Report on Future Perspectives and on Opportunities and Risks

Future Perspectives

Economic Outlook

Economic Outlook1



Growth 2016


Growth forecast 2017

2016 figures restated


Real growth of gross domestic product, source: IHS Global Insight


Including about 50 countries defined by IHS Global Insight as emerging markets in line with the World Bank

As of October 2017






European Union





of which Germany





United States





Emerging Markets2





Economic prospects have improved steadily throughout the year. The global economy will probably grow much more strongly in 2017 than in the previous year. We anticipate positive economic development in both the United States and the European Union in spite of the uncertainty in Europe about further political developments. We expect a significant increase in economic output in the Emerging Markets, too. The recovery in Brazil and Russia is likely to progress, and in China we continue to anticipate high yet slightly slower growth.

Economic Outlook for the Segments1



Growth 2016


Growth forecast 2017

2016 figures restated


Bayer’s estimate, except pharmaceuticals; source for pharmaceuticals market: 2017–2021 IMS Market Prognosis, Latest update September 2017; all rights reserved; currency-adjusted

As of September 2017

Pharmaceuticals market





Consumer health market





Seed and crop protection market





Animal health market





For the pharmaceuticals market, we now expect 2017 growth to slow to 3% (previous forecast: 4%). This forecast is based on the assumption that only weak positive impetus can be expected in the United States.

As regards the consumer health market, we continue to anticipate growth of 3–4% in 2017, roughly matching the prior-year rate. We expect to see market conditions that are similar to those in 2016.

According to our current expectations, the animal health market will grow by 2%, and thus at a slower pace than we previously predicted (previous forecast: 5%). We see slower growth rates in both the farm and companion animals sectors, primarily in North America.

As for the global seed and crop protection market, we continue to anticipate a volatile market environment and growth of 1%. We expect growth impetus to come from North America, Asia / Pacific and Eastern Europe. In Latin America and Western Europe, in contrast, growth dynamics are seen lagging behind global development.

Corporate Outlook

Following the signing of the Covestro control termination agreement in September 2017 and the sale of additional shares, Covestro will be presented as a discontinued operation and is thus, as of the fourth quarter of 2017, treated only as an equity method investment in the forecast (see also Key Events). The Bayer Group’s continuing operations thus reflect the values previously referred to under Life Sciences.

To illustrate the differences between the forecasts based on the former and new Group structure, the previous outlook and the updated version are presented alongside each other in the following table:

Reconciliation of Group Outlook to Reflect Change in Structure



Previous forecast incl. Covestro


Reconciliation to new forecast excl. Covestro

2016 sales


€46,769 million


€34,943 million

anticipated 2017 sales


more than €49 billion


€35 – 36 billion

Increase in sales (Fx. & portfolio adj.)


mid-single-digit percentage increase


low-single-digit-percentage increase

2016 EBITDA before special items


€11,302 million


€9,318 million

anticipated 2017 EBITDA before special items


high-single-digit percentage increase


Slightly above the level of the previous year

2016 core EPS





anticipated 2017 core EPS


low- to mid-single-digit-percentage increase


low-single-digit percentage decrease

Capital expenditures for property, plant and equipment


€2.5 billion


€1.7 billion

Research and development expenses


€4.8 billion


€4.5 billion

Special items


€0.5 billion


€0.6 billion

Depreciation and amortization


€2.9 billion


€2.4 billion

Financial result


minus €1.4 billion


minus €1.4 billion

Net financial debt


around €7 billion


around €4 billion

Effective tax rate


around 23%


around 22%

We have adjusted the exchange rates relevant to our forecast to reflect current developments. For the fourth quarter of 2017 we are now using the exchange rates prevailing on September 30, 2017, including a rate of US$1.18 (previously: US$1.14) to the euro. A 1% appreciation (depreciation) of the euro against all other currencies would now decrease (increase) sales on an annual basis by €240 million and EBITDA before special items by €70 million.

Based on these changes, we have reconciled our outlook for full year 2017 as follows:

For the Bayer Group, we are still planning sales of €35 billion to €36 billion. This continues to correspond to a low-single-digit percentage increase on a currency- and portfolio-adjusted basis. We continue to expect EBITDA before special items to come in slightly above the level of the previous year. As regards core earnings per share from continuing operations, we now expect a low-single-digit percentage decrease on the basis of the values that were adjusted for Covestro effects for the current year and previous year. This is due primarily to the difference in the number of shares, which grew significantly in 2017 as a result of the mandatory convertible notes issued in November 2016. Without this effect, core earnings per share would improve by a low-single-digit percentage.

Sales and Earnings Forecast by Segment

We now expect sales at Pharmaceuticals of approximately €17 billion (previously: more than €17 billion). This continues to correspond to a mid-single-digit percentage increase on a currency- and portfolio-adjusted basis. As before, we plan to raise sales of our key growth products to more than €6 billion. We still expect a high-single-digit percentage increase in EBITDA before special items. There is no change in our expectation of further improving the EBITDA margin before special items.

For Consumer Health we continue to expect sales for the full year of about €6 billion. This still corresponds to the prior-year level on a currency- and portfolio-adjusted basis. As before, we expect EBITDA before special items to decline by a high-single-digit percentage.

For Crop Science we are still anticipating sales of below €10 billion. This corresponds to a low-single-digit-percentage decline on a currency- and portfolio-adjusted basis. Meanwhile, we continue to expect EBITDA before special items to decline by a mid-teens percentage.

For Animal Health, we still anticipate a currency- and portfolio-adjusted increase in sales by a low- to mid-single-digit percentage. As before, we plan to improve EBITDA before special items by a high-single-digit percentage.

Reconciliation: We continue to expect sales of around €1 billion in 2017. We still plan EBITDA before special items in the region of minus €0.2 billion.

Development of further key data

In 2017, we now expect to take special charges for continuing operations in EBITDA in the region of €0.6 billion (previously: €0.5 billion). Most of this amount is accounted for by costs arising in connection with the agreed acquisition of Monsanto, restructuring and efficiency improvement measures, and provisions for legal risks. We aim to increase research and development spending to €4.5 billion. Capital expenditures will amount to about €1.7 billion for property, plant and equipment and around €0.4 billion for intangible assets. Depreciation and amortization are estimated at about €2.4 billion, including €1.4 billion in amortization of intangible assets. We also predict a financial result of around minus €1.4 billion. The effective tax rate is likely to be about 22%. Excluding capital and portfolio measures, net financial debt is targeted to be around €4 billion at the end of 2017 (previously: around €7 billion).

We refer readers to our Annual Report 2016 for information on the outlook for Bayer AG. Beyond that, we expect a significant improvement to our financial result from the sale of the Covestro shares.