €60 million), deferred tax assets (net: €29 million), income tax liabilities (€56 million) and other provisions (€4 million).
The sale of the Consumer business (CS Consumer) of Bayer's Environmental Science unit to SBM Développement SAS, Lyon, France, was completed on October 4, 2016. These activities have been reported as discontinued operations since the second quarter of 2016.
The income statements of the discontinued operations for the second quarter of 2017 are given below:
B 15
| Income Statements for Discontinued Operations | ||
|---|---|---|
| Diabetes Care | CS Consumer | Total | ||||
|---|---|---|---|---|---|---|
| € million | Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 |
| Net sales | 146 | 184 | 79 | – | 225 | 184 |
| Cost of goods sold | (25) | (7) | (40) | – | (65) | (7) |
| Gross profit | 121 | 177 | 39 | – | 160 | 177 |
| Selling expenses | (5) | (1) | (31) | – | (36) | (1) |
| Research and development expenses | – | – | (3) | – | (3) | – |
| General administration expenses | (3) | (3) | (2) | – | (5) | (3) |
| Other operating income / expenses | (7) | – | (54) | – | (61) | – |
| EBIT 1 | 106 | 173 | (51) | – | 55 | 173 |
| Financial result | – | – | – | – | – | – |
| Income before income taxes | 106 | 173 | (51) | – | 55 | 173 |
| Income taxes | (16) | (25) | 16 | – | – | (25) |
| Income after income taxes | 90 | 148 | (35) | – | 55 | 148 |
| 1 EBIT = income after income taxes, plus income taxes, plus financial result |
The income statements of the discontinued operations for the first half of 2017 are given below:
| Income Statements for Discontinued Operations | ||||||
|---|---|---|---|---|---|---|
| Diabetes Care | CS Consumer | Total | ||||
| € million | H1 2016 | H1 2017 | H1 2016 | H1 2017 | H1 2016 | H1 2017 |
| Net sales | 295 | 312 | 166 | – | 461 | 312 |
| Cost of goods sold | (121) | (14) | (82) | – | (203) | (14) |
| Gross profit | 174 | 298 | 84 | – | 258 | 298 |
| Selling expenses | (8) | (2) | (57) | – | (65) | (2) |
| Research and development expenses | (2) | – | (4) | – | (6) | – |
| General administration expenses | (10) | (5) | (4) | – | (14) | (5) |
| Other operating income / expenses | (5) | 5 | (55) | – | (60) | 5 |
| EBIT 1 | 149 | 296 | (36) | – | 113 | 296 |
| Financial result | – | – | – | – | – | – |
| Income before income taxes | 149 | 296 | (36) | – | 113 | 296 |
| Income taxes | (20) | (49) | 12 | – | (8) | (49) |
| Income after income taxes | 129 | 247 | (24) | – | 105 | 247 |
| 1 EBIT = income after income taxes, plus income taxes, plus financial result |
B 16
In the second quarter of 2017, the discontinued operations affected the Bayer Group statement of cash flows as follows:
| B 17 | |||||
|---|---|---|---|---|---|
| Total | |||||
| Q2 2016 | Q2 2017 | Q2 2016 | Q2 2017 | Q2 2016 Q2 2017 | |
| (41) | (3) | 31 | – | (10) | (3) |
| – | – | – | – | – | – |
| 41 | 3 | (31) | – | 10 | 3 |
| – | – | – | – | – | – |
| Diabetes Care | CS Consumer |
In the first half of 2017, the discontinued operations affected the Bayer Group statement of cash flows as follows:
| Statements of Cash Flows for Discontinued Operations | B 18 | |||||
|---|---|---|---|---|---|---|
| Diabetes Care | CS Consumer | Total | ||||
| € million | H1 2016 | H1 2017 | H1 2016 | H1 2017 | H1 2016 | H1 2017 |
| Net cash provided by (used in) operating activities (net cash flow) |
778 | 12 | (18) | – | 760 | 12 |
| Net cash provided by (used in) investing activities | – | – | – | – | – | – |
| Net cash provided by (used in) financing activities | (778) | (12) | 18 | – | (760) | (12) |
| Change in cash and cash equivalents | – | – | – | – | – | – |
As no cash is assigned to discontinued operations, the balance of the cash provided is deducted again in financing activities.
| June 30, 2017 | ||||||
|---|---|---|---|---|---|---|
| Carried at amortized |
Carried at fair value | Nonfinancial assets / |
||||
| cost | [Fair value for information 1] | liabilities | ||||
| Based on quoted prices in active markets (Level 1) |
Based on observable market data (Level 2) |
Based on unobservable inputs (Level 3) |
||||
| € million | Carrying amount |
Carrying amount |
Carrying amount |
Carrying amount |
Carrying amount |
Carrying amount in the state ment of financial position |
| Trade accounts receivable | 12,077 | 12,077 | ||||
| Loans and receivables | 12,077 | 12,077 | ||||
| Other financial assets | 5,195 | 379 | 2,271 | 790 | 8,635 | |
| Loans and receivables | 5,097 | [5,089] | [15] | 5,097 | ||
| Available-for-sale financial assets | 33 | 376 | 1,626 | 779 | 2,814 | |
| Held-to-maturity financial assets | 65 | [67] | 65 | |||
| Derivatives | 3 | 645 | 11 | 659 | ||
| Other receivables | 602 | 64 | 1,512 | 2,178 | ||
| Loans and receivables | 602 | [602] | 602 | |||
| Available-for-sale financial assets | 64 | 64 | ||||
| Nonfinancial assets | 1,512 | 1,512 | ||||
| Cash and cash equivalents | 2,773 | 2,773 | ||||
| Loans and receivables | 2,773 | [2,773] | 2,773 | |||
| Total financial assets | 20,647 | 379 | 2,271 | 854 | 24,151 | |
| of which loans and receivables | 20,549 | 20,549 | ||||
| of which available-for-sale financial assets | 33 | 376 | 1,626 | 843 | 2,878 | |
| Financial liabilities | 17,781 | 1,055 | 369 | 19,205 | ||
| Carried at amortized cost | 17,781 | [14,950] | [3,478] | 17,781 | ||
| Carried at fair value (nonderivative) | 1,055 | 1,055 | ||||
| Derivatives | 369 | 369 | ||||
| Trade accounts payable | 5,153 | 58 | 5,211 | |||
| Carried at amortized cost | 5,153 | 5,153 | ||||
| Nonfinancial liabilities | 58 | 58 | ||||
| Other liabilities | 773 | 2 | 268 | 13 | 1,875 | 2,931 |
| Carried at amortized cost | 773 | [773] | 773 | |||
| Carried at fair value (nonderivative) | 8 | 8 | ||||
| Derivatives | 2 | 268 | 5 | 275 | ||
| Nonfinancial liabilities | 1,875 | 1,875 | ||||
| Total financial liabilities | 23,707 | 1,057 | 637 | 13 | 25,414 | |
| of which carried at amortized cost | 23,707 | 23,707 | ||||
| of which carried at fair value (nonderivative) |
1,055 | 8 | 1,063 |
B 19
of which derivatives 2 637 5 644 1 Fair value of the financial instruments carried at amortized cost; the exemption provisions under IFRS 7.29(a) were applied for information on specific fair values.
B 20
| Dec. 31, 2016 | ||||||
|---|---|---|---|---|---|---|
| Carried at amortized cost |
Carried at fair value [Fair value for information 1] |
Nonfinancial assets / liabilities |
||||
| Based on quoted prices in active markets (Level 1) |
Based on observable market data (Level 2) |
Based on unobservable inputs (Level 3) |
||||
| € million | Carrying amount |
Carrying amount |
Carrying amount |
Carrying amount |
Carrying amount |
Carrying amount in the state ment of financial position |
| Trade accounts receivable | 10,969 | 10,969 | ||||
| Loans and receivables | 10,969 | 10,969 | ||||
| Other financial assets | 2,245 | 523 | 3,985 | 803 | 7,556 | |
| Loans and receivables | 2,148 | [2,145] | [16] | 2,148 | ||
| Available-for-sale financial assets | 32 | 520 | 3,283 | 794 | 4,629 | |
| Held-to-maturity financial assets | 65 | [68] | 65 | |||
| Derivatives | 3 | 702 | 9 | 714 | ||
| Other receivables | 633 | 57 | 2,103 | 2,793 | ||
| Loans and receivables | 633 | [633] | 633 | |||
| Available-for-sale financial assets | 57 | 57 | ||||
| Nonfinancial assets | 2,103 | 2,103 | ||||
| Cash and cash equivalents | 1,899 | 1,899 | ||||
| Loans and receivables | 1,899 | [1,899] | 1,899 | |||
| Total financial assets | 15,746 | 523 | 3,985 | 860 | 21,114 | |
| of which loans and receivables | 15,649 | 15,649 | ||||
| of which available-for-sale financial assets | 32 | 520 | 3,283 | 851 | 4,686 | |
| Financial liabilities | 18,994 | 587 | 19,581 | |||
| Carried at amortized cost | 18,994 | [16,040] | [3,362] | 18,994 | ||
| Carried at fair value (nonderivative) | ||||||
| Derivatives | 587 | 587 | ||||
| Trade accounts payable | 6,035 | 375 | 6,410 | |||
| Carried at amortized cost | 6,035 | 6,035 | ||||
| Nonfinancial liabilities | 375 | 375 | ||||
| Other liabilities | 840 | 2 | 252 | 25 | 2,259 | 3,378 |
| Carried at amortized cost | 840 | [840] | 840 | |||
| Carried at fair value (nonderivative) | 8 | 8 | ||||
| Derivatives | 2 | 252 | 17 | 271 | ||
| Nonfinancial liabilities | 2,259 | 2,259 | ||||
| Total financial liabilities | 25,869 | 2 | 839 | 25 | 26,735 | |
| of which carried at amortized cost | 25,869 | 25,869 | ||||
| of which carried at fair value (nonderivative) |
8 | 8 | ||||
| of which derivatives | 2 | 839 | 17 | 858 | ||
1 Fair value of the financial instruments carried at amortized cost; the exemption provisions under IFRS 7.29(a) were applied for information on specific fair values.
The preceding two tables show the carrying amounts and fair values of financial assets and liabilities for each financial instrument category and a reconciliation to the corresponding line items in the statements of financial position. Since the line items "Other receivables," "Trade accounts payable" and "Other liabilities" contain both financial instruments and nonfinancial assets or liabilities (such as other tax receivables or advance payments for services to be received in the future), the reconciliation is shown in the column headed "Nonfinancial assets / liabilities."
The loans and receivables reflected in other financial assets and the liabilities measured at amortized cost also include receivables and liabilities under finance leases in which Bayer is the lessor or lessee and which are therefore measured in accordance with IAS 17.
Because of the short maturities of most trade accounts receivable and payable, other receivables and liabilities and cash and cash equivalents, their carrying amounts at the closing date do not significantly differ from the fair values.
The fair values of loans and receivables, held-to-maturity financial investments and of financial liabilities carried 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 the creditworthiness of the counterparty. Where a market price is available, however, this is deemed to be the fair value.
The fair values of available-for-sale financial assets correspond to quoted prices 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) 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 value adjustments are determined to allow for the contracting party's credit risk.
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.
Fair values measured using unobservable inputs are categorized within Level 3 of the fair value hierarchy. This applies to certain available-for-sale 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 available-for-sale financial assets 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.
Embedded derivatives are separated from their respective host contracts. 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. 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.
Within the financial liabilities, use was made of the fair value option according to IAS 39.11A for the debt instruments (exchangeable bond) issued in June 2017 that can be converted into Covestro shares. This exchangeable bond is a hybrid financial instrument containing a debt instrument as a nonderivative host contract and several embedded derivatives. Due to the application of the fair value option, the bond was designated as a financial liability at fair value through profit or loss at its initial recognition including the embedded derivatives.
The changes in the amounts of financial assets and liabilities recognized at fair value based on unobservable inputs (Level 3) for each financial instrument category were as follows:
| Development of Financial Assets and Liabilities (Level 3) | B 21 2017 |
|||
|---|---|---|---|---|
| € million | Available for-sale financial assets |
Derivatives (net) |
Liabilities carried at fair value (non derivative) |
Total |
| Carrying amounts of net assets (net liabilities), January 1 | 851 | (8) | (8) | 835 |
| Gains (losses) recognized in profit or loss | 8 | 14 | – | 22 |
| of which related to assets / liabilities recognized in the statements of financial position |
8 | 14 | – | 22 |
| Gains (losses) recognized outside profit or loss | (20) | – | – | (20) |
| Additions of assets (liabilities) | 4 | – | – | 4 |
| Settlements of (assets) liabilities | – | – | – | – |
| Carrying amounts of net assets (net liabilities), June 30 | 843 | 6 | (8) | 841 |
| 2016 | ||||
|---|---|---|---|---|
| € million | Available for-sale financial assets |
Derivatives (net) |
Liabilities carried at fair value (non derivative) |
Total |
| Carrying amounts of net assets (net liabilities), January 1 | 833 | 9 | (37) | 805 |
| Gains (losses) recognized in profit or loss | 9 | (3) | – | 6 |
| of which related to assets / liabilities recognized in the statements of financial position |
9 | (3) | – | 6 |
| Gains (losses) recognized outside profit or loss | 14 | – | – | 14 |
| Additions of assets (liabilities) | 38 | – | – | 38 |
| Settlements of (assets) liabilities | (3) | – | 5 | 2 |
| Carrying amounts of net assets (net liabilities), June 30 | 891 | 6 | (32) | 865 |
B 22
The changes recognized in profit or loss were included in other operating income / expenses, interest income or exchange gains / losses.
In the first quarter, Bayer sold 22 million shares of Covestro AG to institutional investors at a price of €66.50 per share. In the second quarter, Bayer sold a further 17.25 million shares of Covestro AG to institutional investors at a price of €62.25 per share. In addition, 8 million shares of Covestro AG were deposited in Bayer Pension Trust e. V. at a price of €63.04, thus reducing the pension provisions of Bayer AG by €504 million.
The transactions had a €3.0 billion positive effect on Bayer Group equity, with €2.0 billion attributable to shareholders of Bayer AG and €1.0 billion to noncontolling interest. Bayer reduced its interest in Covestro AG from 64.2% to 40.9% of the issued shares.
To find out more about the Bayer Group's legal risks, please see Note 32 to the consolidated financial statements in the Bayer Annual Report 2016, which can be downloaded free of charge at www.bayer.com. Since the Bayer Annual Report 2016, the following significant changes have occurred in respect of the legal risks:
Mirena™: As of July 13, 2017, lawsuits from approximately 3,000 users of Mirena™, an intrauterine system providing long-term contraception, had been served upon Bayer in the United States. Plaintiffs allege personal injuries resulting from the use of Mirena™, including perforation of the uterus, ectopic pregnancy or idiopathic intracranial hypertension, and seek compensatory and punitive damages. Additional lawsuits are anticipated. In April 2017, most of the cases pending in U.S. federal courts in which plaintiffs allege idiopathic intracranial hypertension were consolidated in a second multidistrict litigation proceeding for common pre-trial management. The first multidistrict litigation proceeding concerns perforation cases.
Xarelto™: As of July 13, 2017, U.S. lawsuits from approximately 19,900 recipients of Xarelto™, an oral anticoagulant for the treatment and prevention of blood clots, had been served upon Bayer. Plaintiffs allege that users have suffered personal injuries from the use of Xarelto™, including cerebral, gastrointestinal or other bleeding and death, and seek compensatory and punitive damages. Additional lawsuits are anticipated. In May and June 2017, the first two cases set for trial in the federal multidistrict litigation resulted in complete defense verdicts. Two further trials have been scheduled this year (one in the federal multi district litigation, one in the Pennsylvania state court). Bayer anticipates that additional trials will be scheduled. As of July 13, 2017, ten Canadian lawsuits relating to Xarelto™ seeking class action certification had been served upon Bayer.
Essure™: As of July 13, 2017, U.S. lawsuits from approximately 5,700 users of Essure™, a medical device offering permanent birth control with a nonsurgical procedure, had been served upon Bayer. Plaintiffs allege personal injuries from the use of Essure™, including hysterectomy, perforation, pain, bleeding, weight gain, nickel sensitivity, depression and unwanted pregnancy, and seek compensatory and punitive damages. Additional lawsuits are anticipated. As of July 13, 2017, two Canadian lawsuits relating to Essure™ seeking class action certification had been served upon Bayer.
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.
In the second quarter, Bayer AG increased the coverage of Bayer Pension Trust e.V. with the deposit of 8 million of the shares it held in Covestro AG. The number of shares deposited amounted to 4.0% of the issued shares of Covestro AG and had a value of €504 million.
Sales to related parties were not material from the viewpoint of the Bayer Group. Goods and services in the amount of €0.3 billion were procured from the associate PO JV, LP, Wilmington, United States, mainly in the course of day-to-day business operations. There was no significant change in receivables vis-à-vis related parties compared with December 31, 2016. Liabilities declined by €0.1 billion to €0.2 billion, with the greater part of the decrease pertaining to Casebia Therapeutics Limited Liability Partnership, Ascot, United Kingdom, the newly established joint venture with CRISPR Therapeutics AG, Basel, Switzerland.
The Annual Stockholders' Meeting on April 28, 2017, approved the proposal by the Board of Management and the Supervisory Board that a dividend of €2.70 per share be paid for the 2016 fiscal year.
The actions of the members of the Board of Management and the Supervisory Board in office in 2016 were ratified in accordance with the proposals by the Board of Management and the Supervisory Board.
Six stockholder representatives were elected to the Supervisory Board in accordance with the nominations submitted by the Supervisory Board.
Furthermore, in accordance with the proposal by the Board of Management and the Supervisory Board, the Annual Stockholders' Meeting approved the amendment to the Articles of Incorporation with regard to the compensation of the members of the Supervisory Board.
The Annual Stockholders' Meeting also approved the control agreement between Bayer AG and Bayer CropScience Aktiengesellschaft of February 21, 2017, as proposed by the Board of Management and the Supervisory Board.
In accordance with the proposal by the Supervisory Board, Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Munich, was elected as the auditor of the annual and consolidated financial statements for the fiscal year 2017 and to review the condensed financial statements and interim management reports as of June 30, 2017, September 30, 2017 and March 31, 2018.
Leverkusen, July 25, 2017 Bayer Aktiengesellschaft
The Board of Management
Werner Baumann
Liam Condon Johannes Dietsch Dr. Hartmut Klusik
Kemal Malik Erica Mann Dieter Weinand
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Bayer Group, and the interim management report includes a fair review of the development and performance of the business and the position of the Bayer Group, together with a description of the principal opportunities and risks associated with the expected development of the Bayer Group for the remaining months of the financial year.
Leverkusen, July 25, 2017 Bayer Aktiengesellschaft
The Board of Management
Werner Baumann
Liam Condon Johannes Dietsch Dr. Hartmut Klusik
Kemal Malik Erica Mann Dieter Weinand
To Bayer Aktiengesellschaft, Leverkusen, Germany
We have reviewed the condensed interim consolidated financial statements – comprising the income statement and the statement of comprehensive income, the statement of financial position, the statement of cash flows, the condensed statement of changes in equity as well as selected explanatory notes to the financial statements – and the interim group management report for the period from 1 January 2017 until 30 June 2017 of Bayer AG, which are components of the half-year financial report under § 37w WpHG (Wertpapierhandelsgesetz: German Securities Trading Act).
The preparation of the condensed interim consolidated financial statements in accordance with the IFRS applicable to interim financial reporting as adopted by the EU is the responsibility of the entity's Management Board. The Management Board is also responsible for such internal control as the Management Board determines is necessary to enable the preparation of condensed interim consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express a conclusion on the condensed interim consolidated financial statements based on our review. We conducted our review in accordance with the German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW) as well as in supplementary compliance with the International Standard on Review Engagements "Engagements to Review Historical Financial Statements" (ISRE 2400 (revised)). Those standards require that we plan and perform the review in compliance with professional standards such that we can preclude through critical evaluation, with limited assurance, that the condensed interim consolidated financial statements have not been prepared, in all material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU.
A review of the condensed interim consolidated financial statements in accordance with the German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW) as well as in supplementary compliance with ISRE 2400 (revised) is a limited assurance engagement. A review is limited primarily to inquiries of personnel of the entity and analytical procedures and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot issue an auditor's report.
Based on our review, no matters have come to our attention that cause us to presume that the condensed interim consolidated financial statements have not been prepared, in all material respects, in accordance with the IFRS applicable to interim financial reporting as adopted by the EU.
The preparation 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 entity's Management Board. The Management Board is also responsible for such internal control as the Management Board determines is necessary to enable the preparation of an interim group management report that is free from material misstatement, whether due to fraud or error.
Our responsibility is to express a conclusion on the interim group management report based on our review. We conducted our review in accordance with the German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW) as well as in supplementary compliance with the International Standard on Review Engagements "Engagements to Review Historical Financial Statements" (ISRE 2400 (revised)). Those standards require that we plan and perform the review in compliance with professional standards such that we can preclude through critical evaluation, with limited assurance, that the interim group management report has not been prepared, in all material respects, in accordance with the requirements of the WpHG applicable to interim group management reports.
A review of the interim group management report in accordance with the German generally accepted standards for the review of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW) as well as in supplementary compliance with ISRE 2400 (revised) is a limited assurance engagement. A review is limited primarily to inquiries of personnel of the entity and analytical procedures and therefore does not provide the assurance attainable in a financial statement audit. Since, in accordance with our engagement, we have not performed a financial statement audit, we cannot issue an auditor's report.
Based on our review, no matters have come to our attention that cause us to presume that the interim group management report has not been prepared, in all material respects, in accordance with the requirements of the WpHG applicable to interim group management reports.
Munich, Germany, 26 July 2017
Deloitte GmbH Wirtschaftsprüfungsgesellschaft
Heiner Kompenhans Prof. Dr. Frank Beine
Wirtschaftsprüfer Wirtschaftsprüfer (German Public Auditor) (German Public Auditor)
| Q3 2017 Interim Report | October 26, 2017 |
|---|---|
| Annual Report 2017 | February 28, 2018 |
| Q1 2018 Interim Report | May 3, 2018 |
| Annual Stockholders' Meeting 2018 | May 25, 2018 |
| Q2 2018 Interim Report | July 31, 2018 |
| Q3 2018 Interim Report | October 30, 2018 |
Published by Bayer AG, 51368 Leverkusen, Germany
Editor Jörg Schäfer, phone +49 214 30 39136 Email: [email protected]
Peter Dahlhoff, phone +49 214 30 33022 Email: [email protected]
English edition Bayer Business Services GmbH Translation Services
Date of publication Thursday, July 27, 2017
Bayer on the internet www.bayer.com
ISSN 0343 / 1975
Interim Group Management Report and Condensed Consolidated Interim Financial Statements produced in-house with FIRE.sys.
Certain statements contained in this report may constitute "forward-looking statements." Actual results could differ materially from those projected or forecast in the forward-looking statements. The factors that could cause actual results to differ materially include the following: uncertainties as to the timing of the transaction; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected time-frames or at all and to successfully integrate Monsanto's operations into those of Bayer; such integration may be more difficult, time-consuming or costly than expected; revenues following the transaction may be lower than expected; operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the announcement of the transaction; the retention of certain key employees at Monsanto; risks associated with the disruption of management's attention from ongoing business operations due to the transaction; the conditions to the completion of the transaction may not be satisfied, or the regulatory approvals required for the transaction may not be obtained on the terms expected or on the anticipated schedule; the parties' ability to meet expectations regarding the timing, completion and accounting and tax treatments of the merger; the impact of the refinancing of the loans taken out for the transaction, the impact of indebtedness incurred by Bayer in connection with the transaction and the potential impact on the rating of indebtedness of Bayer; the effects of the business combination of Bayer and Monsanto, including the combined company's future financial condition, operating results, strategy and plans; other factors detailed in Monsanto's Annual Report on Form 10-K filed with the SEC for the fiscal year ended August 31, 2016 and Monsanto's other filings with the SEC, which are available at http://www.sec.gov and on Monsanto's website at www.monsanto.com; and other factors discussed in Bayer's public reports which are available on the Bayer website at www.bayer.com. Bayer and Monsanto assume no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date.
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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