Future Perspectives

Corporate Outlook

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 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 Sales and earnings reporting for continuing operations pertains only to business operations that are expected to remain in the company’s portfolio for the foreseeable future; opposite of discontinued 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

Special charges1

Research and development expenses

Capital expenditures

of which for intangible assets

Depreciation and amortization

of which on intangible assets

Financial result

Effective tax rate

Net financial debt2

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.

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