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Future Perspectives
Economic outlook
The profound turbulence on the international financial markets is increasingly restraining global economic development and harbors substantial additional risks for the real economy.
We expect growth in the markets relevant to our HealthCare business to be relatively steady overall, with a slight loss of momentum likely in the pharmaceutical market due mainly to slower growth in the United States and other major countries. On the other hand, we predict steady expansion in emerging markets such as China, Russia, India and Brazil.
Prices for agricultural raw materials remain well above the ten-year average, despite a decline in recent weeks. We believe that the global seed and crop protection markets will continue to benefit from higher farm incomes and the associated increase in crop production.
Growth in the main customer industries for Bayer MaterialScience (automotive, construction) will probably continue to weaken tangibly, particularly in North America and western Europe. We expect largely stable development in other economic regions (Asia, eastern Europe, Middle East), although export activity in these countries will likely be hampered by shrinking global demand over the next few quarters.
We expect growth in the markets relevant to our HealthCare business to be relatively steady overall, with a slight loss of momentum likely in the pharmaceutical market due mainly to slower growth in the United States and other major countries. On the other hand, we predict steady expansion in emerging markets such as China, Russia, India and Brazil.
Prices for agricultural raw materials remain well above the ten-year average, despite a decline in recent weeks. We believe that the global seed and crop protection markets will continue to benefit from higher farm incomes and the associated increase in crop production.
Growth in the main customer industries for Bayer MaterialScience (automotive, construction) will probably continue to weaken tangibly, particularly in North America and western Europe. We expect largely stable development in other economic regions (Asia, eastern Europe, Middle East), although export activity in these countries will likely be hampered by shrinking global demand over the next few quarters.
Bayer Group sales and earnings forecast
Despite the difficult economic conditions expected in the fourth quarter, we confirm our full-year guidance for 2008. We continue to target over 5 percent currency- and portfolio-adjusted growth in Bayer Group sales, which would mean sales of approximately €33 billion, and plan to further improve EBITDA before special items and the underlying EBITDA margin.
We remain confident about the performance of our HealthCare business and expect all divisions to grow with or above the market after adjusting for currency changes. We aim to improve the EBITDA margin before special items in this subgroup toward 27 percent.
We expect the generally positive market environment for our CropScience business to persist in the fourth quarter. Against this background, we continue to believe that we can increase sales by well over 10 percent on a currency- and portfolio adjusted basis and improve the EBITDA margin before special items to about 25 percent. This would mean that our goal of an approximately 25 percent EBITDA margin before special items, originally targeted for 2009, would be achieved a year earlier than planned.
We believe the economic environment for our MaterialScience business will continue to weaken in the fourth quarter of 2008 and that this subgroup’s earnings will decline again compared to the third quarter. We therefore expect EBITDA before special items for the full year 2008 to come in well below the 2007 figure. However, we anticipate that we will again achieve a good, value-creating earnings level.
For the Bayer Group we continue to predict special charges in the region of €650 million for the full year, of which approximately €400 million (previously: €400 – 450 million) will be cash items.
In light of the portfolio realignment carried out in recent years, we are confident about the Group’s future development. For 2009 we confirm our target of an EBITDA margin before special items for HealthCare and CropScience in the region of 28 percent and 25 percent, respectively. We expect MaterialScience to report lower EBITDA before special items than in 2008.
For the Bayer Group as a whole, we plan a further improvement in EBITDA before special items. We will narrow our 2009 guidance when we publish our Annual Report 2008.
We remain confident about the performance of our HealthCare business and expect all divisions to grow with or above the market after adjusting for currency changes. We aim to improve the EBITDA margin before special items in this subgroup toward 27 percent.
We expect the generally positive market environment for our CropScience business to persist in the fourth quarter. Against this background, we continue to believe that we can increase sales by well over 10 percent on a currency- and portfolio adjusted basis and improve the EBITDA margin before special items to about 25 percent. This would mean that our goal of an approximately 25 percent EBITDA margin before special items, originally targeted for 2009, would be achieved a year earlier than planned.
We believe the economic environment for our MaterialScience business will continue to weaken in the fourth quarter of 2008 and that this subgroup’s earnings will decline again compared to the third quarter. We therefore expect EBITDA before special items for the full year 2008 to come in well below the 2007 figure. However, we anticipate that we will again achieve a good, value-creating earnings level.
For the Bayer Group we continue to predict special charges in the region of €650 million for the full year, of which approximately €400 million (previously: €400 – 450 million) will be cash items.
In light of the portfolio realignment carried out in recent years, we are confident about the Group’s future development. For 2009 we confirm our target of an EBITDA margin before special items for HealthCare and CropScience in the region of 28 percent and 25 percent, respectively. We expect MaterialScience to report lower EBITDA before special items than in 2008.
For the Bayer Group as a whole, we plan a further improvement in EBITDA before special items. We will narrow our 2009 guidance when we publish our Annual Report 2008.
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