SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of April, 2002
---------------------------
Bayer Aktiengesellschaft
(Exact name of registrant as specified in its charter)
Bayerwerk, Gebaude W1
D-51368 Leverkusen
Germany
(Address of principal executive offices)
---------------------------
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
--- ---
Indicate by check mark whether the registrant by
furnishing information contained in this Form
is also thereby furnishing information to the
Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82- N/A
EXHIBIT INDEX
1. One press release dated April 17, 2002.
2. One English-language version of Bayer AG's Interim Report for the first
quarter of 2002 as distributed at Bayer AG's Annual Stockholders' Meeting,
April 26, 2002.
3. English-language transcript of speech held by Dr. Manfred Schneider,
Chairman of the Board of Management of Bayer AG, at Bayer AG's Annual
Stockholders' Meeting, April 26, 2002.
4. One press release dated April 26, 2002.
5. One press release dated April 26, 2002.
EXHIBIT 1
[Bayer Logo]
Corporate Investor Relations
European Commission clears planned transaction - Bayer can acquire Aventis
CropScience
Approval subject to a number of divestments - FTC decision imminent
Leverkusen - The European Commission has authorized Bayer AG's acquisition of
Aventis CropScience subject to certain conditions. Approval from this regulatory
authority is a decisive step towards establishing the new company Bayer
CropScience. "Following an in-depth dialogue with the Commission, we now have an
outcome that should enable us to achieve our strategic goals of becoming one of
the top companies in our industry and at the same time ensuring the long-term
competitiveness of Bayer CropScience," commented Dr. Jochen Wulff, designated
Management Board Chairman of Bayer CropScience. The U.S. antitrust authority,
the Federal Trade Commission (FTC), is expected to announce its decision
shortly.
Under the conditions imposed by the E.U. Commission, a number of products for
certain applications and in certain regions must be divested or outlicensed
within six months. The list of conditions relates to total product sales of EUR
600 million - or 9 percent of the combined business based on 2000 figures.
The main requirement concerning insecticides is the divestment of the global
business in agrochemical products based on Aventis' active substance fipronil,
though these products may be licensed back for regions other than Europe and the
United States. Also to be sold is the European business in the insecticides
ethiprol, phosalone, cypermethrin and acetamiprid. Existing Bayer products to be
divested for Europe are those with the active ingredients cyfluthrin,
beta-cyfluthrin, oxydemeton-methyl and fenamiphos.
The European business in the herbicides linuron and metamitron and the
fungicides iprodione, prochloraz, pyrimethanil, triticonazole and
fluquinconazole is also to be sold.
Other conditions imposed relate to product outlicensing for regions, individual
countries or specific applications. Said Wulff: "From the start, we were
realistic about possible objections by the antitrust authorities. We anticipate
keen interest from prospective purchasers and will use the proceeds of the
divestitures and licenses to further strengthen the company."
The Commission's decision was based on an in-depth antitrust review of the
acquisition, notice of which was given in October 2001. This involved analysing
the positions of all the products of both companies in their respective fields
of application and in individual markets, as well as obtaining statements from
competitors and customers. Bayer as the acquirer then submitted proposals that
dispelled the Commission's objections.
Leverkusen, April 17, 2002
Forward-Looking Statements
This news release contains forward-looking statements based on current
assumptions and forecasts made by Bayer Group management. Various known and
unknown risks, uncertainties
and other factors could lead to material differences between the actual future
results, financial situation, development or performance of the company and the
estimates given here. These factors include those discussed in our public
reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and
Exchange Commission (including our Form 20-F).The company assumes no liability
whatsoever to update these forward-looking statements or to conform them to
future events or developments.
EXHIBIT 2
Information for Stockholders 2002
Interim Report for the First Quarter
[Bayer logo]
Interim Report for the First Quarter
Net income substantially improved - No recovery in industrial business so far
Hopes of an economic recovery were not yet fulfilled in the first quarter of
2002. However, we believe the U.S. economy, which had weakened considerably,
will recover in the course of the year and we also anticipate an economic
revival in Europe.
Sales from continuing operations
(euro) million
2002 2001 2001 2001 2001
Q1 Q1 Q2 Q3 Q4
-- -- -- -- --
Domestic 1,989 2,252 2,157 1,827 1,880
Foreign 4,968 5,188 5,575 4,824 5,235
Operating result from continuing operations before exceptional items
(euro)million
2002 2001 2001 2001 2001
Q1 Q1 Q2 Q3 Q4
-- -- -- -- --
493 912 541 46 356
The 6 percent decline in sales from continuing operations, to (euro)7.0 billion,
was fairly modest considering the state of the economy in the first quarter and
especially since portfolio changes accounted for a 4 percent decrease.
The operating result before exceptional items dropped by 46 percent to (euro)0.5
billion, due partly to the weakness of the economy but also to continuing
pressure on polymers margins and the absence of sales of the
cholesterol-lowering drug Lipobay(R)/Baycol(R).
Change in sales 1st Quarter
--------------- -----------
Reported -8%
Continuing operations -6%
Volumes +1%
Prices -4%
Exchange rates +1%
Portfolio changes -4%
After exceptional items, the operating result matched the (euro)0.8 billion
earned in the same period last year. It was boosted to the tune of (euro)0.5
billion by the sale of company-owned housing units, but diminished by (euro)0.2
billion in charges for restructuring and site consolidation.
Including the Haarmann & Reimer and Fibers business groups, which it is planned
to divest, sales declined by 8 percent to (euro)7.2 billion, and the operating
result was down just 1 percent.
Performance by Business Area
Our four business areas recorded combined external sales of (euro)6.8 billion,
an operating result of (euro)0.6 billion before exceptional items and corporate
costs, and gross cash flow of (euro)0.7 billion. Polymers posted the highest
sales volume and CropScience the highest operating margin, while Health Care
accounted for the largest shares of the operating result and gross cash flow.
Performance by business area (before reconciliation)
(euro) million
Health Care CropScience Polymers Chemicals
----------- ----------- -------- ---------
Sales 2,410 866 2,648 847
Operating result * 244 144 92 77
Gross cash flow 266 107 219 115
* Before exceptional items
Interim Report for the First Quarter
Health Care
(euro) million
1st Quarter 1st Quarter Full year
2002 2001 2001
---- ---- ----
Sales 2,410 2,566 10,821
Operating result before exceptional items 244 380 943
Return on sales before exceptional items 10.1% 14.8% 8.7%
Gross cash flow 266 366 926
CropScience
(euro) million
1st Quarter 1st Quarter Full year
2002 2001 2001
---- ---- ----
Sales 866 814 2,708
Operating result before exceptional items 144 213 453
Return on sales before exceptional items 16.6% 26.2% 16.7%
Gross cash flow 107 160 550
Sales in the Health Care business area decreased by 6 percent to (euro)2.4
billion, largely because of the withdrawal of the cholesterol-lowering drug
Lipobay(R)/Baycol(R). The operating result dropped by 36 percent to (euro)0.2
billion, and gross cash flow was down 27 percent, to (euro)0.3 billion.
Pharmaceuticals saw business decline by (euro)233 million, or 19 percent, to
(euro)1.0 billion, with the absence of Lipobay(R)/Baycol(R) diminishing sales by
(euro)246 million. The anti-infective Ciprobay(R)/Cipro(R) showed growth, while
the antihypertensive Adalat(R) was exposed to increasing competition from
generics, especially in the United States.
The Biological Products Business Group grew sales by 36 percent to (euro)0.3
billion, mainly because increased quantities of our factor VIII product
Kogenate(R) were released.
Bayer and Aventis have signed a non-binding letter of intent to combine the
Biological Products Business Group and Aventis Behring into a joint venture.
Consumer Care sales were down 9 percent to (euro)0.5 billion due to lower sales
of our cold remedies and the effects of the economic crisis in Argentina.
We plan to optimize the portfolio by divesting the household insecticides
business.
Sales of the Diagnostics Business Group rose by 8 percent to (euro)0.5 billion,
with increases in all business units. Nucleic acid diagnostics showed the
strongest growth.
A worldwide distribution agreement for oncology-related serum assays was signed
with DAKO A/S of Denmark.
Animal Health boosted sales by 13 percent to (euro)0.2 billion, mainly due to a
strong upward trend in our products for companion animals in North America.
CropScience sales rose 6 percent to (euro)0.9 billion, with our European and
North American companies contributing most to the increase. The operating result
and gross cash flow slipped by 32 and 33 percent, respectively, to (euro)0.1
billion each, chiefly due to write-offs of receivables in Latin America and
one-time charges for the integration of Aventis CropScience.
The European Commission has approved the acquisition of Aventis CropScience
subject to certain conditions. The U.S. Federal Trade Commission (FTC) is
expected to announce its decision shortly.
Polymers
(euro) million
1st Quarter 1st Quarter Full year
2002 2001 2001
---- ---- ----
Sales 2,648 2,846 10,788
Operating result before exceptional items 92 230 434
Return on sales before exceptional items 3.5% 8.1% 4.0%
Gross cash flow 219 381 1,201
Chemicals
(euro) million
1st Quarter 1st Quarter Full year
2002 2001 2001
---- ---- ----
Sales 847 1,023 3,749
Operating result before exceptional items 77 132 271
Return on sales before exceptional items 9.1% 12.9% 7.2%
Gross cash flow 115 124 379
The Polymers business area continued to be affected by poor trading conditions
in the first quarter of 2002. Fierce competition for market share was
accompanied by further price erosion. The cost structure programs we have
embarked on could not yet fully offset the resulting pressure on margins.
Against this background the business area posted sales of (euro)2.6 billion,
with the operating result amounting to (euro)0.1 billion and gross cash flow to
(euro)0.2 billion.
Sales of the Plastics Business Group declined by 19 percent to (euro)0.8
billion, largely because of a substantial drop in demand and price reductions in
the Polycarbonates Business Unit.
In the Rubber Business Group, continuing weak demand from the automotive
industry caused a 6 percent drop in sales, to (euro)0.6 billion.
Sales of Polyurethanes grew by 4 percent to (euro)0.8 billion, mainly as a
result of higher volumes in the Comfort and Insulation business units.
This business group is strengthening its market position in Scandinavia by
acquiring the polyurethanes activities of the Danish company Tectrade A/S,
Copenhagen.
Sales in the Coatings and Colorants Business Group slipped 3 percent to
(euro)0.5 billion.
The Chemicals business area recorded a 17 percent decline in sales, of which 7
percentage points were due to portfolio changes. Here, too, continuing pressure
on margins weighed heavily on the operating result. Gross cash flow receded by 8
percent to (euro)0.1 billion.
The Basic and Fine Chemicals Business Group saw sales drop by 13 percent to
(euro)0.2 billion, primarily because of divestments. Other factors were the
effect of the weak economy on the basic chemicals business and, in the Inorganic
Basic Chemicals Business Unit, a sharp drop in the price of caustic soda
solution.
Business in Specialty Products was down 5 percent to (euro)0.4 billion, due
partly to generally weak demand and partly to lower sales of textile processing
chemicals in North America.
In the Wolff Walsrode Business Group, portfolio changes caused sales to decrease
by 27 percent to (euro)0.1 billion.
Sales of H.C. Starck fell 35 percent - mainly because of the continuing cyclical
weakness in the electrical industry - to (euro)0.2 billion.
Cash flow statements
(euro) million
1st Quarter 1st Quarter
2002 2001
---- ----
Gross operating cash flow 834 1,067
Changes in working capital (594) (770)
Net cash provided by operating activities 240 297
of which discontinuing operations 23 (16)
Net cash used in investing activities (62) (746)
of which discontinuing operations (29) (21)
Net cash provided by financing activities 194 415
of which discontinuing operations 5 47
Change in cash and cash equivalents 372 (34)
Cash and cash equivalents at beginning of year 719 491
Exchange rate movements and changes in scope of
consolidation 1 18
Cash and cash equivalents at end of first quarter 1,092 475
Performance by region (by point of origin, before reconciliation)
(euro) million
Latin
America/
North Africa/
Europe America Asia/Pacific Middle East
------ ------- ------------ -----------
Sales 3,297 2,266 900 494
Operating result * 473 (2) 69 37
Gross cash flow 554 174 70 49
* Before exceptional items
Performance by Region
Sales of our companies in Europe registered an 8 percent decline, to (euro)3.3
billion.
The operating result dropped by 41 percent to (euro)0.5 billion, and gross cash
flow was down 27 percent, at (euro)0.6 billion. The 14 percent return on sales
was well above the Group average of 7 percent. In North America and
Asia/Pacific, too, we recorded lower sales, operating income and gross cash
flow.
In the Latin America/Africa/Middle East region, Bayer companies posted 5 percent
higher sales in local currencies. Shifts in currency parities had a negative
effect. The operating result was on a par with last year, while gross cash flow
improved by 20 percent to (euro)49 million.
Earnings
(euro) million
1st Quarter 1st Quarter Full year
2002 2001 2001
---- ---- ----
Operating result 840 848 1,611
of which discontinuing operations 19 24 369
Non-operating result (157) (126) (496)
Income before income taxes 683 722 1,115
Net income 523 442 965
Liquidity and capital resources
The consolidated financial statements for the first quarter of 2002 have been
prepared as for the year 2001 according to the rules issued by the International
Accounting Standards Board, London. Reference should be made as appropriate to
the notes to the 2001 statements.
While gross cash flow declined by (euro)233 million, net cash flow was down by
only (euro)57 million because of a (euro)176 million reduction in working
capital compared with the first quarter of 2001. Net cash used in investing
activities came to (euro)62 million, including (euro)26 million for net
additions to property, plant and equipment. The latter figure is the difference
between (euro)541 million in capital expenditures and (euro)515 million in cash
inflows from sales of noncurrent assets. Net cash outflow for investments, after
deducting interest and dividends received, amounted to (euro)36 million.
Financing activities provided net cash of (euro)194 million, with (euro)310
million in net borrowings partially offset by (euro)116 million in interest paid
after taxes.
Cash and cash equivalents increased from the first quarter of last year by
(euro)617 million to (euro)1,092 million. Including marketable securities and
other instruments, the Group had liquid assets of (euro)1,144 million on March
31, 2002.
Earnings performance
The operating result - including discontinuing operations - for the first
quarter of 2002 declined by 1 percent to (euro)0.8 billion. This includes the
(euro)0.5 gain on the sale of the majority of our company housing units.
The non-operating result declined by (euro)31 million to minus (euro)157
million.
Income tax expense, at (euro)159 million, was (euro)125 million less than for
the same period last year due to the tax-free income from the above sale. The
effective tax rate dropped by 16 percentage points to 23 percent. Net income
rose by 18 percent to (euro)523 million.
Interim Report for the First Quarter
Balance sheet structure
(euro) million
March 31, 2002 March 31, 2001 Dec. 31, 2001
-------------- -------------- -------------
Noncurrent assets 21,621 21,656 21,702
Current assets 16,541 16,631 15,337
Stockholders' equity 16,763 16,322 16,922
Minority stockholders' interest 96 108 98
Liabilities 21,303 21,857 20,019
Total assets 38,162 38,287 37,039
Asset and capital structure
Total assets increased during the first three months of 2002 by (euro)1.1
billion, or 3 percent, to (euro)38.2 billion.
Growth was mainly in current assets, with trade accounts receivable (euro)0.6
billion higher than on December 31, 2001 and liquid assets (euro)0.4 billion
higher.
Stockholders' equity declined by (euro)0.2 billion to (euro)16.8 billion. The
(euro)0.5 billion in net income for the first quarter does not offset the
proposed dividend for 2001.
Liabilities, including deferred taxes and deferred income, grew to (euro)21.3
billion. Of the increase, the dividend allocation alone accounts for (euro)0.7
billion. Net debt was unchanged from December 31, 2001 at (euro)6.5 billion.
Capital expenditures
In the first quarter of 2002 we spent (euro)0.5 billion for intangible assets,
property, plant and equipment. In line with our declared strategy, this was
fully financed out of the (euro)0.6 billion amortization and depreciation
charge. Europe accounted for expenditures of (euro)0.2 billion, with 83 percent
of this invested at our German sites. We more than doubled our capital
investment in North America, to (euro)0.3 billion.
The capital expenditure budget for the full year 2002 is (euro)2.4 billion.
Employees
On March 31, 2002 the Bayer Group had 111, 100 employees in its continuing
operations, which was 900 fewer than at the start of the year. Headcount was
reduced by 600 in Europe, 200 in the Latin America/Africa/Middle East region and
100 in Asia/Pacific. The number of employees in North America was unchanged.
Compared with the first quarter of 2001, personnel expenses rose by (euro)45
million to (euro)1.9 billion. Of this increase, (euro)25 million resulted from
currency translations.
Outlook
In the Health Care business area, we expect substantially higher sales this year
for biological products, though this cannot compensate for the absence of
Lipobay(R)/Baycol(R). Operating income will be further affected by restructuring
charges in Pharmaceuticals and expenses for the planned launch of our new drug
for the treatment of erectile dysfunction. In Diagnostics and Biological
Products, however, we expect earnings to improve.
CropScience should post moderate business growth during the year despite the
economic weakness in Latin America. The operating result, however, will be
hampered by expenses for the integration of Aventis CropScience.
The business trend in Polymers and Chemicals is crucially dependent on an
improvement in the economic situation. The cost structure programs we have
initiated cannot fully offset the continuing pressure on margins.
Regarding the full year 2002, the current economic uncertainty precludes any
reliable forecast for the operating business. However, gains from the planned
divestitures should significantly improve net income.
Interim Report for the First Quarter
Bayer Group Highlights
1st Quarter Full year
2002 2001 2001
---- ---- ----
Sales ((euro)million) 7,233 7,901 30,275
of which discontinuing operations 276 461 1,337
Sales from continuing operations 6,957 7,440 28,938
Change -6.5% +10.2% +1.1%
Domestic companies 1,989 2,252 8,116
Change -11.7% +10.2% -0.2%
Foreign companies 4,968 5,188 20,822
Change -4.2% +10.2% +1.7%
Operating result ((euro)million) 840 848 1,611
of which discontinuing operations 19 24 369
Operating result from continuing operations 821 824 1,242
Change -0.4% -16.4% -59.5%
Operating result from continuing operations
before exceptional items 493 912 1,855
Change -45.9% -7.9% -42.2%
Return on sales before exceptional items 7.1% 12.3% 6.4%
Net income ((euro)million) 523 442 965
Change +18.3% -20.5% -46.9%
Gross cash flow ((euro)million) 834 1,067 2,923
Change -21.8% +2.9% -29.8%
Capital expenditures ((euro)million)* 528 519 2,553
Domestic companies 182 234 1,346
Foreign companies 346 285 1,207
Number of employees* as of March 31 111,100 114,600 112,000
Personnel expenses ((euro)million) 1,879 1,834 7,576
Change +2.5% +7.1% +3.9%
* continuing operations
Bayer Group Consolidated Statements of Income (Summary)
1st Quarter Change %
2002 2001
---- ----
(euro) million
Net sales 7,233 7,901 -8.5%
Net sales from discontinuing operations (276) (461) -40.1%
Net sales from continuing operations 6,957 7,440 -6.5%
Cost of goods sold (4,070) (3,873) +5.1%
Gross profit 2,887 3,567 -19.1%
Selling expenses (1,574) (1,672) -5.9%
Research and development expenses (551) (562) -2.0%
General administration expenses (217) (253) -14.2%
Other operating income (expenses) - net 276 (256) o
Operating result from continuing operations 821 824 -0.4%
Operating result from discontinuing operations 19 24 -20.8%
Operating result 840 848 -0.9%
Non-operating result (157) (126) -24.6%
Income before income taxes 683 722 -5.4%
Income taxes (159) (284) -44.0%
Income after taxes 524 438 +19.6%
Minority stockholders' interest (1) 4 o
Net income 523 442 +18.3%
Earnings per share ((euro)) 0.72 0.61 +18.0%
Bayer Group Consolidated Balance Sheets (Summary)
March 31, 2002 March 31, 2001 Dec. 31, 2001
-------------- -------------- -------------
(euro) million
Assets
Noncurrent assets 21,621 21,656 21,702
Inventories 5,852 6,454 5,818
Receivables 8,898 9,312 8,140
Liquid assets 1,144 677 771
Current assets 15,894 16,443 14,729
Deferred taxes 647 188 608
38,162 38,287 37,039
of which discontinuing operations 1,043 1,529 1,049
Stockholders' equity and liabilities
Capital stock and reserves 4,812 4,812 4,812
Retained earnings 10,159 9,911 9,841
Net income 523 442 965
Other comprehensive income
Currency translation adjustment 666 811 759
Miscellaneous items 603 346 545
Stockholders' equity 16,763 16,322 16,922
Minority stockholders' interest 96 108 98
Long-term liabilities 8,477 8,934 8,906
Short-term liabilities 11,488 11,311 9,875
Liabilities 19,965 20,245 18,781
of which discontinuing operations 313 481 307
Deferred taxes 1,338 1.612 1.238
38,162 38,287 37,039
Bayer Group Consolidated Statements of Changes in Stockholders' Equity
Capital
stock Currency
and Retained Net translation Miscellaneous
reserves earnings income adjustment items Total
-------- -------- ------ ---------- ----- -----
(euro) million
December 31, 2000 4,812 9,047 1,816 465 0 16,140
Dividend payment (1,022) (1,022)
Allocation to retained earnings 864 (794) 70
Exchange differences 346 346
Other changes in stockholders'
equity 346 346
Income after taxes 442 442
March 31, 2001 4,812 9,911 442 811 346 16,322
December 31, 2001 4,812 9,841 965 759 545 16,922
Dividend payment (657) (657)
Allocation to retained earnings 318 (308) 10
Exchange differences (93) (93)
Other changes in stockholders'
equity 58 58
Income after taxes 523 523
March 31, 2002 4,812 10,159 523 666 603 16,763
Interim Report for the First Quarter
Key Data by Segment and Region
Health Care CropScience
----------- -----------
Pharmaceuticals & Consumer Care &
Segments Biological Products Diagnostics Animal Health CropScience
(euro)million 1st Quarter 1st Quarter 1st Quarter 1st Quarter
2002 2001 2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ---- ---- ----
Net sales (external) 1,257 1,422 950 964 203 180 866 814
Change in(euro) -11.6% +2.0% -1.5% +5.8% +12.8% -8.2% +6.4% -1.8%
Change in local
currencies -12.7% +0.6% -1.9% +4.1% +12.6% -9.0% +6.7% -1.7%
Intersegment sales 8 8 1 0 0 3 17 43
Operating result
before exceptional
items 131 285 63 73 50 22 144 213
Return on sales
before exceptional
items 10.4% 20.0% 6.6% 7.6% 24.6% 12.2% 16.6% 26.6%
Exceptional items (8) (4) (6) (10) 0 0 0 0
Operating result 123 281 57 63 50 22 144 213
Return on sales 9.8% 19.8% 6.0% 6.5% 24.6% 12.2% 16.6% 26.2%
Gross cash flow 114 231 111 114 41 21 107 160
Polymers Chemicals
-------- ---------
Polyurethanes,
Coatings &
Segments Plastics & Rubber Colorants Chemicals
(euro)million 1st Quarter 1st Quarter 1st Quarter
2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ----
Net sales (external) 1,308 1,522 1,340 1,324 847 1,023
Change in(euro) -14.1% +11.5% +1.2% +23.9% -17.2% +27.1%
Change in local currencies -15.4% +9.6% +0.5% +22.2% -16.0% +26.2%
Intersegment sales 29 30 32 38 95 111
Operating result before
exceptional items 24 185 68 45 77 132
Return on sales before
exceptional items 1.8% 12.2% 5.1% 3.4% 9.1% 12.9%
Exceptional items (9) (11) (93) (7) (6) (51)
Operating result 15 174 (25) 38 71 81
Return on sales 1.1% 11.4% (1.9)% 2.9% 8.4% 7.9%
Gross cash flow 109 229 110 152 115 124
Continuing Discontinuing
Segments Reconciliation operations operations Bayer Group
-------------- ---------- ---------- -----------
(euro)million 1st Quarter 1st Quarter 1st Quarter 1st Quarter
2002 2001 2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ---- ---- ----
Net sales (external) 186 191 6,957 7,440 276 461 7,233 7,901
Change in(euro) - - -6.5% +10.2% - - -8.5% +7.8%
Change in local
currencies - - -6.9% +8.9% - - -8.9% +6.5%
Intersegment sales (182) (233) - - - - - -
Operating result
before exceptional
items (64) (43) 493 912 19 41 512 953
Return on sales
before exceptional
items - - 7.1% 12.3% - - 7.1% 12.1%
Exceptional items 450 (5) 328 (88) 0 (17) 328 (105)
Operating result 386 (48) 821 824 19 24 840 848
Return on sales - - 11.8% 11.1% - - 11.6% 10.7%
Gross cash flow 94 2 801 1,033 33 34 834 1,067
Latin America/
Africa/
Regions Europe North America Asia/Pacific Middle East
------ ------------- ------------ -----------
(euro)million 1st Quarter 1st Quarter 1st Quarter 1st Quarter
2002 2001 2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ---- ---- ----
Net sales (external) 2,914 3,218 2,242 2,254 1,113 1,201 688 767
by market
Net sales (external) 3,297 3,590 2,266 2,357 900 963 494 530
by point of origin
Change in(euro) -8.2% +10.0% -3.9% +8.4% -6.5% +18.3% -6.8% +6.6%
Change in local
currencies -8.4% +9.9% -8.8% +3.0% -4.9% +22.6% +5.1% +3.5%
Interregional sales 795 908 506 458 53 70 25 32
Operating result
before exceptional
items 473 804 (2) 35 69 110 37 38
Return on sales
before exceptional
items 14.3% 22.4% (0.1)% 1.5% 7.7% 11.4% 7.5% 7.2%
Exceptional items 427 (24) (98) (55) 0 (4) (1) 0
Operating result 900 780 (100) (20) 69 106 36 38
Return on sales 27.3% 21.7% (4.4)% (0.8)% 7.7% 11.0% 7.3% 7.2%
Gross cash flow 554 755 174 221 70 97 49 41
Continuing Discontinuing
Regions Reconciliation operations operations Bayer Group
-------------- ---------- ---------- -----------
(euro)million 1st Quarter 1st Quarter 1st Quarter 1st Quarter
2002 2001 2002 2001 2002 2001 2002 2001
---- ---- ---- ---- ---- ---- ---- ----
Net sales (external) - - 6,957 7,440 276 461 7,233 7,901
by market
Net sales (external) - - 6,957 7,440 276 461 7,233 7,901
by point of origin
Change in(euro) - - -6.5% +10.2% - - -8.5% +7.8%
Change in local
currencies - - -6.9% +8.9% - - -8.9% +6.5%
Interregional sales (1,379) (1,468) - - - - - -
Operating result
before exceptional
items (84) (75) 493 912 19 41 512 953
Return on sales
before exceptional
items - - 7.1% 12.3% - - 7.1% 12.1%
Exceptional items 0 (5) 328 (88) 0 (17) 328 (105)
Operating result (84) (80) 821 824 19 24 840 848
Return on sales - - 11.8% 11.1% - - 11.6% 10.7%
Gross cash flow (46) (81) 801 1,033 33 34 834 1,067
2001 figures restated
Forward-Looking Statements
This Interim Report contains forward-looking statements. These statements
use words like "believes", "assumes", "expects" or similar formulations. Various
known and unknown risks, uncertainties and other factors could lead to
substantial differences between the actual future results, financial situation,
development or performance of our company and those either expressed or implied
by these statements. These factors include, among other things:
o downturns in the business cycle of the industries in which we compete;
o new regulations, or changes to existing regulations, that increase our
operating costs or otherwise reduce our profitability;
o increases in the price of our raw materials, especially if we are unable to
pass these costs along to customers;
o loss or reduction of patent protection for our products;
o liabilities, especially those incurred as a result of environmental laws or
product liability litigation;
o fluctuation in international currency exchange rates as well as changes in
the general economic climate; and
o other factors identified in this Interim Report.
These factors include those discussed in our public reports filed with the
Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission
(including our Form 20-F).
In view of these uncertainties, we caution readers not to place undue reliance
on these forward-looking statements. We accept no obligation to continue to
report or update these forward-looking statements or adjust them to future
events or developments.
Published by:
Bayer AG
Corporate Communications Division
51368 Leverkusen, Germany
Phone +49 214 30 58992
Fax +49 214 30 71985
Distribution: phone +49 214 30 71816
Bayer on the Internet:
www.bayer.com
[Bayer logo]
EXHIBIT 3
[English-language transcript of speech given by Dr. Manfred Schneider, Chairman
of the Board of Management of Bayer AG, at Bayer's Annual Stockholders' Meeting,
April 26, 2002]
Ladies and gentlemen,
On behalf of my colleagues on the Board of Management, I too would like to
welcome you to this year's Annual Stockholders' Meeting. We are pleased that so
many stockholders have again responded to our invitation. This is an impressive
indication of your strong ties to Bayer.
At the center of our attention this year is the reorganization of the Bayer
Group and the transformation of our management structures, which are currently
being implemented under the slogan "The New Bayer".
The main objectives are to improve Bayer's long-term competitiveness, strengthen
the focus on our core businesses in Health Care, CropScience, Polymers and
Chemicals, and optimize our services.
We ultimately aim to achieve leadership positions, or safeguard existing ones,
in our various markets and to increase the value of our company over the long
term in the interests of our stockholders.
The reorganization will lead to far-reaching changes. It will present major
challenges to all those involved and demand a heavy commitment on everyone's
part - from the Board of Management to the employees of our various
organizational units.
Despite this, we are not losing sight of our everyday operations. The business
situation remains difficult. Earnings were sharply down in 2001, and the first
quarter of 2002 was unsatisfactory. There are still no clear signs of a real
recovery.
But before I get to our business performance and the further outlook for 2002,
I'd like to make a few comments about developments in 2001, which are described
in detail in our Annual Report.
We were faced with difficulties and challenges on a scale that we had never
before experienced.
It started with production problems for our genetically engineered
blood-clotting factor Kogenate(R). Then came the unexpectedly sharp downturn in
the industrial business, which affected Polymers in particular, followed by the
withdrawal in the summer of our cholesterol-lowering drug Lipobay(R)/Baycol(R),
which had far-reaching consequences.
The problems with Kogenate(R) and the Baycol(R) withdrawal diminished the
operating result of our Pharmaceuticals Business Group by a total of (euro)950
million including exceptional charges.
The economic downturn further reduced earnings by more than (euro)600 million
compared to the previous year.
We can and we must solve the technical problems ourselves, and we have made good
progress in this respect. Economic fluctuations are part of business life and
they can be at least partially offset through suitable countermeasures.
The Lipobay(R)/Baycol(R) withdrawal, on the other hand, has left a permanent
mark. We cannot easily close the gap that it has created. After all, we had
budgeted for more than (euro)1 billion in sales of this product last year, as
well as a major contribution to our earnings that was to increase steadily over
the coming years.
The withdrawal thus had a strong effect on our corporate value - although we are
convinced that the reaction of the capital markets to the summer 2001 withdrawal
was excessive.
Yet there were also positive headlines in 2001.
The foremost of these was certainly the agreement to acquire the crop science
business of Aventis - the largest acquisition in Bayer's history. We are thus
implementing our strategy of expanding our agriculture activities over the long
term to capture a leading global position in this attractive market.
This applies both to conventional crop protection - that's to say insecticides,
herbicides and fungicides - and to the so-called green biotechnology sector and
the specialties business in agrochemical compounds. The acquisition gives us an
excellent starting position in these areas.
We are pleased to report that the European antitrust authorities have since
approved the acquisition - with conditions that we can accept. We have carefully
prepared all the details of the integration, which will begin without delay as
soon as we get the green light from the U.S. authorities as well.
A further success was the package of measures we have introduced to get the
company back on track.
This includes the extensive cost-structure projects we initiated last year,
which now number 11 programs. We aim to achieve total savings of (euro)2 billion
by 2005, and thus make our structures more streamlined and efficient.
The individual measures have been spelled out, and we are consistently
implementing them.
In Pharmaceuticals in particular, we have greatly stepped up our restructuring
and cost-containment efforts, partly in order to compensate for the negative
effects of the Lipobay(R)/Baycol(R) withdrawal.
To optimize for the long term our processes and structures in biological
products and Kogenate(R) in particular, we have created a new Biological
Products Business Group.
At the same time, this will facilitate the planned merger of the Aventis plasma
business with our blood plasma products. Now that agreement has been reached in
principle, we are currently negotiating the details.
By forming a joint venture under our management control, we would achieve an
outstanding position in the plasma business, which is an important element of
our health care strategy.
We have also decided to accelerate our portfolio management and divest
businesses that are no longer core activities.
This includes the decision to divest Haarmann & Reimer, Rhein Chemie,
PolymerLatex, the household insecticides business of Consumer Care and our
remaining generics activities.
These processes are under way, and in some cases are already completed or at
advanced stages. For example, we have already sold most of our generics
businesses, as well as our company housing units in Germany.
We currently expect that all divestiture processes will be largely completed by
the end of this year.
Another gratifying accomplishment last year was a considerable increase in net
cash flow by 33 percent to (euro)3.7 billion. This reflects the initial success
of our redoubled efforts in asset management. We aim to secure and further
expand this achievement in the coming months.
2001 was a disappointing year overall, but there was also some good news to
report, as you can see.
However, the key data clearly show the mark left by the problems I mentioned and
the unexpectedly sharp economic downturn.
Although sales from continuing operations rose slightly, all other figures were
down - in some cases significantly.
The operating result before exceptional items dropped by 42 percent to (euro)1.8
billion for the reasons I already described.
The operating margin thus fell from 11 percent in the previous year to 6.4
percent in 2001.
Exceptional charges, mainly for restructuring measures in Polymers and the
Lipobay(R)/Baycol(R) withdrawal, diminished the operating result by (euro)613
million. Operating profit was down 60 percent overall, to (euro)1.2 billion.
So much for the performance of our continuing operations.
The operating result from discontinuing operations amounted to (euro)369
million, more than (euro)300 million of which was generated by the sale of our
50 percent interest in Erdolchemie.
The reported operating result amounted to (euro)1.6 billion.
The negative non-operating result was higher by 67 percent at (euro)496 million.
Income before taxes was down 63 percent year-on-year to (euro)1.1 billion.
Due to the unsatisfactory earnings performance and to tax-free income, income
tax expense dropped by 87 percent to (euro)154 million.
Income after taxes thus declined by 48 percent to (euro)961 million.
The fact that we are proposing a dividend payment of 90 cents per share - which
is no more than 36 percent below the previous year's level - reflects our
confidence that a major part of the decline in earnings is only temporary and
that our earning power is not weakened for the long term.
Moreover, our balance sheet structure and financial position remain good, and
the high payout ratio of 68 percent underscores the importance we place on an
appropriate profit distribution to our stockholders.
This concludes our look at 2001, which was without doubt one of our most
challenging years in a long time.
However, we are convinced that we have taken the necessary steps and done
everything required to solve the problems and reorganize the Bayer Group.
Make no mistake: the start to the new year was disappointing, although the
picture is starting to improve somewhat.
In the Health Care business area, the turnaround in Biological Products, which
is going as planned, and the continuing upswing in Diagnostics cannot compensate
for the weakness in Pharmaceuticals.
Animal Health continues to perform very well, while Consumer Care has suffered
setbacks, particularly in North America and Argentina.
Overall sales of the Health Care business area fell by 6 percent to (euro)2.4
billion in the first three months of this year.
The operating result before exceptionals dropped 36 percent to (euro)244
million. However, it must be remembered that Lipobay(R)/Baycol(R) still
contributed substantially to sales and operating profit in the first quarter of
2001.
Our Crop Protection business continues to develop well. Following the transfer
of the Animal Health Business Group to the Health Care business area, in part to
prepare for the integration of Aventis CropScience, this business has been
renamed CropScience.
CropScience sales grew by 6 percent to (euro)866 million. The operating result
dropped by 32 percent to (euro)144 million, due in part to write-offs of
receivables in Latin America and to integration costs already incurred.
The expected recovery in our industrial business has not yet materialized.
Polymers in particular remain under pressure. Raw material prices have not
dropped to the extent anticipated at the end of 2001. Demand continues to be
weak, and there are some significant overcapacities in the market.
The Polymers business area had sales of (euro)2.6 billion through the end of
March. This was 7 percent less than in the first quarter of 2001.
The operating result declined by 60 percent to (euro)92 million. This is a
further indication that there has been no change in the trend so far.
The situation is similar in Chemicals, where sales were down significantly in
all four business groups.
Sales of this business area fell by 17 percent to (euro)847 million in the first
quarter. The operating result declined by 42 percent to (euro)77 million.
The overall picture in the Group reflects that of its individual business areas.
Sales from continuing operations declined by (euro)483 million, or 6 percent, to
(euro)7 billion.
The operating result before exceptionals dropped by 46 percent year-on-year to
(euro)493 million. However, it must be remembered that we got off to an
exceptionally good start in the first quarter of 2001, in some cases with record
earnings.
We recorded net exceptional income of (euro)328 million, compared to a net
charge of (euro)88 million in the same period of 2001. This income includes the
gain from the sale of our company housing in Germany.
Earnings from discontinuing business amounted to (euro)19 million. The reported
operating result thus dipped by 1 percent year-on-year to (euro)840 million.
After the non-operating result of minus (euro)157 million, we recorded pre-tax
income of (euro)683 million in the first quarter. This was 5 percent less than
in the same period of the previous year.
Income taxes amounted to (euro)159 million, and income after taxes increased by
20 percent over the same period last year, to (euro)524 million.
In view of the currently unsatisfactory situation, we are doing all in our power
to adopt countermeasures and improve our earnings performance.
Most important in this respect are our cost structure projects, from which we
expect savings of (euro)500 million this year, most of which will be realized in
the second half.
The turnaround in Biological Products should also lead to positive earnings
again in this business group.
The same applies to our Diagnostics Business Group, which should contribute much
better results following the completion of restructuring measures this year.
The Pharmaceuticals Business Group, on the other hand, will have to undergo
further adjustments. There will also be expenses for the launch of our new
product to treat erectile dysfunction, which is scheduled to be introduced in
the U.S., the most important market, in the fall in cooperation with Glaxo
SmithKline.
We expect a positive performance from our CropScience business. However,
earnings of this business area will be temporarily impacted by integration
charges.
We do not anticipate a substantial improvement in our industrial business. This
applies to both Polymers and Chemicals, especially since raw material prices are
rising again and the markets remain unstable.
However, additional opportunities should be created if business picks up in
important markets and consumer industries such as the automotive, construction
and electrical/electronics sectors.
The full extent of exceptional charges cannot yet be predicted. However, we do
not expect that they will be higher than in 2001.
We expect considerably higher charges to the non-operating result due to the
financing of the Aventis CropScience acquisition.
However, we aim to reduce financial obligations as quickly as possible, in part
through income from divestitures. We intend to go on systematically cutting back
on working capital by reducing inventories and receivables. We also aim to
streamline our capital spending and reduce it to the level of depreciation.
Any forecast of the operating result would be characterized by uncertainty in
view of the current unpredictable economic situation. It will therefore be
another few weeks before we can give a well-founded estimate.
As we are expecting considerable additional earnings from the aforementioned
divestment of businesses and affiliates, we anticipate much higher after-tax
income for 2002 - despite the uncertainties in our operating business.
Ladies and gentlemen, to summarize: the business trend this year presents major
challenges for us, and we are setting clear priorities.
First, we will do everything in our power to improve our earnings in an
unfavorable business environment.
We are also focusing on the rapid and efficient integration of the Aventis
CropScience business.
A further priority is to thoroughly restructure our Pharmaceuticals business at
a faster pace.
In addition, we will aggressively implement our cost structure projects in order
to stabilize earnings and optimize our business structures.
Last but not least, we want to follow through with the planned reorganization of
the Bayer Group to ensure long-term competitiveness.
So what is the rationale behind our plan to reorganize the enterprise and its
management structure so fundamentally?
We made this decision because the existing structures have met their limits and
- above all - because of the changing strategic requirements and competitive
situation.
In almost all of our activities, we are now dealing with competitors who are
focusing on the respective individual markets and technologies.
The structure of our core businesses must be every bit as focused, flexible and
transparent as those of our leading competitors.
The question is how we can gain the advantages of these focused competitors
without giving up our broad diversification - a strength that offers us not just
considerable synergy potential, but also far more opportunities and a better
balance of risk factors than if we limited our activities to a single market.
After all, we remain convinced that we possess sufficient potential and
resources in all four business areas to attain and secure leading market
positions and grow the value of our company faster than the average in the
medium and long term.
To fully exploit this potential and grow the value of our enterprise in line
with the legitimate expectations of our stockholders and the capital market, we
aim to intensify our strategic management and make it more efficient.
At the same time, we will create structures for our business areas that
correspond to those of our competitors and fundamentally strengthen our
operative management.
That's why we are proposing to create four legally independent subgroups for our
operating business, which is currently managed by the business groups. These
subgroups, as well as three supporting service companies, would be placed under
the joint umbrella of Bayer AG for strategic management.
Bayer HealthCare AG would consist of the Animal Health, Biological Products,
Consumer Care, Diagnostics and Pharmaceuticals business groups. This company
would encompass our entire health care service and product range, from
innovative medicines through diagnostic technologies to our globally known OTC
brands.
With sales of more than (euro)10 billion, our HealthCare business has enough
critical mass to play a leading role in this highly competitive and innovative
market.
We are convinced that this innovative performance spectrum gives us an
outstanding and expandable business structure. Our broad portfolio - tailored to
the needs of the health care market - should allow us to stand out from purely
pharmaceutical companies in the eyes of both customers and the capital market.
We are not satisfied with the current level of profitability in this business
area. Yet the restructuring we have already embarked on and the consistent
exploitation of synergy potentials within this subgroup should give us every
opportunity to fundamentally improve our long-term numbers to a level that
justifies the expectations placed in us.
In addition, we will continue to search for a strategic partner for our
Pharmaceuticals business.
In Agriculture - which, through the integration of Aventis CropScience and with
your approval, will now become the CropScience subgroup - we are already one of
the world's leading companies.
Our medium-term goal is to achieve sales of more than (euro)7 billion and an
operating margin in the area of 20 percent.
Forming a subgroup would not only facilitate the integration of Aventis
CropScience, but also create for our agriculture business a highly focused
company with a management structure that matches those of our competitors.
In Polymers, too, Bayer is already a leading supplier with an outstanding
product portfolio. The combined business volume of nearly (euro)11 billion
satisfies all requirements regarding critical mass.
The challenge here lies in optimizing our technical structures - that's to say
the processes, facilities, global site structures and logistics processes -
across the boundaries of our current business groups so that we can withstand
steadily increasing pressure from the competition.
By pooling our marketing and sales activities, moreover, we aim to become more
efficient in our various markets and in comparison to our key customers, as well
as to better develop customer potential than is possible in our current business
group structures.
Last but not least, we want to strengthen our Chemicals business through
strategic partnerships to enable it to compete over the long term with the
leading specialties companies in terms of technology and market presence.
The importance of this - particularly for our German sites and for employees in
our chemical facilities in Germany, which is where our chemicals operations are
predominantly located - can hardly be overestimated.
Here, too, a legally independent Bayer Chemicals subgroup would lay important
foundations; all potential partners for our Chemicals business are already
organized as independent companies. In order to cooperate with such companies,
we need to separate our activities from the AG structure.
With combined sales of more than (euro)4 billion and a portfolio ranging from
specialties to fine and industrial chemicals, our chemical activities are
without doubt among the most attractive potential partners for achieving the
industry consolidation that we are convinced remains necessary.
To support these four subgroups, we possess a broadly based, efficient service
portfolio that we also plan to restructure along entrepreneurial lines
throughout the world.
Here, too, there is great synergy potential, both in the individual companies
and in the combined range of optimized services for the enterprise as a whole.
We view the service companies, which will also have full operating
responsibility for their respective business, as competence centers and
market-oriented service suppliers.
For business and administrative services, we plan to create the subsidiary Bayer
Business Services. We see considerable advantages in supplying these services to
the Group from a single source in the future.
Bayer Technology Services will pool central engineering services, plant
engineering and process development.
The site services company will supply and optimize all site-related services for
internal and external customers.
We are convinced that the creation of subgroups for our business areas,
supported by service companies, will make us as focused and flexible as the
competition, without our having to give up the synergy advantages of the Bayer
Group.
And there are a number of other advantages too.
We would increase our transparency for internal steering and value management,
and also for our investors and the capital market.
We could greatly reduce the complexity of our company by fully aligning
operative management to the individual subgroups and their needs and providing
it with support in the form of business processes and information systems.
But above all, we would strengthen the independence and entrepreneurial freedom
of our operating units by transferring their management to legally independent
subgroups with global responsibility.
On the other hand, we want to maintain the unity of the Bayer Group as a whole -
let me be perfectly clear about that. Of primary importance here is the
strategic management of the enterprise as a whole, which is also to be
permanently strengthened through our reorganization process.
To achieve this, we are reorganizing the Group Management Board, which in future
will concentrate fully on strategic decisions and management of the overall
portfolio.
Accordingly, the Group Management Board will perform primarily the following
core tasks:
o continuous management of the Group portfolio
o Group-wide selection and development of top management personnel
o defining the Group's medium and long-term goals, including allocation of
the strategic and financial resources necessary to achieve them
o defining and monitoring performance targets such as annual sales and
earnings budgets
o continuous evolution of efficient incentive systems to support performance
and value management
o launch of Group-wide initiatives and projects to optimize jointly used
processes and structures.
The composition of the Group Management Board will be in line with these core
responsibilities.
Under the leadership of the Board of Management, Group management will act as a
unified entity across subgroup boundaries, with an uppermost management level
that includes both the Board of Management and the heads of the subgroups.
Cooperation within this management level will be characterized by a clear
division of duties and roles between independent management of the subgroups'
operations and strategic management of the entire enterprise.
We see this joint management as an essential guarantor of cohesion within the
enterprise, the individual parts of which will quite intentionally have far more
independence in the future.
So much for the goals of, and reasons for, the reorganization of the Group and
its management. You have received detailed information on this in the Group
Reorganization Report and the Notice of the Annual Stockholders' Meeting.
The new Group management will be responsible for achieving these goals on behalf
of the employees, our customers and not least you, our stockholders. At the end
of this Meeting, Mr. Wenning will take over at the company's helm.
I am certain that you will give him and his team the same degree of trust and
support that you gave to me during the ten years in which I served as Management
Board Chairman of Bayer AG.
This trust and support constantly served as a solid foundation and a reliable
backing that I could build on in both the good times and in the more difficult
phases of my ten-year tenure as Bayer CEO. For that I would like to thank you
most sincerely.
Much has been accomplished in this period. We steadily expanded our company and
focused on the areas where we saw the greatest potential and the best
opportunities.
I won't go into detail here about our performance and numbers, but I would like
to summarize my time as Bayer CEO by focusing on two points that were
particularly important for Bayer and for me at the time.
I am referring here to our strategy at the beginning of the 90s to fundamentally
restructure the Group portfolio and expand the Health Care and Agriculture
business areas in particular. We set ourselves the goal of boosting these areas'
combined share of Group sales from 34 percent back then to 50 percent.
We achieved this goal, counting the Aventis CropScience acquisition:
Agriculture's share of sales has climbed from 13 to 24 percent, while Health
Care's share rose from 21 to 31 percent - so that's 55 percent in total.
The share of our industrial business declined accordingly, from 49 to 45
percent.
The restructuring of our Group portfolio is based above all on organic growth -
that's to say our extensive investment in research and development and the
systematic expansion of our international market presence.
However, there have also been major acquisitions, such as Sterling's North
American OTC business, including the Bayer Cross in the United States; Chiron
Diagnostics; and above all Aventis CropScience.
On the other hand, we also streamlined the portfolio through a number of
strategic divestitures. Two examples are the sale of Agfa and Erdolchemie.
In our industrial business the focus was on heavy investment, particularly the
expansion of our polymer facilities around the world and including the
construction of new sites. Yet here too, there were sizable acquisitions and
divestment of many activities that had become non-core. Examples are the
acquisition of the Lyondell polyols business and the divestiture of the Dralon
fibers business, the titanium dioxide business and the textile dyes.
In the course of our portfolio management overall, we have acquired businesses
with a total sales volume of (euro)7.2 billion and divested activities with a
volume of (euro)8.5 billion since 1996, including the divestitures planned for
this year.
I believe these numbers speak for themselves.
The second point I'd like to mention in this summary is the goal of achieving a
sustained, long-term increase in our corporate value.
Here it is not quite so easy to evaluate our performance. Following the market
withdrawal of our cholesterol-lowering drug last year, we suffered a significant
setback that unquestionably clouds our ten-year performance.
Nevertheless, we achieved a lot in this respect - maybe even more than we
expected ten years ago.
On April 30, 1992, Bayer's share price stood at the equivalent of (euro)14. This
corresponds to a market capitalization of (euro)9.2 billion.
Now, in mid-April 2002, our share price is in the region of (euro)40, giving us
a market capitalization of more than (euro)29 billion.
This means that we have increased the value of our company by about (euro)20
billion, or more than 200 percent, since April 1992. Ladies and gentlemen, this
is a sizable increase that we can be proud of.
If we include the (euro)6.5 billion that Bayer has paid out in dividends since
1992, including the proposed dividend for 2001, the performance is even better.
I will not deny that we all want and expect more. The events of 2001 showed that
the share price trend is not a one-way street, and that a company with our
structure also faces considerable risks. Yet the ten-year figures show that we
have succeeded in enhancing the value of our company over the long term and in
offering our stockholders an attractive return on their investment in Bayer.
Moreover, we are convinced that our company has great further potential that far
exceeds this valuation.
That potential lies above all in the expertise and the skills of the 117,000
employees who work for Bayer worldwide and who ensure that we can continue to
provide our customers with the services, products and solutions they have come
to expect of us.
That's why I would like to say a special word of thanks to all our employees for
what they have done for Bayer.
The last ten years as Chairman of the Board of Management were a fascinating
time for me. I am proud and happy that I was able to contribute to making Bayer
fit for the future.
I am confident that the new management team under the leadership of Werner
Wenning will do everything in its power to fully exhaust Bayer's potential - on
behalf of our employees, our customers and above all our stockholders.
Thank you.
EXHIBIT 4
Dr. Manfred Schneider at the Annual Stockholders' Meeting of Bayer AG in
Cologne: "Reorganization, cost containment and earnings improvement have top
priority"
After-tax income up 20 percent to EUR 524 million in the first quarter of 2002 /
Still no clear sign of a recovery / Higher after-tax income due to divestitures
Cologne/Leverkusen - "The business trend this year presents major challenges for
us," explained Dr. Manfred Schneider, Chairman of the Board of Management of
Bayer AG, at the company's Annual Stockholders' Meeting on Friday in Cologne.
"We are setting clear priorities," he added. According to Dr. Schneider, Bayer
will do everything in its power to improve earnings again in an unfavorable
business environment - parallel to the extensive reorganization preparations.
This includes aggressive implementation of the cost-containment projects in
order to stabilize earnings and optimize business structures. With these 11
programs, Bayer aims to achieve total savings of EUR 2 billion by 2005. Further
areas of focus include the rapid and efficient integration of Aventis
CropScience and the thorough restructuring of the Pharmaceuticals business at a
faster pace.
The reorganization of the Bayer Group is proceeding swiftly. The new structures
are to be in place by July 1, 2002, which should boost competitiveness,
strengthen the focus on Bayer's core businesses and increase transparency,
flexibility and agility. "We are convinced that the creation of subgroups for
our business areas, supported by service companies, will make us as focused and
flexible as the competition, without our having to give up the synergy
advantages of the Bayer Group," commented Schneider, who was succeeded by former
Bayer CFO Werner Wenning as Chairman of the Board of Management at the end of
the Annual Stockholders' Meeting after a ten-year tenure at the company's helm.
Business situation remains difficult
Dr. Schneider also commented on the Group's current business performance. "The
business situation remains difficult," he said, adding that, following a sharp
decline in earnings in 2001, the first quarter of 2002 was also unsatisfactory.
Schneider still sees no clear signs of a real recovery. Group sales from
continuing operations declined by 6 percent to EUR 7 billion in the first three
months of this year, while the operating result before exceptional items dropped
by 46 percent to EUR 493 million. Operating profit after exceptional items
remained steady at EUR 821 million (2001: EUR 824 million). Income after taxes
increased by 20 percent over the same period last year to EUR 524 million.
Turnaround in Biological Products
In the Health Care business area, the turnaround in Biological Products and the
continuing upswing in Diagnostics could not compensate for the weakness in
Pharmaceuticals, Schneider said, adding that Animal Health continues to perform
very well while Consumer Care has suffered setbacks, particularly in North
America and Argentina. Overall sales of the Health Care business area fell by 6
percent to EUR 2.4 billion. The operating result before exceptionals dropped 36
percent to EUR 244 million. According to Dr. Schneider, however, it must be
remembered that Lipobay(R)/Baycol(R) still contributed substantially to sales
and operating profit in the first quarter of 2001.
Crop Protection still developing well
The Crop Protection business continues to develop well, with sales growing by 6
percent to EUR 866 million. The operating result dropped by 32 percent to EUR
144 million, however, due in part to write-offs of receivables in Latin America
and to integration costs already incurred.
Polymers under pressure
The expected recovery in Bayer's industrial business has not yet materialized,
Schneider stated. Polymers in particular remain under pressure, with sales
falling by 7 percent to EUR 2.6 billion. The operating result declined by 60
percent to EUR 92 million. "This is a further indication that there has been no
change in the trend so far," said Schneider. Sales of the Chemicals business
area fell by 17 percent to EUR 847 million, while its operating result dropped
by 42 percent to EUR 77 million.
"In view of the currently unsatisfactory situation, we are doing all in our
power to adopt countermeasures and improve our earnings performance," Dr.
Schneider stressed. Most important in this respect are the cost structure
projects, from which Bayer expects savings of EUR 500 million this year.
Schneider anticipates positive earnings in Biological Products, as well as
considerably better results from Diagnostics.
The Pharmaceuticals Business Group, on the other hand, will have to undergo
further adjustments. Schneider expects a continuing strong performance from the
crop protection business, although its earnings will be temporarily impacted by
expenses for the integration of Aventis CropScience. Bayer does not anticipate a
substantial improvement in its industrial business. This applies to both
Polymers and Chemicals, especially since raw material prices are rising again
and the markets remain unstable. The cost-containment programs Bayer has
introduced will not fully compensate for the continuing pressure on margins.
Much higher after-tax income expected
According to Schneider, it is extremely difficult to forecast the operating
result for 2002 as a whole in view of the current unpredictable economic
situation: "It will therefore be another few weeks before we can give a
well-founded estimate." Despite the uncertainties in Bayer's operating business,
the company anticipates much higher after-tax earnings, as considerable
additional income is expected from this year's planned divestiture of businesses
and affiliates. These include Haarmann & Reimer, Rhein Chemie, PolymerLatex, the
household insecticides business and the remaining generics activities.
The 2002 Annual Stockholders' Meeting marks the end of Dr. Schneider's mandate
as Chairman of the Board of Management. During the Meeting, the stockholders are
expected to elect Schneider to the Supervisory Board. Further highlights of the
event are the stockholders' votes on numerous points concerning the planned
reorganization, as well as the election of the stockholders' representatives to
the Supervisory Board.
Leverkusen, April 26, 2002
hhb (2002-04-126E)
Contact:
Gunter Forneck, Tel.: +49-214-30-50446
Hans Graf von Hochberg, Tel.: +49-214-30-82895
(during the Annual Stockholders'
Meeting on April 26: Tel.: +49-221-284-4724)
Forward-Looking Statements
This news release contains forward-looking statements based on current
assumptions and forecasts made by Bayer Group management. Various known and
unknown risks, uncertainties and other factors could lead to material
differences between the actual future results, financial situation, development
or performance of the company and the estimates given here. These factors
include those discussed in our public reports filed with the Frankfurt Stock
Exchange and with the U.S. Securities and Exchange Commission (including our
Form 20-F).The company assumes no liability whatsoever to update these
forward-looking statements or to conform them to future events or developments.
The text oft the Interim Report for the First Quarter of 2002 is printed below:
[See Exhibit 1 to this report on Form 6-K]
EXHIBIT 5
Following the Annual Stockholders' Meeting:
Dr. Manfred Schneider named new Bayer Supervisory Board Chairman
Hermann Josef Strenger named Honorary Chairman
Leverkusen - Dr. Manfred Schneider, previously Chairman of the Board of
Management of Bayer AG, was elected Chairman of the company's new Supervisory
Board at the Board's constituent meeting held immediately after Friday's Annual
Stockholders' Meeting in Cologne. Dr. Schneider succeeds Hermann Josef Strenger,
who had been Chairman of the Supervisory Board since 1992 and has now been named
an Honorary Chairman. Erhard Gipperich, Chairman of the Works Council of Bayer
AG and Vice Chairman of the Supervisory Board since 2000, was reelected this
position.
The Annual Stockholders' Meeting had already voted Dr. Schneider and the other
nine proposed stockholders' representatives onto the Supervisory Board by a
large majority. The stockholders' representatives are Dr. Paul Achleitner, Dr.
Josef Ackermann, Prof. Dr.-Ing. E.h. Hans-Olaf Henkel, Dr. h.c. Martin
Kohlhaussen, John Christian Kornblum, Dr. Heinrich von Pierer, Dr. Wolfgang
Reitzle, Prof. Dr. Ernst-Ludwig Winnacker and Dr. Hermann Wunderlich. Substitute
members are Jochen Appell and Dr. Hans-Dirk Krekeler.
The following employees' representatives were elected to the Supervisory Board
by the assembly of Bayer employees' delegates on January 22, 2002: Karl Josef
Ellrich, Erhard Gipperich, Karl-Heinz Huchthausen, Petra Kronen, Wolfgang
Schenk, Hubertus Schmoldt, Dieter Schulte, Siegfried Wendlandt, Reinhard Wendt
and Thomas de Win.
Leverkusen, April 26, 2002
hhb (2002-04-141E)
Contact:
Hans Graf von Hochberg, phone + 49 214 30 82895
E-mail: hans.hochberg.hh@bayer-ag.de
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Bayer Aktiengesellschaft
(Registrant)
Date: April 29, 2002 By: /s/ ROSAR
----------------------------------------
Name: Dr. Alexander Rosar
Title: Head of Investor Relations
/s/ BUCHMEIER
----------------------------------------
Name: Dr. Armin Buchmeier
Title: Senior Counsel