Outlook and Targets
Please read our caution about Forward-Looking Statements in the Conditions of Use when using this information.
(published on May 3, 2018 in the Interim Report Q1 2018)
Based on the business development described in this report and taking into account the potential risks and opportunities, we confirm the currency-adjusted forecasts published in February for operating performance (see Annual Report 2017, Chapter “Corporate Outlook”). We continue to expect 2018 sales to increase by a low- to mid-single-digit percentage on a currency- and portfolio-adjusted basis. As before, we aim to increase EBITDA before special items and core earnings per share by a mid-single-digit percentage on a currency-adjusted basis.
Taking into account the exchange rates as at March 31, 2018, reported sales would decline in 2018 overall by a low-single-digit percentage (previously: remain at the prior-year level). In absolute terms, sales would now come in at below €35 billion (previously: around €35 billion). EBITDA before special items would decline by a low-single-digit percentage (previously: match the prior-year level). Core earnings per share would come in at the prior-year level, as previously forecast.
The following forecast is based on the current business development and our internal planning. The planned acquisition of Monsanto is not yet included in this forecast and is dealt with separately below.
Our forecast is based on the exchange rates as of December 31, 2017. To enhance the comparability of operating performance, the forecasts are also adjusted for currency effects1. A 1% appreciation (depreciation) of the euro against all other currencies would decrease (increase) sales on an annual basis by some €250 million and EBITDA before special items by about €70 million.
1 The average monthly exchange rates from 2017 (see Annual Report 2017, chapter “Basic Principles, Methods and Critical Accounting Estimates”) were applied.
For 2018, we expect sales of around €35 billion. This corresponds to a low-to mid-single-digit percentage increase on a currency- and portfolio-adjusted basis. EBITDA before special items is expected to match the prior-year level (currency-adjusted: increase by a mid-single-digit percentage). Core earnings per share from continuing operations are expected to come in at the prior-year level (currency-adjusted: increase by a mid-single-digit percentage).
Forecast for Key Financial Data of the Group for 2018
|Closing rates on Dec. 31, 2017||Currency-adjusted|
|Sales||Prior-year level||Increase by a low- to mid-single-digit percentage|
|Development of EBITDA before special items||Prior-year level||Increase by a mid-single-digit percentage|
|Development of core earnings per share||Prior-year level||Increase by a mid-single-digit percentage|
Sales and earnings forecast by segment
For Pharmaceuticals, we plan to generate sales of more than €16.5 billion, taking into account product supply constraints out of the Leverkusen Supply Center. This corresponds to a low-single-digit percentage increase on a currency- and portfolio-adjusted basis. We aim to raise sales of our key growth products Xarelto™, Eylea™, Stivarga™, Xofigo™ and Adempas™ towards €7 billion. We expect EBITDA before special items to decline by a low-single-digit percentage (currency-adjusted: increase by a low-single-digit percentage), and anticipate a slight decline in the EBITDA margin before special items.
In the Consumer Health segment, we expect sales of more than €5.5 billion, which would be at the prior-year level on a currency- and portfolio adjusted basis. We expect EBITDA before special items to decline by a low-single-digit percentage (currency-adjusted: increase by a low-single-digit percentage).
For Crop Science, we see sales coming in at more than €9.5 billion. This corresponds to a mid-single-digit percentage increase on a currency- and portfolio-adjusted basis. We expect to increase EBITDA before special items by a mid- to high-single-digit percentage (currency-adjusted: mid-teens percentage increase).
In the Animal Health segment, we expect a currency- and portfolio-adjusted increase in sales by a low-single-digit percentage. We expect EBITDA before special items to decline by a mid-single-digit percentage (currency-adjusted: at the prior-year level). Both sales and EBITDA before special items are negatively impacted by revised financial reporting standards (IFRS 15).
Reconciliation: We expect sales of around €1.5 billion in 2018. We plan EBITDA before special items in the region of minus €0.2 billion.
Forecast for Other Key Data of the Group for 2018
|Closing rates on Dec. 31, 2017|
|Special charges1||around €0.4 billion|
|Research and development expenses||around €4.1 billion|
|Capital expenditures||around €2.2 billion|
of which for intangible assets
|around €0.6 billion|
|Depreciation and amortization||around €2.2 billion|
|of which on intangible assets||around €1.2 billion|
|Financial result||around minus €1 billion|
|Effective tax rate||20.0%|
|Net financial debt2||Net liquidity position|
1 Mainly comprising costs in connection with the planned acquisition of Monsanto until closing, restructuring measures and efficiency improvement programs
2 Excluding capital and portfolio measures
Outlook including Monsanto
Through the expected acquisition in the second quarter of 2018, we anticipate a significant increase in sales and EBITDA before special items. Based on current assumptions about the equity and financing measures to be undertaken, we expect a moderate decline in core earnings per share. For the first full year following the acquisition, we continue to expect a significant increase in sales and EBITDA before special items, and an increase in core earnings per share.
Outlook for Bayer AG
For Bayer AG we expect sales of approximately €15 billion and EBIT in the region of minus €1.5 billion. Bayer AG comprises both its own operational business and that assumed from Bayer Pharma AG and Bayer CropScience AG through business leases. In addition, the earnings of most major Bayer subsidiaries in Germany are transferred directly to Bayer AG under profit and loss transfer agreements. Also, specific intra-company dividend measures ensure the availability of sufficient distributable income. On account of the interdependencies between Bayer AG and its subsidiaries, the outlook for the Bayer Group thus largely also reflects the expectations for Bayer AG. In the coming year, based on these factors, we expect Bayer AG to report a distributable profit that will again enable our stockholders to adequately participate in the Bayer Group’s earnings.