Bayer AG

XETRA:BAYN

Earnings Call Transcript 2021-Q4

[Operator]

Ladies and gentlemen,

thank you for

standing by. Welcome to

Bayer's Investor and

Analyst

Conference

Call

on

the

Full

Year

and

Fourth

Quarter

2021 Results. Throughout

today's

recorded

presentation,

all

participants

will

be

in

a

listen-only

mode.

The presentation

will

be

followed

by

a

question-and-answer

session.

[Operator Instructions]

I'd

now

like to

turn

the

conference

over

to

Mr.

Oliver

Maier, Head

of

Investor

Relations

of

Bayer

AG.

Please

go

ahead,

sir.

[Oliver Maier, Head-Investor Relations, Bayer AG]

Great. Thank

you

so

much,

Nairobi.

Good

afternoon

and

thanks

for

joining

us

today.

I'd

like

to

welcome

all

of

you

to

our

fourth

quarter

full

year

2021

conference

call.

With

me

on

the

call

today

are Werner

Baumann,

our

CEO;

and

Wolfgang

Nickl,

our

CFO.

The

divisions

are

represented

by

the

responsible

management

board

members.

Slightly

different

layout

for

the

fiscal

year,

Werner

will

begin

today's

call

with

the

highlights

of

2021

and

frame

the

year

ahead

of

us.

We

will

then

have

Rodrigo,

Stefan

and

Heiko

comment

on

the

respective

business

performances

and

the

divisional

outlook

for

2022.

Wolfgang

will

wrap

it

up

with

an

overview

of

the

group

performance

and

outlook

before

we

open

up

for

the

Q&A

session.

As

always,

I

would

like

to

draw

your

attention

to

the

cautionary

language

that

is

included

in

our

safe

harbor

statement

as

well

as

in

all

the

materials

that

we

have

distributed

today.

With

that, I'll

hand

it

over

to

you,

Werner.

[Werner Baumann]

All

right.

Thanks,

Oliver,

and

good

afternoon,

ladies

and

gentlemen.

It's

my

pleasure

to

welcome

you

to

our

conference

call.

Before

we

go

into

the

business

performance,

let

me

start

with

what

is

certainly

top

of

mind

for

all

of

us.

With

the

Russian

invasion

in

Ukraine,

the

geopolitical

order

has

shaken.

And

we

are

deeply

shocked

and

concerned

about

what

is happening

to

the

Ukrainian

people.

This

war

is

no

less

than

a

threat

to

our

freedom

and

democracy.

And

we

as

Bayer

condemn

in

the

most

vigorous

way

this

Russian

attack.

While

we

hope

that

concerted

political

actions

will

help

to

improve

the

situation

as

soon

as

possible,

we

as

a

company

try

to

step

up

as

a

reliable

partner

and

a

good

corporate

citizen

true

to

our

vision,

help

for

all,

hunger

for

none.

Of

course,

the

safety

of

our

employees

is

now

our

top

priority.

And

we

are

taking

all

appropriate

measures

to

protect

our

700

colleagues

in

the

Ukraine.

At

the

same

time,

we

are

doing

everything

we

can

to

further

ensure

supply

of

our

products

to

the

civilian

population,

including

vital

medicines

and

agriculture

products

to

safeguard

food

supplies.

And

of

course,

we

are

prepared

to

step

up

our

humanitarian

help

with

financial

support

and

donations

of

our

medical

products,

as

we

have

shown

during

the

COVID

pandemic.

Now,

there's

certainly

no

smooth

transition,

but

let

me

take

a

step

back

and

comment

on

some

key

macro

factors

relevant

for

our

business

last

year. We

saw

a particularly

favorable

agricultural

market

dynamics,

with

high

soft

commodity

prices

and

tight

global

supply

leading

to

increased

levels

of

glyphosate

prices.

In

pharma,

elective

treatments

increased

again

after

COVID-19

restrictions

in

2020.

And

for

Consumer

Health,

we

saw

continued

growing

demand

for

preventive

health

solutions.

On

the

downside,

we

know that

increasing

inflationary

pressure

and

volatility

of

global

supply

chains

across

industries.

Let

me also

provide

a

very

brief

update

on

the

status

of

the

glyphosate

litigation.

In

December,

the

US

Supreme

Court

requested

the

views

of

the

Solicitor

General

in

the

Hardeman

case.

Notwithstanding

what

the

brief

concludes,

there

are

two

potential

outcomes.

If

the

Supreme

Court

decides

to

review

the

Hardeman

case

after

input

from

the

Solicitor

General,

and

finally,

rules

in

our

favor,

this

will

effectively

end

the

glyphosate

litigation.

If

the

Supreme

Court

denies

accepting

the

case

for

review

or

finally

rules

against

us,

we

will

activate

the

voluntary

claims

administration

program

in

our

five-point

plan

to

help

bring

closure

to

the

litigation.

From

a

financial

point

of

view,

we

have

incorporated

this

specific

scenario

already

into

our

provisions

in

2021.

Now

let's

move

on

to

our

business

performance.

I'm

very

pleased

to

share

that

we

have

overachieved

our

updated

guidance,

which

we

communicated

with

our

Q3

earnings

release. While

2021

started

as

a

transitional

year

for

Bayer,

we

ended

2021

with

strong

momentum

that

provides

an

excellent

base

for

further

growth

and

earnings

expansion

in

2022.

Overall,

and

supported

by

a

positive

market

environment,

we

did

much

better

than

expected

at

the

beginning

of

the

year.

We

substantially

increased

our

top

line

by

9%,

with

strong

contributions

from

all

divisions.

Crop

Science

strengthened

its

market

position,

with

market

share

gains

specifically

in

corn

and

continued

expansion

in

fungicides.

We

also

saw

strong

price

increases

across

the

board,

particularly

for

our

glyphosate-based

products,

driven

by

tight

global

supply.

Pharmaceuticals

generated

another

year

of

healthy

growth

for

our

key

products,

Eylea

and

Xarelto,

despite

the

first

impacts

from

volume-based

procurement

in

China

for

Xarelto.

We

also

reentered

the

US

market

in

cardiology

and

saw

pleasing

contributions

from

our

launch

products.

Consumer

Health

delivered

industry-leading

growth

across

regions

and

categories,

with

a

focus

on

excellence

in

execution

and

innovation.

The

substantial

volume

growth,

strong

price

performance

and

the

contributions

from

our

ongoing

performance

programs

contributed

positively

and

more

than

offset

inflationary

pressure

and

cost

normalization

after

an

exceptional

2020,

while

enabling

us

to

invest

in

launches

and

innovation.

However,

still

reported

performance

in

[ph]



euro (00:06:42)

was

held

back

as

we

faced

significant

foreign

exchange

headwinds

of

roughly

€1

billion

in

top

line

and

approximately

€500

million

in

bottom

line.

Now

let's

look

at

innovation,

which

is

key

for

our

future

growth.

We

have

made

significant

progress

on

our

innovation

agenda

and

are

looking

ahead

to

a

promising

2022.

For

pharmaceuticals,

we

have

achieved

important

approvals

and

entered

commercialization

stage

for

our

new

products,

resulting

in

a

very

much

derisked

late-stage

pipeline.

For

our new

products,

Nubeqa,

Kerendia

and

Verquvo,

we

see

ongoing

strong

launch

momentum

and

planned

further

rollouts

in

2022.

To

that

end,

we

just

recently

received

the

approval

to

market

Kerendia

in

the

European

Union.

And

just

a

week

ago,

for

our

prostate

cancer

drug,

Nubeqa,

we

did

raise

our

peak

sales

expectation

from

more

than

€1

billion

to

now

more

than

€3

billion.

We

also

made

great

progress

on

our

early stage

pipeline

with

our

cell

and

gene

therapy

platform

and

strengthened

our

drug

discovery

capabilities

with

the

acquisition

of

Vividion

Therapeutics.

For our

number

one

product,

Xarelto,

we

saw

the

positive

patent

ruling

confirming

our

once-daily

administration

patent

in

the

EU.

With

that,

we

will

now

have

extended

exclusivity

until

2026

in

Europe

for

our

most

important

pharma

product,

which

complements

the

2027

exclusivity

extension

we

already

achieved

in

the

US.

In

Crop

Science,

we

successfully

commercialized

hundreds

of

next-generation

corn

and

soybean

seed

products

and

advanced

short stature

corn.

We

also

made

significant

progress

on

our

digital

platform,

including

the

successful

launch

of

our

carbon

farming

initiative,

expansion

of

our

Orbia

digital

ag

marketplace

in

Brazil,

and

entered

into

important

collaboration

agreements

with

Microsoft

and

other

external

partners.

In

Consumer

Health,

we

saw

successful

launches

of

Bepanthen

Dry

Skin

and

AleveX

Topical

Pain

as

well

as

regulatory

clearance

for

the

2022

Rx-to-OTC

switch

of

Astepro

in

the

US,

the

first

and

only

steroid-free

nasal

decongestant

in

the

market.

We

also

made

significant

progress

regarding

our

sustainability

goals

and

the

sustainable

development

of

our

businesses.

At

Crop

Science,

we

are

advancing

carbon

farming,

a

completely

novel

field

of

business

which

financially

rewards

farmers

for

adopting

practices

that

improve

carbon

sequestration

into

the

soy.

In

pharmaceuticals,

we

enable

access

to

modern

contraceptives

by

investing

more

than

€400 million

into

facilities

in

Costa

Rica

and

Finland.

And

at

Consumer

Health,

we

are

investing

€100 million

to

make

our

products

more

sustainable.

We

intend

to

make

the

packaging

for

all

our

consumer

products

recyclable

or

reusable

by

2030.

Looking

ahead,

we

are

focused

on

carrying

the

strong

business

momentum

to

2022,

translating

into

growth

and

earnings

expansion. We

expect

that

momentum

to

be

significantly

skewed

towards

the

first

half of

the

year.

On

the

downside,

we

anticipate

inflationary

cost

pressures

to

persist

and

supply

chains

to

remain

stretched,

resulting

in

a

very

volatile

supply

situation

across

industries.

Also,

our

plans

assume

a

stable

geopolitical

environment

in

Eastern

Europe,

which

meanwhile

changed

dramatically.

We

will closely

monitor

and

mitigate

these

risks

to

the

extent

possible.

For

innovation

activities,

we

expect

further

important

news

flow

across

divisions

and

our

Leaps

entity

in

2022,

including

the

news

we

shared

with

you

10

days

ago

on

the

ARASENS

data

for

Nubeqa.

Looking

forward

to

keeping

you

updated.

Stefan

will

also

outline

the

major

pipeline

in

Pharma

and

the

catalysts

we

have

seen

for

the

coming

year.

I'd

also

take

the

opportunity

to

welcome

Rodrigo

Santos

for

his

first

earnings

call.

It's

great

to

have

Rodrigo

on

the

team

as

a

successor

to

Liam.

And

the

business

is

off

to

a

good

start

and

a

bright

future

under

his

leadership.

And now, over to you, Rodrigo.

[Rodrigo Santos]

Thank

you,

Werner,

and

thanks

to

all

of

you

joining

us

today.

I'm

really

excited

to

begin

by

sharing

some

excellent

results

from

this

past

year.

We

saw

great

progress

in

our

pipeline,

in

our

digital

farm

solutions,

well

aligned

with

our

objective

to

transform

agriculture

for

a

more

sustainable

future.

At

the

same

time,

we

clearly

demonstrated

performance

of

a

market

leader

with

share

gain

in

corn

seeds

and

traits

in

key

markets,

such

as

Brazil

and

Argentina,

and

taking

the

number

one

brand

position

in

the US.

This

was

supported

by

the

launch

of

new

hybrids

and

our

next-generation

and

industry-first

RNAi-based

corn

rootworm

trait

as

part

of

the

VTPro4

offering

in

Brazil.

In

soybeans,

we

launched

Intacta

2

Xtend

with

more

than

800,000

acres

in

the

first

year in

Brazil,

and

we

expect

it

to

grow

to

6

million

acres

in

the

next

season.

Meanwhile,

in

North

America,

we

reached

16 million

acres

with

XtendFlex

in

the

first

year

of commercialization,

successfully

defending

our

position

as

the

number

one

soybean

weed

control

system

in

North

America.

So,

I'm

pleased

to

share

that

the

combination

of

innovation

and

disciplined

execution

resulted

in

record

sales

for

Crop

Science

in

2021,

with

growth

across

all

regions

and

all

business

units.

The

11.1%

sales

growth

was

driven

by

higher

prices

for

our

herbicides,

coupled

with

combined

expansion

in

fungicides,

as

well

as

by

market

share

gains

in

corn

and

stronger

pricing

and

volume

gains

in

soybean

seeds

and

traits.

This

performance,

combined

with

our

ongoing

efficiency

measures,

more

than

offset

significant

cost

inflation

as

well

as

negative

currency

effects

of

€387

million.

This

led

to

a

4%

overall

increase

in

EBITDA

before

special

items,

with

a

margin

of

23.2%

or

24.3%

at

prior

year

currency

rates,

consistent

with

our

guidance

for

the

year.

As

we

move to

2022,

we

have

two

primary

objectives,

to

continue

to

perform

and

transform

at

the

same

time.

With

these

results

and

this

innovation

at

our

back,

combined

with

high

commodity

price,

we

see

strong

momentum

moving

into

2022.

As

a

result,

we

are

guiding

to

a

7%

sales

growth

and

EBITDA

before

special

items

margin

of

25%

to

26%.

Overall,

earnings

growth

is

expected

to

come

from

stronger

prices,

share

gains

and

new

efficiency

measures,

which

are

expected

to

more

than

offset

continued

inflationary

cost

pressures,

particularly

in

crop

protection

where

we,

like

the

rest

of

the

industry,

are

experiencing

unprecedented

supply

chain

challenges.

Given

these cost

pressures

and

the

value

of

our

high performance

products

creates,

we

expect

pricing

to

be

the

primary

contributor

to

our

sales

growth

for

the year.

Roughly,

half

of

the

pricing

growth

is

expected

to

come

from

herbicides

and

about

half

from

corn

seeds

and

traits

and

the

rest

of

our

crop

protection

portfolio.

The

annual

refresh

of

our

corn

seed

portfolio

and

upgrades

to

the

next-generation

technologies

in

insecticides and fungicides

like

Fox

Xpro,

enabled

that

growth

with

6%

to

7%

price

increases

globally.

While

volume

is

not

expected

to

be

as

significant

as

pricing,

we

do

expect

share

gains

in

corn

and

strong

demand

from

fungicides

to

contribute

to

our

overall

growth.

In

our

models,

we

expect

herbicides

price

to

be

higher

in

the

first half of

2022

and

lower

on

the

second

half,

with

possible

improvement

of

the

global

supply

of

glyphosate.

This

trend

influences

our

total

outlook

with

our

total

sales

growth

rate,

expected

to

be

above

7%

for

the

first

half

and

below

that

level

for

the

second

half

of

the

year.

Similarly,

our

EBITDA

before

special

items

margin

expected

to

expand

strongly

in

the

first

half

and

compress

in

the

second

half,

on

the

path

to

the

25%

to

26%

for

the

full

year.

This

year,

however,

is

not

expected

to

be

without

challenges.

Our

growth

outlook

in

this

plan

is

constrained

by

potential

competitive

dynamics

and

some

regulatory

uncertainty,

plus

some

potential

supply

challenges

across

all

our

crop

protection

portfolio.

Agriculture

has

always

had

its

challenges

and

always

will.

But

as

the

market

leader

in

this

business,

our

organization

will

focus

on

maximizing

the

opportunities

that

the

innovation

provides,

while

working

to

minimize

the

risks.

I

look

forward

to

updating

you

on

the

performance

against

this

plan

and

ongoing

efforts

to

transform

agriculture

in

the

year

ahead.

With

that,

I

will

hand

over

to

Stefan

to

share

an

update

on

the

Pharma

business.

[Stefan Oelrich]

Thank

you,

Rodrigo.

More

than

happy

to

do

that

and

good

afternoon

to

everyone.

Bayer

Pharma's

top line

saw

a

strong

recovery

in

2021

after

COVID-19

limited

our

patients'

ability

to

get

their

medications

in

the

prior

year.

Sales

grew

7%,

slightly

above

our

upgraded

guidance

from

August,

driven

by

higher

volumes

that

were

up

by

9%.

Around

60%

of

this

increase

came

from

our

two

flagship

products.

Eylea

sales

improved

by

19%,

driven

by

a

double-digit

increase

across

all

regions,

which

was

also

supported

by

continuously

growing

adoption

and

higher

shipments

of

the

prefilled

syringes

that

were

launched

in

2020.

Also,

our

biggest

single

sales

contributor,

Xarelto,

showed

a

strong

performance

in

2021,

growing

6%

year-on-year.

A

healthy

volume

trend

more

than

offset

lower

prices

from

volume-based

procurement

reductions

in

China,

which

started

to

take

effect

in

September

2021

and

were

implemented

in

all

provinces

by

October.

Concluding

my

comments

on

last

year's

key

top line

drivers,

Adalat

and

Adempas

both

achieved

around

20%

growth

in

2021.

For

Adempas,

this

included

a

one-time

milestone

payment

of

€190 million

that

came

in

the

fourth

quarter

driven

by

its

strong

market

momentum

that

led

to

more

than

$1

billion

of

in-market

sales

in

2021.

With

this,

we

have

reached

the

final

sales

threshold

that

triggers

milestone

payments

related

to

this

product.

Looking

at

our

late-stage

assets.

We

successfully

launched

Kerendia

in

the

United

States

last

September.

Despite

limited

ability

to

reach

healthcare

providers

during

the

COVID-19

pandemic,

we

are

excited

to

report

a

launch

uptake

that

is

in

line

with

other

successful

cardiovascular

medicines

that

have

been

introduced

in

the

US

market,

and

we

do

expect

this

trend

to

continue.

Only

recently,

the

American

Diabetes

Association

updated

their

guidelines

with

an

A

recommendation

for

the

use

of

Kerendia

for

patients

with

chronic

kidney

disease

who

are

at

increased

risk

for

cardiovascular

events

or

chronic

kidney

disease

progression.

We

also

continued

to

make

good

progress

with

the

rollout

of

Verquvo

in

the

treatment

of

heart

failure

with

reduced

ejection

fraction,

following

last

year's

approvals

in

the

US,

Japan

and

in

the

EU.

The

continued

rollout

of

our

new

prostate

cancer

drug,

Nubeqa,

was

particularly

successful,

generating

sales

of

€219

million

in

2021.

In

the

second

year

after

market

launch,

it

is

already

one

of

our

top

15 products.

This

strong

performance

is

the

result

of

Nubeqa's

unique

clinical

profile,

which

was

impressively

confirmed

by

a consistent

set

of

strong

efficacy

and

tolerability

data

from

Nubeqa's

second

successful

Phase

III

ARASENS

trial

released

two

weeks

ago.

With

an

EBITDA

before

special

items

of

€5.8

billion,

equivalent

to

a

margin

of

31.5%,

we

also

delivered

on

our

earnings

guidance

in

2021.

As

already

stressed

last

year,

the

2020

margin

was

a

tough

comparison

in

the

first

place

as

it

benefited

significantly

from

cost

containment

we

had

initiated

in

the

face

of

the

evolving

COVID-19

pandemic.

Also,

higher

investments

into

innovation

and marketing

of

new

products

weighed

on

profitability

in

2021.

For

2022,

we

expect

to

grow

divisional

sales

by

3%

to

4%.

We

see

new

launches

increasingly

contributing

to

top line

and

expect

Eylea

to

continue

playing

out

its

market leading

position

with

mid-single-digit

percent

growth

this

year.

Overall,

sales

growth

in

the

division

is

expected

to

exceed

by

far

the

VBP pricing

headwinds

we

are

facing

in

China

for

Xarelto

and

Adalat

this

year.

Please

be

reminded

that

Xarelto

sales

in

2021

only

included

four

months

of

adverse

impact

from

China

VBP,

but

they

will

fully

materialize

in

this

year.

Going

forward,

while

Xarelto

is

expected

to

continue

growing

in

our

largest

region,

Europe,

we're

facing

a

more

heterogeneous

development

in

other

regions,

mainly

due

to

softer

pricing

as

well

as

ending

exclusivity.

Closing

my

comments

on

VBP

in

China,

Adalat

is

likely

to

see

first

impact

by

the

second

half

of

this

year.

In

terms

of

late-stage

pipeline

news

flow,

we've

kicked

off

the

year

strongly,

with

a

second

set

of

very

positive

clinical

Phase

III

data

from

Nubeqa's

ARASENS

trial

and

the

EU

approval

for

Kerendia.

Continuing

the

launch

dynamics

of

our

late-stage

pipeline

assets

and

getting

Nubeqa

submitted

for

the

indication

extension

in

the

metastatic

hormone-sensitive

prostate

cancer

is

one

of

our

key

priorities

this

year.

For

Eylea,

we

are

currently

running

two

Phase

III

studies

with

an

8

milligram

formulation,

with

the

objective

to

potentially

prolong

injection

intervals

and

improve

patient

convenience

while

keeping

superior

efficacy.

Data

from

these

studies

are

expected

to

deliver

results

in

the

second

half

of

this

year.

On

top

of

this,

our

Factor

XI

program

will

be

Phase

III

decision

ready

this

year,

with

a

highly

competitive

profile

that

could

eventually

be

leading

in

the

class.

Targeting

Factor XI

in

the

anti-coagulation

pathway

promises

a

novel

and

disruptive

route

to

decouple

prevention

from

cardiovascular

risks,

from

bleeding

risks.

In

addition,

it

could

offer

options

to

patients

for

which

treatments

are

not

available

at

all

today.

In

the

early

phase

of

our

pipeline,

we

may

see

news

this

year

that

have

the

potential

to

be

transformative

in

fighting

Parkinson's

disease

in

area

of

utmost

clinical

needs.

With

BlueRock

stem

cell-based

therapy

candidate,

DA01,

we're

developing

a

treatment

that

uses

authentic

dopaminergic

neurons

to

reinnervate

the

affected

regions

of

the

human

brain

and

reverse

the

degenerative

process.

We have

included

a

total

of seven

patients

in

the

potentially

groundbreaking

procedure

and

expect

interim

data

from

the

study

in

this

year's

second

half.

The

ongoing

investments

into

technologies

as

well

as

our

progress

in

advancing

our

pipeline

from

early

to

late

stage

to

launches

and

rollouts

reflect

the

consistent

execution

of

our

strategy

to

generate

sustainable

long-term

growth.

At

the

same

time,

our

ambition

is

to

maintain

attractive

returns.

With

the

EBITDA

margin

goal

of

around

32%

before

special

items

for

this

year,

we're

committed

to

deliver

on

both

ends,

supported

by

a

stringent

cost

management

and

reallocation

of

resources.

And

now

it's

Heiko's

turn

to

update

you

on

Consumer

Health.

[Heiko Willem-Jan Schipper]

All

right.

Thank

you,

Stefan,

and

good

afternoon,

everybody.

It's

a

pleasure

for

me

to

go

into

Consumer

Health

performance

in

2021

and

also

share

you

our

outlook

for

2022.

Starting

with

2021,

we

delivered

strong

broad-based

growth

of

6.5%

across

all

our

regions

and

nearly

all

our

categories.

We

are

consistently

performing

at

the

high

end

of

our

industry,

which

is

really

a

demonstration

of

the

quality

of

our

Consumer

Health

business,

our

brands

and

our

people.

In

short,

our

results

prove

our

ability

to

execute

on

our

strategy

and

outperform

in

an

increasingly

competitive

environment.

The

standout

category

performance

was

again

Nutritionals.

We

have

now

seen

strong

double-digit

growth

in

this

category

for

the

past

two

years

with

in

particular,

our

power

brands

One

A

Day

and

Redoxon

performing

very

well.

In

addition,

our

growth

was

supported

by

successful

launches

behind

brands

like

Bepanthen

and

Aleve,

demonstrating

our

ability

to

strengthen

iconic

brands

with

innovation

that

win

with

customers

and

with

consumers.

Cough

and

cold

was

a

tale

of

two

halves.

The

first

half

of

the

year

was

negative

due

to

a

historically

weak

flu

season.

But

for

the

second

half of

2021,

we

saw

robust

growth

following

the

opening

up

of

many

countries.

However,

the

category

finished

2021

slightly

below

prior

year.

All

our

other

categories

delivered

mid-

to

high-single-digit

growth.

These

broad-based

contributions

positioned

us

again

ahead

of

the

overall

market

in

2021,

which

grew

around

4%.

Moving

to

the

bottom

line.

Continued

disciplined

operational

execution

of

our

strategy

once

again

led

to

margin

expansion.

In

2021,

we

improved

our

profitability

by

50

basis

points

to

22.5%,

or

in

absolute

terms,

earnings

before

special

items

amounted

to

€1.2

billion.

This

margin

expansion

was

driven

by

disciplined

spending

and

pricing

measures,

compensating

for

the

inflationary

cost

increases

and

still

enabling

us

to

invest

in

marketing

and

innovation

behind

our

brands.

Now

let's

look

ahead

and

move

to

the

outlook.

Consumer

Health

remains

fully

on

track

to

successfully

deliver

on

our

growth

strategy.

In

2022,

we

expect

to

grow

4%

to

5%,

with

a

further

step-up

in

innovation.

Growth

is

likely

to

be

front-loaded

for

the

first

half

of

the

year

with

an

easier

comp

versus

2021,

especially

in

cough

and

cold.

We

expect

earnings

before

special

items

to

be

within

the

22%

to

23%

range.

We

do

everything

we

can

to

compensate

rising

input

costs

with

efficiency

measures

as

well

as

a

focus

on

pricing.

At

the

same

time,

we

plan

higher

investment

in

the

brands

behind

our

launches

as

well

as

in

research

and

development.

One

major

growth

driver

in

2022 and

beyond

will

be

the

launch

in

the

US

of

a

new

brand

called

Astepro.

It

is

the

first

and

only

steroid-free

antihistamine

nasal

spray

for

allergies

approved

as

an

over-the-counter

product.

This

Rx-to-OTC

switch

represents

a

significant

milestone

for

our

business

as

it

strengthens

our

leading

allergy

portfolio

and

offers

a

differentiated

solution

to

the

50

million

Americans

who

suffer

from

allergies.

In

conclusion,

we

look

forward

to

another

exciting

year

for

our

Consumer

Health

business

at

Bayer.

Over

the

past

three

years,

we

have

delivered

growth

at

the

forefront

of

our

industry

and

improve

margins

at

the

same

time.

We

are

well

placed

to

win

in

this

market

with

our

leading

brands,

broad

geographic

footprints

and

a

proven

track

record

to

win

with

consumers.

And

with

that, I will hand it over to Wolfgang who will guide you through our financials.

[Wolfgang U. Nickl]

Thank

you,

Heiko.

I

will

now

walk

you

through

the

group

financials

of 2021

and

combine

what

you

have

heard from

my

colleagues

in

the

group

outlook

for

fiscal

year

2022.

Group

net

sales

came

in

at

€44

billion

and

9%

growth

over the

prior

year.

This

is

€1

billion

above

our

updated

guidance

and

includes

a

significant,

but

anticipated

currency

headwind

of

€1.1

billion.

The

weakness

of

the

US

dollar

and

the

Brazilian

real against

the

euro

has

the

biggest

effect,

but

the

Japanese

yen,

Turkish

lira

and

Russian

ruble

also

contributed.

Earnings

before

special

items

of

€11.2

billion

declined

by

3%,

resulting

in

a

margin

of

25.4%

in

line

with

our

latest

guidance.

Negative

currency

effects

of

about €500

million

weighed

on

group

EBITDA,

representing

a

50 basis

point

margin

decline

versus

the

prior

year.

For

our

underlying

operations

we

were

by

and

large

able

to

compensate

inflationary

pressure

on

input

costs

with

adjusted pricing

and

efficiency

gains,

while

increasing

investments

into

innovation

and

product

launches.

Inflation

particularly

impacted

our

cost

for

energy,

active

ingredients,

freight

and

labor.

As

an

example,

the

global

container

freight

costs

for

a

40 foot

container

increased

from

roughly

$2,000

in

2020

to

roughly

$10,000

in

2021.

Furthermore,

as

communicated

last

year,

we

were

sold

our

cost

profile

on

the

short-term

incentives

in

a

year-over-year

comparison,

cycling

over

50%

payout

in

2020.

Core

earnings

per

share

grew

by

2%

to

€6.51

and

are

roughly

€0.20

above

the

upper

end

of

our

latest

guidance,

including

currency

impact.

Positive

contribution

from

Crop

Science

and

Consumer

Health

compensated

for

lower

pharma and

reconciliation

results

as

well

as

a

higher

core

tax

rate.

Better

financial

results

contribute

more

than

€0.30,

thanks

to

lower

interest

rates

for

new

financing

and

favorable

currency

effects

as

well

as

a

positive

remeasurement

for

our

[ph]

two

Leaps (00:30:15)

investment.

The

largest

difference

between

core

earnings

per

share

of

€6.51

and

earnings

per

share

of

€1.02

relates

to

increase

provision

for

the

glyphosate

litigation

and

expenses

related

to

our

restructuring

programs

as

shown

in

the

backup

of

the

slide

deck.

Our

free

cash

flow

came

in

at

€1.4

billion.

This

represents

a

5%

increase

over

the

prior

year,

despite

€400

million

higher

net

settlements

and

increased

tax

payments.

The

strong

cash

performance

was

mainly

driven

by

disciplined

working

capital

management,

particularly

in

Crop

Science.

Compared

to

our

updated

guidance,

we

saw

lower

than

anticipated

net

settlement

payments,

which

came

in

at

€4.3

billion

for

the

full

year.

These

factors

are

also

the

reason

why

our

net

financial

debt

came

in

€2

billion

better

than

our

latest

guidance.

The

increase

of

net

financial

debt

year-over-year

from

roughly

€30

billion

to

€33

billion

is

mainly

driven

by

the

financing

of

the

Vividion

acquisition

of

€1.2

billion,

negative

foreign

exchange

effects

of

€900

million

and

dividend

payouts

of

€2

billion

which

more

than

consumed

the

free

cash

flow.

I

would

like

to

close

our

presentation

with

our

group

guidance

for

2022. Let

me

start by

pointing

out

that

our

guidance

reflects

our

current

business

and

does

not

include

any

impact

of

the

planned

sale

of

the

professional

part

of

our

environmental science

business.

Please

also

note

that,

an

arbitration

with

BASF,

as

regularly

reported

in

the

risk

section

of

the

Annual

Report, will

likely

be

concluded

towards

mid-2022,

but

possibly

even

sooner,

with

strong

arguments

in

defense

of

our

case,

and

therefore,

not

taken

any

provisions.

As

in

previous

years,

we

focus

on

the

guidance

at

constant

currencies,

or

in

other

words,

at

average

actual

2021

exchange

rates.

The

estimated

FX

impact,

if

we

would

use

month

and

December

2021

spot

rates,

is

reflected

in

the

right

column

and

shows

a

tailwind

for

net

sales

of

roughly

€1

billion

and

€0.10

on

core

EPS.

We

estimate

Bayer

Group

sales

to

be

at

approximately

€46

billion,

an

increase

of

around

5%.

While

we

significantly

invest

into

future

growth,

particularly

in

Pharma

and

Consumer

Health,

we

expect

to

see

margin

expansion

through

strong

top

line

growth

and

further

contributions

from

our

efficiency

programs.

Our

EBITDA

margin

before

special

items

is

anticipated

to

increase

to

approximately

26%

bringing

absolute

EBITDA

before

special

items

to

around

€12

billion.

Based

on

the

divisional

projections,

we

expect

a

strong

phasing

of

top

line

and

profitability

towards

the

first

half

of

the

year,

with

an

anticipated

normalization

in

the

second

half.

For

core

EPS,

we

lift

our

guidance

to

approximately

€7

at

constant

currencies.

For

the

core

tax

rate,

we

continue

with

our

guidance

of

approximately

23%

for

the

time

being.

In

case,

we

see

the

proposed

introduction

of

minimum

taxes

or

attempted

tax

rate

rises

by

government

facing

high

pressure

to

refinance

COVID-19-related

expenditures,

this

level

would

become

increasingly

challenging.

Our

reconciliation

result

is

anticipated

with

minus €500

million

to

minus

€600

million.

The

reflected

increase

versus

the

prior

year

was

mainly

driven

by

the

planned

start

of

an

upgrade

of

our

system

infrastructure.

We

keep

our

strong

focus

on

cash

generation

and

expect

free

cash

flow

to

increase

to

a

range

between

€2

billion and

€2.5

billion.

This

includes

total

anticipated

net

payouts

for

litigation

settlements

of

approximately

€2.5

billion,

consisting

of

phased

payouts

for

glyphosate-related

settlement

agreed

to

prior

to

the

Supreme

Court

requesting

the

opinion

of

the

US

government

on

the

Hardeman

case.

Excluding

settlements,

we

target

an

underlying

free

cash

flow

of

around

€4.5

billion

to €5 billion.

Our

net

financial

debt

is

forecasted

to

be

in

the

range

of

€33

billion

to €34 billion.

Please

note

that

we

have

listed

other

major

KPIs

in

the

appendix

of

our

investor

presentation.

For

the

fiscal

year

2021,

we

proposed

a

dividend

payment

of

€2

per

share,

which

is

subject

to

approval

by

the

AGM.

The

payout

ratio

of

approximately

31%

remains

within

the

target

corridor

of

30%

to

40%

of

our

core

EPS.

And

with

that,

Oliver,

I'll

hand

the

call

back

over

to

you

to

start up

on

the

Q&A.

[Oliver Maier, Head-Investor Relations, Bayer AG]

Thank

you

so

much,

Wolfgang.

Thank

you

all

for

the

comments

and

for

the

insight.

Before

we

begin,

I

would

remind

you

to

please

keep

your

questions

to

hopefully

about

two

per

person,

so

that

we

are

able

to

take

as

many

questions

from

as

many

participants

as

possible.

And

with

that,

Nairobi,

I

think

you

may

open

up

the

lines

for

questions.

[Operator]

Ladies

and

gentlemen,

at

this

time, we

will

begin

the

question-and-answer

session.

[Operator Instructions]



The

first question

is

from

the

line

of

Vincent

Andrews

from

Morgan

Stanley.

Please

go

ahead.

[Vincent Stephen Andrews, Analyst, Morgan Stanley & Co. LLC]

Thank

you

and

good

morning,

everyone.

Rodrigo,

wondering

if

I

could

ask

you

to

speak

a

little

bit

more

about

glyphosate

pricing,

and

I'll

do

my

two

questions

in

one.

The

first

would

be,

if could

you

just

talk

about

how

you're

thinking

about

how

you're

pricing

your

product

versus

where

the

Chinese

prices

have

gone

given

just

sort of

the

parabolic

nature

of

the

Chinese

price

increase.

Historically,

you

tend

to

try

to

price

$1

to

a

gallon

above

the

Chinese.

But

I

think

if

you

were

actually going

to

do

that,

your

pricing

will be

a

lot

higher

than

what

seems to

be

embedded

in

the

guidance.

So

what's

the

strategy?

And

then,

I

guess

the

second

part

of

my

question

is,

you

talked

about

in the

back

half

of

the

year,

you're

expecting

prices

to

be

down

sequentially.

Is

that

also

sort

of

implying

that

as

we

get

into

2023,

on

a

year-over-year

basis,

prices

will

be

probably

be

lower

than

22%

but

probably

still

higher

than

2021?

Or

how

should

we

be thinking

about

that

in our

models?

[Rodrigo Santos]

Thank

you,

Vincent.

So

let

me talk

a

little

bit

about

glyphosate.

So

if

you

take

a

look

on

our

outlook

of

2021,

we

end

up

with

our

herbicides

with

around

15%

growth.

That's

basically

driven

by

price.

As

you

remember,

we

had

the

volume

impact

because

of

the

Hurricane

Ida.

If

you

think

about

2022,

we

see

the

same

scenario,

right?

So

in

the

opposite

direction

that

we

had

in

2021

where

we

had a

lower

price

in

the

first

six

months

and

a

higher

price

on

the

second

half

of

the

year,

this

year,

we

are

expecting

the

opposite.

We're going

to

have

a

higher

price

on

the

first

six

months

and

a

lower

price

for

the

remaining

of

the

year.

At

least

this

is

what

we

see

today.

We

– of

course,

we're

going

to

continue working

very

close

to

that

to

see

if

we

can

capture

any

additional

opportunities

on

that

one.

I

just

want

to

also

reinforce

with

the

opportunity,

Vincent,

that

we

are

guiding

for

2022

half

of

our

price

increase

coming

from

the

herbicides

and

half

of

our

price

increase

coming

from

corn

seeds

and

trait,

fungicides

and

insecticides.

So

we

are

taking

advantage

of

that

market

opportunity

with a

disciplined

execution

to

drive

that

price

increase

for

the year.

So

overall,

we

see

a

strong

first

six

months,

and

we

are

projecting

a

lower

for

the

remaining

of

the

year,

but

we're

going

to

try

to

capture

any

opportunity

that

we

see

in

the

market.

[Operator]

Mr.

Andrews,

have

you

finished your

question?

[Vincent Stephen Andrews, Analyst, Morgan Stanley & Co. LLC]

No,

I

will

pass it

along.

Those

were

my

two.

[Operator]

The

next question

is

from

the

line

of

Peter

Verdult.

Please

go

ahead.

[Peter Verdult, Analyst, Citigroup Global Markets Ltd.]

Thank

you. Pete

Verdult,

Citi.

Two

questions.

Heiko

or

Werner

[ph]



you've

seen

competing

(00:38:26) Consumer

businesses

valued

at

five

times

sales.

How

do

you

think

about

ensuring

Bayer's

Consumer

business

[indiscernible]



(00:38:32)

executing

well

but

not

getting

much

recognition

for

that

in

your

current

share

price.

I

think

secondly,

[ph]

this is for (00:38:40)

Rodrigo,

just

to

sort

of

piggyback

on

to

Vincent's

question.

Just

in

terms

of some

of

the

headwinds

you

talked

about,

regulatory,

competitive

and

supply

issues.

Last

year,

you

talked

about

a

lost

corn

license,

regulatory

withdrawal

in

the

Luling

plant.

I

think

you

quantified

that

as

sort of

3%

headwind.

Could

you

give

us

some

sense

as

to

what

these

headwinds

could

be

if

they

came

to

pass?

Thank

you.

[Oliver Maier, Head-Investor Relations, Bayer AG]

Hey,

Pete,

it's

Oliver.

I

had

the

hardest

time

to

understand

the

first

question,

to

be

honest.

Any

chance

you

could

reiterate

that

or

not

using

a

headset

or

something?

Just

checking.

[Peter Verdult, Analyst, Citigroup Global Markets Ltd.]

Yeah.

Oli,

sorry.

Let

me

try

the

first

one

again.

It's

very

quick.

I

just

thought

given

we

are

seeing

consumer

businesses

valued

at

five

times

sales

in

the

market,

how

does

Heiko

or

Werner

think

about

ensuring

that

the

Bayer

Consumer

business

is

properly

valued

given

the

current

share

price

and

how

well

the

Consumer

business

is performing?

[Werner Baumann]

Hi

Peter,

let

me

take

[ph]



care of

(00:39:44)

let's

say,

the

first

question.

There's

no

doubt

that

our

stock

is

not

appropriately

valued.

And

you've

heard

us

say

that

several

times,

which

is

not

limited

to

the

Consumer

business,

but

cuts

across

the

board.

And

against

the

strong

performance

that

you've

seen

in

2021

and

also

the

perspective

of

2022,

let

alone

the

fact

that

we

are

looking

at

a

glyphosate

scenario

that

we

have

fully

provided

for

the

case

that

we

see,

we

hope

and

expect

that

the

value

comes

back

into

our

stock,

and

that

includes

all

businesses.

We've

also

seen

that

relative

to

the

consolidation

in

the

markets,

not

everything

that

was

announced

did

finally

materialize.

Our

performance

in

Consumer

Health

speaks

for

itself.

Heiko

will

now

touch

on

it

again.

So

we

don't

have

any

issue

holding

our

ground,

and

we

continue

to

believe

that

we

are

the

best

owner

and

operator

of

that

business.

[Heiko Willem-Jan Schipper]

Yeah.

Maybe

just

to

add

a

couple

of

words

to

Werner.

I

think

it

shows

that

Consumer

Health

is

in

just

an

extremely

attractive

business,

and

that's

why

we're

in

it.

And

obviously,

if

you

combine

that

then

with

the

performance

that's

at

the

forefront

of

the

industry,

then

it's

obvious

that

we

have

a

very,

very

strong

Consumer

Health

business

with

very

good

brands,

with

a

very

good

geographic

performance

and

also

a

very

solid

performance.

So

all

in

all,

I

think

it

just

confirms

that

this

is

the

right

industry

to

be

in,

and

that's

why we're

in

it.

[Oliver Maier, Head-Investor Relations, Bayer AG]

Pete,

I

think

that

covers

the

Consumer

Health.

Can

you

actually

ask

a

second

question

again

because

that

was

also

hard

to

understand?

[Peter Verdult, Analyst, Citigroup Global Markets Ltd.]

Sorry.

Despite

being

told

not

to

be

on

headset,

I

was

on

a

handset. Hopefully,

you

can

hear

me

clearly

now.

Second

question

was

just

to

Rodrigo.

Just

following

on

from

Vincent's

question.

You

talked

about

some

potential

headwinds

in

terms

of

competitive

supply

and

regulatory.

You

had

similar

headwinds

last

year.

I

think

you

quantified

them.

I

think

you

lost

a

corn

license.

You

had

a

regulatory

withdrawal

in

Europe,

and

you

had

the

plant

closure

in

Louisiana.

I

think

you

quantified

that

about

3%,

just

wanted

to

get

a

sense

from

Rodrigo,

if

some

of

those headwinds

come

to

pass,

what

sort

of quantification

are

we

thinking

about

in

terms

of

those

headwinds?

Thank

you.

[Rodrigo Santos]

Thank

you.

Thank

you on

that

one.

Let

me

say

this

upfront.

So

when

we

look

to

the

market,

similar

to

what

I

heard

from

the

entire

industry,

I

think

the

key

risk

that

we

foresee

is

global

supply.

I

think

that's

the

one

that

we

are

looking

very

close.

We

had

one

that

we

shared

with

you

that

about

glyphosate

was

a

marginal

one

to

the

full

year.

But

that's

the

one

that

I

think

that

we

are

looking

very

close.

We

are

monitoring.

It's

very

hard

to

anticipate

when

it comes

from

a

supplier

of

us.

But

that's

the

one

that

we

are

watching

closely,

right?

So

that's

probably

the

key

one

that

I

would

say

that

the

entire

industry

will

be

facing

this

year,

not

even

considering

the

geopolitical

situation

that

we

are

talking

a

little

bit

earlier

today.

On

the

regulatory

and

the

competitive

dynamics,

we're going

to

have

that

competitive

dynamics,

especially

in

soybean

in US

and

some

of

that

impact

also

in

terms

of

global

regulatory

that

we

have.

We

may

see

something

that –

but

I

would

say

that

if

I

would

highlight

the

one

that

we

are

looking

close

is

the

global

supply

that

I

just

mentioned.

[Peter Verdult, Analyst, Citigroup Global Markets Ltd.]

Thank

you.

[Oliver Maier, Head-Investor Relations, Bayer AG]

Thanks,

Pete.

[Operator]

The

next

question is

from

the

line

of

Michael

Leuchten

from

UBS.

Please

go

ahead.

[Michael Leuchten, Analyst, UBS AG (London Branch)]

Thank

you very

much.

Two

questions,

please.

One

clarification

question

for

Rodrigo.

You

were

saying

you

expect

most

of

the

growth

coming

from

pricing,

as

you

outlined

a

few

times

now.

How

much

of

the

price

have

you

taken

already

and

how

much

is

to

come

in

the

year?

And

then,

when

you

say

you

are

expecting

to

take

market

share,

but

you

don't

say

– you

don't

expect

volume

uptake.

How

does

that

work?

Is

that

minor

share

gains

that

you're

expecting,

hence,

volume

uptake

not

being

that

significant?

And then

a

question

for

Werner.

Looking

at

the

Annual

Report,

the

outstanding

glyphosate

cases

are

138,000.

When

we

started

this

process,

it

was

125,000

[ph]



clearly of a (00:44:28)

small

uptick

since

then.

I

was

just

wondering

whether

you

could

speak

to

the

dynamic

of

new

cases

coming

in

sort of

the

cadence

that

would

be

helpful.

Thank

you.

[Rodrigo Santos]

So

let me

go

to

the

second

part

of

your

question

about

Crop

Science

in

a

very

straightforward.

The

main

driver

of

growth

for

2022

is

pricing,

but

we

also

see

some

volume

gains

in

terms

of

market

share

for

corn

and

also

some

fungicide

expansion

that

we're

seeing,

particularly

in

LatAm

as

Fox

Xpro

and

the

new

launch

that

we

have.

But

the

main

driver

is

pricing,

let

me

go

to

the

first

part

of

your

question.

So,

we

are

taking

like

an

average

of

6%

to

7%,

a

global

average

price

increase

for

our

crop

protection

products,

excluding

glyphosate

and

also

our

corn

seeds

and

traits.

When

you

think

about

the

northern

hemisphere,

North

America

and

Europe,

that's

the

pricing

that

we

are

running,

the

campaigns

and we

are

implementing

as

well

for

the

tropical

areas,

more

Latin

America

and

APAC

that

will

come

on

the

second

part

of

the

year.

But

I

would

say

that

considering

all

the

innovation

that

we

are

bringing

to

the

market,

all

the

500

seed

deployments

that

we

are

putting in

the

market

this

year, I'm

confident

that

this

price

for

value

that

we

are

putting

in

the

market,

we're

going

to be

able

to

implement

and

execute

for

the

full

year.

[Werner Baumann]

All

right.

Thanks,

Rodrigo.

So

Michael,

to

your

question

on

glyphosate

cases.

Yeah,

as

of

February

1, we

have

about

138,000

cases.

The

case

count

increases

very,

very

slowly.

You

will

have

probably

seen

that

advertising

activity

has

come

down

substantially.

And

with

the

138,000

in

mind,

we

have

settled

107,000,

which

also

includes

the

cases

that

are

not

eligible,

because

they

don't

meet

the

criteria.

So

there's

a

remainder

of

roughly

30,000,

so

not

a

big

difference

compared

to

the

number

before.

And

just

to

make

sure

that

everybody

understands

what

the

dynamic

on

the

30,000 is,

we

decided

to

not

entertain

any

further

settlement

discussions

for

the

time

being

as

we

wait

for

the

recommendation

of

the

Solicitor

General

and

then

how

the

SCOTUS

review

further

unfolds.

So

there's

no

settlement

activity

at

this

point

in

time.

[Michael Leuchten, Analyst, UBS AG (London Branch)]

Thank

you.

[Oliver Maier, Head-Investor Relations, Bayer AG]

Thank

you,

Michael.

[Operator]

The

next

question

is

from

the

line

of

Sachin

Jain

from

Bank

of

America.

Please

go

ahead.

[Sachin Jain, Analyst, Bank of America]

Hi

there.

Sachin

Jain,

Bank

of

America. I've

got

two

follow-up

questions,

if

I

may,

both

fairly

straightforward, I

think.

First,

on

Kerendia,

obviously,

pointing

to

a

strong

launch.

Stefan,

do you

think you'd

be

a

top 15

product

in

2022

or

any

color

you

can

give

on

sales

structure

for

this

year?

And

then

secondly,

in

your

introductory

comment

cited

the

Factor

XI

Phase

III

decision

by

midyear,

I

just

had a

couple

of

clarification

questions

around this,

if

I

may.

Firstly,

given

you've

got

multiple

assets,

could

you

progress

more

than

one?

You

mentioned

potential

differentiation

on

achieving

efficacy

without

bleeding.

Do you

have

any

data

in-house

that

supports

that

as

yet?

And

then

you

mentioned

potential

of

this

to

be

best-in-class.

Why

do

you think

that's the

case?

Thank

you.

[Stefan Oelrich]

Okay.

Thank

you,

Sachin.

That's

a

long

two

questions.

So

Kerendia,

unfortunately,

I have

a

shorter

answer.

So

it's

a

little

early

to

tell

you

more

for

this

year.

We're

very

confident

with

the

uptake.

A

lot

is –

obviously,

holding

is –

standing

in

the

balance

of

increased

access

and

really

giving

everyone

an

opportunity

beyond

our

programs

that

support

patients

to

actually

be

fully

reimbursed

by

payers.

So

this

is

an

ongoing

effort

and

will

very

much

shape

our

sales

curve

for

this

year.

But

besides

that,

we're

very

optimistic

about

Kerendia.

Whether

it

makes

it

into

the

top

15

this

year

or

next

year

remains

to

be

seen

for

the

time

being.

On

Factor

XI,

so

I

don't

know

if

I

caught

all

of

the

gist

of

your

question,

but

let

me

try

to – if

I

heard

you

right,

first

one

was

whether

we're

looking

into

progressing

multiple

Factor

XI

opportunities

during

the

year

because

we

have

three

different

medicines

that

are

currently

in

Phase

II.

So

this

is

still

something

that

we're

discussing

because

we're

very

happy

with

what

we're

seeing,

especially

on

our

oral

program.

So

obviously,

we're

only

going

to

be

launching

a

Phase

III

into

the

injectables,

if

the

profile

of

our oral

cannot

reach

certain

patients

that

would

also

benefit

from

an

injectable.

So

–

but

we're

very

pleased

with

what

we're

seeing.

You

know

that

I

can't

give

you

much

more

before

we

publish

this

at

a

scientific

meeting,

which

is

foreseen

in

the

–

at

the

American

College

of

Cardiology

that's

upcoming.

And

we've

obviously

taken

a

look

at

some

of

what

our

competitors

have

shown.

And

so

we

have

our

data

on

file,

and

that

makes

us

quite

optimistic

across

the

different

indications

that

we

intend

to

pursue

and

what

we've

seen

so

far.

So

I

think

we

have

a

strong

contender,

which

speaks

to

the

experience

of

our organization

in

developing

anticoagulants.

I

mean,

let's

not

forget

that

we

designed

those

programs

that

made

Xarelto

what

it

is

today.

[Sachin Jain, Analyst, Bank of America]

Thank

you very

much.

[Oliver Maier, Head-Investor Relations, Bayer AG]

Thanks, Sachin.

[Operator]

The

next question

is

from

the

line

of

James

Quigley

from

Morgan

Stanley.

Please

go

ahead.

[James P. Quigley, Analyst, Morgan Stanley & Co. International Plc]

Hello and thanks

for taking

my

questions.

Just

one

on

the

guidance,

one

on the

pharma

margins.

So

on

the

guidance,

when

I

work

through

on

a

divisional

basis,

it

makes

the

group

margin

looked

a

little

bit

conservative.

So

we're

working

through

on

the

divisions,

that

suggests

around

– about

a

26.5%

margin

[ph]



– was it a (00:50:47)

26%

margin

for

the

group.

Is

that

taking

a

little

bit

of

conservatism?

Or

is

there

something

that

I'm

missing

when

doing

that

calculation?

And

on

the

pharma

margin,

about

50

basis

points

or

so

increase

in

2022

as

you

continue

to

invest

for

growth.

But

how

long

are

you

–

how

far

or how long

are

you

with

that

investment?

Should

we

expect

the

margin

to

start

to

slowly

increase

from

here?

Or

is

a

lot

of

the

costs

already

in

the

base,

giving

potential

from

2023

onwards

to

show

greater

[ph]



gross (00:51:27)

margin

expansion?

Thanks.

[Wolfgang U. Nickl]

Yeah,

James,

this

is

Wolfgang.

Let

me

do

the

group

one

and

then

Stefan

will

do

the

pharma

one.

You're

right.

I

mean,

we're

talking

about

rounding

here.

I

mean

we

said

€12

billion

EBITDA

and

€46

billion.

If

you

do

the

exact

math,

it's

€26.1

billion.

We

had

around

€26 billion,

so

it

could

be

a little

bit

less,

could

be

a

little bit

right.

And

if

you

would

go

exactly

to

the

midpoint

of

everything,

and

that

appears

to

be

the

math

that

you

have

just

done,

you

would

be

above

the

€26.1

billion.

So

we'll

find

out

at

the

end

of

the

year whether

it

was

conservative

or

not.

But

at

this

point,

we

believe

it's

around

26%.

[Stefan Oelrich]

Thanks.

On

the

pharma

margin,

so first

of

all,

I

know

that

you

probably

know

this,

but

there

are

a

lot

of

moving

parts

here

in

terms

of

our

full

year

accounting

of

launch

investments

plus

also

a

shift

of

resources

towards

R&D.

Just

be

reminded

of

some

of

the

acquisitions

that

we

did

that

need

to

be

all

digested

inside

of

our

R&D

line.

So

despite

of

all

of

this,

with

some

of

the

savings

programs

that

we

have

and

tightening

our

belt,

we're

getting

to

the

32%

guidance.

This

is

what

we

had

also

given

in

our

midterm

guidance,

and

we

stand

by

that.

[Operator]

Mr. Quigley,

have

you

finished

your

question?

[James P. Quigley, Analyst, Morgan Stanley & Co. International Plc]

Yes.

Thank

you.

[Operator]

The

next question

is

from

the

line

of

Tony

Jones

from

Redburn.

Please

go

ahead.

[Tony Jones, Analyst, Redburn (Europe) Ltd.]

Good

afternoon

everybody.

Thanks

for

taking

my

questions.

I've

got

two,

both

for

Wolfgang,

I

think.

Could

you

quantify

the

EBITDA

impacts

from

supply

chain

disruption

and

cost

inflation

last

year?

And

maybe

give

any

indication

where

you

think

that

will

be

recurring

at

a similar

level

in

this

current

year.

And

then

the

higher

reconciliation

charge,

the €500

million

to

€600

million,

is

that

a

recurring

new

level?

Or

is

that

just

a

one-off

higher

charge

in

the

current

year?

Thank

you.

[Wolfgang U. Nickl]

Yeah.

Thanks

a

lot.

So

on

the

EBITDA

margin

for

last

year,

you

will

recall,

there

were

several

effects.

One

was

the

catch-up

on

STI

and

one

was

currency.

One

was

indeed

the

investments

that

Stefan

just

mentioned

into

growth

in

R&D.

And

then

there

were

inflationary

trends.

We

have

not

spelled

them

out,

and

I

don't

think

we

will

spell

them

out.

But

I

can

tell

you,

if

I

look

at

– I

gave

you

the

little

example

on

ocean

freight,

I

mean,

active

ingredients

and

energy

would

be

other

elements.

But

I

can

probably

give

you

this

much

in

a

division

like

Crop

Science

with

high

[ph]



COGS (00:54:32).

We're

talking

several

hundred

million

euros.

So

it's

quite

substantial.

And

of

course,

Rodrigo,

just

as

Stefan,

just

as

Heiko,

will

do

their

utmost

to

see

what

they

can

factor

into

the

pricing

and

offset

with

other

efficiencies.

That's

very

clear.

As

it

relates

to

the

supply

chain

issues

we

had

last

year,

you

will

probably

see

by

our

growth

numbers

that

they

have

not

held

us

back

super

significantly.

But

in

the

Crop

Science

case,

I

think

that's

probably

the

most

prominent.

We

could

have

sold

significantly

more

had

we

not

had

the

Ida

effect

in

Luling.

Reconciliation,

we're

at

€488

million

last

year.

And

as

a

reminder

for

everybody,

that's

kind

of

the

central

cost

that

we

don't

really

have

an

appropriate

key

to

allocate

to

the

divisions.

It's

a

bit

volatile, because

there

are

also

STI

and

LTI

normalizations

in

there.

But

the

fact

that

we

are

a

little

bit

up

in

2022

stems

from

two

main

reasons.

Number

one,

we

are

starting

the

upgrade

of

our

ERP

systems.

And

this

is

a very

general

work,

so

it's

not

specific

to

a

division.

So

we

put

it

in

reconciliation.

The

second

thing

is

you

can

imagine

that

the

company

of

our

size

pays

quite

a

bit

in

insurance

premiums.

And

we

have

seen

that

market

much

like

every

other

company

going

up

in

prices

quite

significantly.

And

that

would

be

the

second

one.

So

for

now,

again,

there

are

a

couple

of

moving

parts

in

there.

I

would

hope

that

we

would

keep

it

lower

than

that

going

forward.

But

right

now,

we'll

be

with

2022, and

we'll

update

you

on

the

time

after that in

due

course.

I

hope

that

answers...

[Tony Jones, Analyst, Redburn (Europe) Ltd.]

Thank

you.

That's

very

helpful.

Yeah,

thank

you.

[Wolfgang U. Nickl]

Welcome.

[Oliver Maier, Head-Investor Relations, Bayer AG]

Thank

you,

Tony.

[Operator]

Next

question

is

from

the

line

of

Richard

Vosser

from

JPMorgan.

Please

go

ahead.

[Richard Vosser, Analyst, JPMorgan Securities Plc]

Hi.

Thanks

for

taking my

questions.

Just

a

question

on

those

inflationary

cost

pressures.

Obviously,

we

can

see

energy

prices

going

up

in

the

geopolitical

uncertainty. So

just

could

you

just

talk

about

what

access

you

have

to

long-term

contracts,

how

long

they

are;

and

how

you

have

thought

about

this

or

–

and

the

changes

to

those

in

your

guidance?

Second

question,

just

come

back

to

those

glyphosate

numbers

in

terms

of

the

case

increases,

obviously,

a

very

low

case

increase.

Is

that

in

line

with

the

expectations

you

have

for

provisioning?

And

do

you

continue

to

see

the

case

volume

going

down?

So

just

some

thoughts

about

that

provisioning

and

just

give

us

some

idea

there.

Thanks

very much.

[audio gap]

[Werner Baumann]

(00:57:32-00:57:39)

this

is actually

very

difficult

to

answer

in

general.

But

we

have

a

number

of

long-term

contracts.

Actually

something

that

is

coming

in

very

handy

when

you

look

at

that

massive

inflation

that

we

see

and

cost

pressure

on

the

energy

supplies.

The

fact

that

by

now,

we

have

long-term

contracts

for

roughly

25%

of

our

energy

builds

in

renewables

helped

substantially

to

kind

of

curb

the

cost

increases.

Secondly,

if

we

talk

about,

generally,

about

our

energy

footprint

and

with

that,

that

significant

cost

increase

that

you

see

a

lot of

other

people

talk

about,

at

our

end,

we

are

not

that

energy

intense

a

business

anymore.

And

overall,

our

energy

costs

here,

which

includes

[ph]



SEM (00:58:32)

and

a

few

other

things

already,

it's

about

€0.5

billion.

So

on

a

€44

billion,

€46

billion

top

line,

we

will

see

increases,

of

course,

but

we

assume

that

we

will

be

able

to

absorb.

And

as

Rodrigo

and

Heiko

have

already

talked

about,

we

are

also

in

a

strong

position

when

it

comes

to

pricing

due

to

the

inflationary

tendencies

that

we

see

all over

the

place,

and

we

will

roll

that

over

very

aggressively.

Now,

there

are

other

areas

where,

let's

say,

the

task

at

hand

is

different.

Even

with

higher

costs

that

is

coming

to

us,

the

name

of

the

game

is

securing

supply.

So

Rodrigo

talked

about

it

earlier.

We

see

ultra-stretched

supply

chains,

with

very,

very

high

risk

of

default.

And

that

is

what

we

are

managing

in

order

to

make

sure

that

we

can

produce

and

supply,

which

is

currently

the

focus,

and

that's

what

our

procurement

organization

is

working

on.

The

second

thing,

on

the

case

increases,

well,

we've

just

closed

the

books.

The

books

have

been

audited.

And

the

provisions

have

passed

the

test

of

being

appropriate.

So

there's

no

significant

move

one

way

or

the

other

that

would

inform

our

view

on

the

appropriateness

or

non-appropriateness

for

this

argument

of

the

status

of

our

provisions.

So

we

are

very

preserved

for

the

set

of

futures,

but

also

the

current

that

have

entered

our

[indiscernible]

(01:00:19),

so

no

change.

[Richard Vosser, Analyst, JPMorgan Securities Plc]

Thanks,

Werner.

[Oliver Maier, Head-Investor Relations, Bayer AG]

Thank

you,

Richard.

[Operator]

The

next

question

is

from

the

line

of

Sebastian

Bray

from

Berenberg.

Please

go

ahead.

[Sebastian Bray]

Hello

and

thank

you

for

taking

my

questions.

I

would

have

two,

please.

The

first

is

just

on

the

driving

forces

behind

the

guidance

within

Crop

Sciences.

And

I'm

particularly

thinking

about

what

has

happened

since

Monsanto

was

bought.

Am

I

right

in

saying

that

negative

FX

effects

have

removed

roughly

€1

billion

of

EBITDA

in

euro

terms

since

late

2018

from

Crop

Sciences?

And

to

the

earlier

points

about

the

competitive

dynamic

in

soybean,

if

we

were

to

return

to

an

FX

environment

that

were

similar

to

2018,

does

all

of

this

come

back,

or some

been

sacrificed

to

drive

market

share

gains?

My

second

question

is

on

working

capital.

Can

you

just

give

a

reminder

of

what

typically

you

carry

as

a

percentage

of

sales

growth

for

Crop

Sciences

and

Pharma,

is

it

about

20%

to

25%?

Thank

you.

[Werner Baumann]

All

right.

Sebastian,

the

first

piece

is

going to

be

answered

by

Rodrigo

and

then

Wolfgang

will

take

your

second

question

on

working

capital.

[Rodrigo Santos]

So

let

me address

the

first

piece.

So

I

think

that

we

are

taking

advantage

of

our

full

portfolio

to

the

market.

We

just

announced

recently

our

pipeline

review

when

we

advanced

like

500

seed

deployments,

but

at

the

same

time,

more

than

300

product

registration

on

crop

protection.

That's

why

I

mentioned

about –

when

we

think

about

crop

protection,

we

have

a

price

increase

similar

to

what

we

have

in

corn

seeds

and

traits

around

6%

to

7%

as

an

average

globally.

There

are

places

that

we

have

in

double-digit

price

and

some

other

regions

different.

But

we

are

taking

full

advantage

of

our

entire

portfolio

to

drive

the

growth

that

we

are

seeing

this

year.

I

think

that's

one

piece.

On

soybeans

here.

So

let

me

divide

the

soybean

discussion

here.

So

one

is

in

South

America,

in

Brazil,

we

just

launched

Intacta

2

Xtend

with

800,000

acres.

We

are

seeing

to

an

increase

to

a

6

million

thousand (sic) [6 million] (01:02:38)

acres.

We

have

a

5%

price

increase.

So

we

are

seeing

great

dynamics

again

in

Brazil.

In

US,

it's

more

a

competitive

market,

and

we're

going

to be

competing

in

the

market

as

we

had

last

year.

I

think

that

the

launch

of

XtendFlex

with

16

million

acres

was

very

important

for

us.

We

defend

our

number

one

position

on

the

weed

control

in

North

America.

We're

going

to

continue to

do

that

for

this

year.

So

overall,

when

I

think

about

the

growth

that

we

have

for

2022, I

think

we

are

taking

advantage

of

our

full

portfolio.

We

are

maximizing

the

opportunities

where

we

see

the

opportunity

and

minimizing

the

risk

that

we

were

talking

before.

So

that's

a

little

bit

of

my

overview

on

the

Crop

Science. I

hope

that

answer

your question.

[Wolfgang U. Nickl]

And

now,

Sebastian,

I'll

go

into

the

working

capital

thing,

and

I'll do

it

more

from

a

corporate

perspective.

First

of

all,

we're

quite

pleased

with

what

all

the

teams

have

done

last

year.

Our

free

cash

flow

was

significantly

better

than

what

we

had

forecasted.

For

the

total

company,

the

working

capital

to

sales

ratio

came

somewhere

from

37%

to

like

34%.

I

think

it's

important

when

you

look

at

this

for

crop

in

particular,

that

you

also

take

the

prepays

in

consideration,

because

your

traditional

receivables,

inventory

and

payables

won't

do

the

trick

because

we

always

have

very

significant

prepays

there.

And

if

you

take

that

into

consideration,

it's

around

the

corporate

average.

I

hope

that

helps

you

with

your

question,

Sebastian.

[Sebastian Bray]

Yes,

indeed.

Thank

you

for

taking

my

question.

[Wolfgang U. Nickl]

You're

welcome.

[Oliver Maier, Head-Investor Relations, Bayer AG]

Thank

you,

Sebastian.

[Operator]

The

next

question

is

from

the

line

of

Jo

Walton

from

Credit

Suisse.

Please

go

ahead.

[Jo Walton, Analyst, Credit Suisse Securities (Europe) Ltd.]

Thank

you.

Two

questions.

Firstly,

I

wonder

if

you

could

tell

us

a

little

bit

more

about

the

impact

of

your

business

in

Russia

and

Ukraine.

If

the

situation

stays

as

it

is,

and

it's

obviously

very

difficult

to

get

things

in

and

out

of

Ukraine

and

Russia

with

sanctions,

could

you

just

give

us

some

sense

of

what

the

impact

could

be

on

your

business?

And

on

a

Pharma

question, Eylea

is

obviously

doing

extremely

well.

And

you're

telling

us

that

part

of

this

is

the

launch

of

the

prefilled

syringes.

We've

recently

had

the

two-year

data

in

from

faricimab.

I

wonder

if

you

could

tell

us

how

you

feel

Eylea,

particularly

perhaps

the

8-milligram

Eylea

would

compete

with

that

two-year

data

on

faricimab?

And

therefore,

how

long

we

can

expect

to

see

Eylea

continue

to

grow

ignoring

anything

to

do

with

patent

expiries?

Many

thanks.

[audio gap]

(01:05:17-01:05:30)

[Operator]

Hello,

Mr. Maier.

Can

you

hear

us?

[audio gap]

[Werner Baumann]

(01:05:35) and

catering

to

the

most –

let's

say,

the

most

fundamental

needs

all

of

us

have

and

that

is

access

to

food,

and

access

to

your

health

and

health

supplies.

So

with

that,

currently,

there

are

no

limitations

when

it

comes

to

sanctions.

We,

of

course,

will

be

subjected

to

the

mandate

of

politics.

And

we

will

adhere

and

cater

to

those.

But

as

we

speak,

I

think

all

of

the

sanctions

are

designed

to

hit

those

in

power

and

to

protect

those

who

suffer

from

the

situation

most.

And

this

is

actually

the

civil

population.

And

our

products

are

the

ones

that

we

have

to

continue

to

make

available

to

these

people

because

a

lot

of them

are

kind

of

on

our

medicines.

And

they

need

to

have

access

to

it

and

they'll

go

out

of

our

way

in

order

to

provide

it.

Secondly,

the

overall

situation

in

Ukraine

and

Russia,

of

course,

continues

to

change

by

the

hour.

We

have

strong

crisis

management

resources

and

teams

that

report

to

the

board

on

the

topic

when

it

comes

to

supply,

when

it

comes

to

ensuring

that

we

have

logistics.

And

transport

is

one

of

the

bigger

challenges

right

now.

And

then

first

things

first.

First

things

are

that

we

take

care

of

our

own

people

in

these

countries.

And

there

are

some

very,

very

basic

needs

people

have

right

now.

One

is

access

to

safe

housing

between

shelter

that

we

are organizing

and

providing

also,

with

a

lot

of

private

initiatives

of

our

people

on

the

ground.

And

secondly,

as

you've

seen

the

pictures

in

the

news,

that

people

can't

get

a

hold

of

cash. We

are

providing

our

people

in

Ukraine

with

advanced

cash

payments

so

that

they

get

by

with,

let's

say,

the

most

urgent

needs

that

they

have

locally.

And

the

rest

of

it,

we

have

to

play

it

by

the

hour

really.

[Stefan Oelrich]

Hi

Jo,

Stefan

here.

So

thanks

for

your

question

on

Eylea.

Glad

to

see

that

you're

following

this

closely

and

especially

our

very,

very

positive

growth

momentum

that

we're

seeing.

So

yeah,

we're

following

up

on

–

obviously,

also

on

what's

happening

in

terms

of

clinical

data

from

faricimab,

I

think

this

looks

good,

and

they're

catching

up

to

us.

I

mean,

we're

already

at

the

given

doses

have

a

four-month

dosing

interval

and

with

our

treatment

treat

and

extend.

So

they're

catching

up

to

that

now

with

what

they

have.

I

think

we're

always

one

step

ahead

up

to

now.

So

in

terms

of

growth,

that's

indeed

a

topic

we

will

have

to

address

in

terms

of

also

peak

sales

that

we

can

achieve

with

Eylea

moving

forward,

because

we're

impressed

by

how

solid

Eylea

is.

And

so,

I

would

think

that

we

can

expect

continued

growth

in

the

coming

years,

only

impeded

by

loss

of

exclusivity

that

will

occur

around

2025.

[Operator]

The

next

question is

from

the

line

of

Marcus

Friedrichs (sic) [Falko Friedrichs].

Please

go

ahead.

[Falko Friedrichs, Analyst, Deutsche Bank AG]

Hello.

It's

Falko

Friedrichs

from

Deutsche

Bank

and

thanks

for

taking

my

questions.

I

also

have

two,

please.

The

first

one

is

going

back

to

your

Crop

Science

guidance.

So

taking

the

7%

organic

growth

that

you're

pointing

out,

you

mentioned

it

several

times

on

this

call

that

the

majority

of

this

should

be

price.

So

is

it

fair

for

us

to

assume

that

the

split

is

roughly

5%

price

and

2%

volume

in

2022?

And

if

that

is

correct,

I

still

don't

fully

understand

why

the

volume

growth

shouldn't

be

bigger

this

year.

And

that's

my

first

question.

And

then

the

second

one

is

on

pharma.

You

mentioned

that

the

volume

growth

for

Xarelto

should

largely

offset

the

VBP

impact.

So,

is

it

a

fair

assumption

to

assume

low-single-digit

growth

for

the

drug

in

2022?

Thank

you.

[Rodrigo Santos]

So

let me

address

first

the

question

here

on

that.

Yeah,

you

fair

to

say

that

you

reinforce

the

point

that

I

made,

yeah,

the

main

driver

of

our

growth

is

pricing

that

we

see

that.

Some

of

the

volume

gain

that

we

have

in

corn

that

I

mentioned,

especially

in

gaining

market

share

and

also

the

expansion

of

fungicides.

You

also

have

some

of

the

downside

including

on

the

plan

in

terms

of

the

cost

increase

and

some

other elements

of

that

equation.

But

overall,

I

would

say

that

the

far

majority

of

that

price

– of

the

growth

that

we

have

for 2023

is

pricing.

Half

of

that

coming

from

the

herbicide line

and

half

of

that

coming

from,

mainly

all

the

other

crop

protection

products

and

the

corn,

that's

right.

That's

right.

[Stefan Oelrich]

Yeah.

Thank

you

for

your

question.

On

Xarelto,

Marcus (sic) [Falko],

I

think

it's

important

that

I

give

you

more

color

on

this

one.

So

we

did

manage

to

compensate

in

2021,

the

price

decreases

by

increased

volumes.

For

2022,

given

that

we

have

a

full

year

of

VBP

impact

in

China,

this

is

going

to

be

much,

much

harder.

So

what

we

do

expect,

given

the

importance of

China

that

for

this

year,

we

may be

facing

a

slight

decrease

even

in

Xarelto

in

2022.

We're

obviously

following

this

closely,

because

Europe

continues

to

be

strong,

but

we're

now

seeing

first

impact,

especially

through

China.

So

2022

is

a

tough

year

for

us.

[Falko Friedrichs, Analyst, Deutsche Bank AG]

Okay.

And

a

brief

follow-up

for

Rodrigo,

if

I

may.

Does

your

guidance

assume

that

you're

winning

market

share

in

corn,

but

losing

market

share

in

soy

in

2022?

[Rodrigo Santos]

No,

we

are

gaining

market

share

in

corn.

We

are

not

assuming

that

in

soybean.

I

think

that

we

are

not

considering

a

significant

expansion

in

soybean.

That's

fair

to

say.

When

we

think

about

the

volumes

that

we

plan

and

especially

for

North

America

different

from

what

I

mentioned

about

South

America,

right?

So

we

always

talk

about

soybean,

I

want

to

split

that

equation.

In

South

America,

we

are

seeing

a

significant

expansion

of

the

Intacta

2

Xtend

platform.

We're

seeing

great

momentum and we're

going

to

continue to

seeing

momentum.

On

the

US

market,

we

are

a

more

competitive

environment

that

we

are

not

planning

a

significant

expansion

on

the

plans.

[Falko Friedrichs, Analyst, Deutsche Bank AG]

Okay.

Thank

you.

[Oliver Maier, Head-Investor Relations, Bayer AG]

Thank

you,

Rodrigo.

[Operator]

Ladies

and

gentlemen,

we

kindly

ask

you

for

your

understanding

that

we

have

to

close

this

call

now

due

to

time

contracts. Excuse

me,

Mr. Maier,

please

continue

with

any

other

points

you

wish

to

raise.

[Oliver Maier, Head-Investor Relations, Bayer AG]

Right.

Thank

you

so

much,

Nairobi.

Much

appreciated,

and

thanks

to

all

for

your

time

today

and

the

attention.

Greatly

appreciate

it.

And

this

closes

our

call

for

today.

Stay

safe,

and

we

talk

soon.

Thank

you

so

much.

[Operator]

Ladies

and

gentlemen,

this

concludes

the

full

year

and

fourth

quarter

2021 investor

and

analyst

conference

call

of

Bayer

AG.

Thank

you

for

participating.

You

may

now

disconnect.