Bayer: Strong growth, outlook raised

? Group sales increase by 9.6 percent (Fx & portfolio adj.) to 12.819 billion euros

? EBITDA before special items rises by 30.0 percent to 3.349 billion euros

? Crop Science and Consumer Health achieve strong sales and earnings growth

? Pharmaceuticals reports slight increase in sales and earnings

? Core earnings per share advance by 19.9 percent to 1.93 euros

? Free cash flow of 1.140 billion euros

? Improved ESG rating from MSCI

? Full-year Group outlook raised

Leverkusen, August 4, 2022 – The Bayer Group achieved substantial growth in the second quarter of 2022. "We delivered strong operational performance. In terms of sales, we posted significant gains at Crop Science and strong growth at Consumer Health, as well as a slight increase at Pharmaceuticals, too. And with EBITDA before special items, we even achieved growth of 30 percent," said Werner Baumann, Chairman of the Board of Management, on Thursday while presenting the company's half-year financial report. "In view of our good business performance and higher growth expectations, we have raised our full-year guidance," he explained.

In the second quarter of 2022, Group sales increased by 9.6 percent to 12.819 billion euros on a currency- and portfolio-adjusted basis (Fx & portfolio adj.). EBITDA before special items advanced by 30.0 percent to 3.349 billion euros. Positive currency effects benefited sales by 915 million euros (Q2 2021: minus 524 million euros) and EBITDA before special items by 300 million euros (Q2 2021: minus 153 million euros). Free cash flow was level with the prior-year period, at 1.140 billion euros. Net financial debt as of June 30, 2022, came in at 36.575 billion euros, up 5.9 percent from March 31, 2022.

Significantly improved market environment at Crop Science

In the agricultural business (Crop Science), Bayer increased sales by 17.2 percent (Fx & portfolio adj.) to 6.461 billion euros, driven by a substantial improvement in the market environment. The division recorded double-digit percentage growth in Latin America and Europe/Middle East/Africa, and also registered an expansion of business in North America and Asia/Pacific. Herbicides posted the strongest growth, at 51.3 percent (Fx & portfolio adj.), with sales rising particularly in Latin and North America, as well as in Europe/Middle East/Africa as a result of prices for glyphosate-based products remaining high. Sales at Corn Seed & Traits advanced by 9.5 percent (Fx & portfolio adj.), mainly due to price increases in North America, Europe/Middle East/Africa and Latin America. In addition, volumes expanded in all regions except North America. Sales at Fungicides rose by 4.3 percent (Fx & portfolio adj.), with growth in all regions except North America, where volumes declined as a result of unfavorable weather conditions.

EBITDA before special items at Crop Science climbed by 71.8 percent to 1.749 billion euros. The growth in earnings was mainly driven by the substantial improvement in business performance, as well as contributions from ongoing efficiency programs. There was also a positive currency effect of 215 million euros (Q2 2021: minus 111 million euros). By contrast, earnings were diminished by an increase in costs, particularly in the cost of goods sold, which was mainly due to high inflation. The EBITDA margin before special items rose by 6.8 percentage points to 27.1 percent.

Successful product launches at Pharmaceuticals

Sales of prescription medicines (Pharmaceuticals) increased by 2.1 percent (Fx & portfolio adj.) to 4.818 billion euros. The division's new products, especially Nubeqa? and Kerendia?, continued their successful market launch, with sales of the cancer drug Nubeqa? doubling compared with the prior-year quarter. Sales of the ophthalmology drug Eylea? rose by 11.7 percent (Fx & portfolio adj.), with business up in all regions. The company was able to capture market share, particularly in Europe, thanks in part to Eylea? prefilled syringes. The division also registered significant growth for Adalat?, its heart disease treatment, and Aspirin? Cardio, its product for secondary prevention of heart attacks. Sales of these two products were up 11.2 percent (Fx & portfolio adj.) and 18.9 percent (Fx & portfolio adj.), respectively, due to higher volumes in China. Sales of the cancer drug Stivarga? increased at an even stronger rate of 27.6 percent (Fx & portfolio adj.), mainly driven by expanded volumes in China and the United States.

EBITDA before special items at Pharmaceuticals advanced by 4.9 percent to 1.478 billion euros. Higher raw material costs and increased marketing investments in new products were largely offset by the growth in sales. The division also generated income from the sale of non-core businesses. There were positive currency effects of 41 million euros (Q2 2021: minus 26 million euros). The EBITDA margin before special items amounted to 30.7 percent.

Consumer Health grows business in all regions

Bayer's sales of self-care products (Consumer Health) advanced by 6.8 percent (Fx & portfolio adj.) to 1.496 billion euros, with broad-based growth in all regions and nearly all categories. Sales in the Allergy & Cold category rose by 16.9 percent (Fx & portfolio adj.), largely due to continuously high cold incidence rates in Europe and North America. In June, the division also started selling Astepro?, a product that it switched from Rx to OTC status. As the first and only steroid-free antihistamine nasal spray available over the counter on the U.S. market, Astepro? is a differentiated, fast-working solution. Sales rose by a double-digit percentage (Fx & portfolio adj.) in the Digestive Health category as well, and the Dermatology and Pain & Cardio categories also recorded significant growth.

EBITDA before special items at Consumer Health climbed by 18.7 percent to 330 million euros. The growth in earnings was on the back of a strong rise in sales, as well as the division's continuous cost and price management efforts in an environment of accelerating inflation. There were also positive currency effects of 49 million euros (Q2 2021: minus 20 million euros). The EBITDA margin before special items rose by 0.5 percentage points to 22.1 percent.

Outlook for 2022 raised

Following the positive development of business in the first half of 2022, Bayer remains optimistic for the remainder of the year. It has therefore raised its guidance for the Crop Science and Consumer Health divisions, and thus also for the Group as a whole.

On a currency-adjusted basis (i.e. based on the average monthly exchange rates from 2021), Bayer now expects to generate sales of 47 billion to 48 billion euros in 2022 (previously: approximately 46 billion euros). This now corresponds to an increase of about 8 percent (previously: around 5 percent) on a currency- and portfolio-adjusted basis. The company is now targeting an EBITDA margin before special items of around 26 to 27 percent (previously: around 26 percent) on a currency-adjusted basis. Based on the aforementioned sales figure, this would now correspond to EBITDA before special items of around 12.5 billion euros (previously: around 12.0 billion euros) on a currency-adjusted basis. Core earnings per share are now expected to come in at approximately 7.30 euros (previously: approximately 7.00 euros) on a currency-adjusted basis. Free cash flow is now forecast to amount to around 2.5 billion euros (previously: around 2 billion to 2.5 billion euros) on a currency-adjusted basis. In addition, the company continues to expect year-end net financial debt of approximately 33 billion to 34 billion euros on a currency-adjusted basis. As in the overall guidance, this figure does not take into account the contractually agreed divestment of the Environmental Science Professional business.

Bayer has also prepared its guidance based on the closing exchange rates as of June 30, 2022, and the differences to the currency-adjusted targets above are as follows: the company now expects to generate sales of 50 billion to 51 billion euros (previously: approximately 47 billion euros). Based on the aforementioned sales figure, Bayer is now targeting EBITDA before special items of around 13.0 billion euros (previously: around 12.0 billion euros). Core earnings per share are now expected to come in at approximately 7.70 euros (previously: approximately 7.10 euros). In addition, the company now expects year-end net financial debt of approximately 34 billion to 35 billion euros (previously: approximately 33 billion to 34 billion euros).

Sustainability: access to innovative seeds and farming solutions

Bayer also continued to make good progress in terms of sustainability. The company is supporting the Zero Hunger Pledge, which will involve helping smallholder farmers access innovative seeds, sustainable agricultural practices and farming solutions, and thus providing them with new income-generating opportunities.

Bayer has also made important progress in a major ESG rating: MSCI ESG Research recently updated their ESG Controversies Report and lifted the red flag related to "environmental concerns over GMO crops" as well as their related allegation of a breach of the UN Global Compact Principles. This marks another important milestone in improving Bayer's ESG rating profile.