Management Report
Management Report

4.5 Liquidity and Capital Expenditures of the ­Bayer Group

Bayer Group Summary Statements of Cash Flows[Table 3.19]
 20092010
 € million€ million
Gross cash flow *4,658 4,771
Changes in working capital/other non-cash items717 1,002
Net cash provided by (used in) operating activities (net cash flow)5,375 5,773
Net cash provided by (used in) investing activities(1,501) (2,414)
Net cash provided by (used in) financing activities(3,246) (3,230)
Change in cash and cash equivalents due to business activities628 129
Cash and cash equivalents at beginning of period2,094 2,725
Change due to exchange rate movements and to changes in scope of consolidation3 (14)
Cash and cash equivalents at end of period2,725 2,840

2009 figures restated

* Gross cash flow = income after taxes, plus income taxes, plus non-operating result, minus income taxes paid or accrued, plus depreciation, amortization and impairment losses, minus impairment loss reversals, plus/minus changes in pension provisions, minus gains/plus losses on retirements of noncurrent assets, minus gains from the remeasurement of already held assets in step acquisitions. The change in pension provisions includes the elimination of non-cash components of the operating result (EBIT). It also contains benefit payments during the year.

Operating cash flow

Gross cash flow rose by 2.4% in 2010 to €4,771 million (2009: €4,658 million). It improved significantly at MaterialScience due to the growth in business, but declined markedly at HealthCare and CropScience, partly due to higher litigation-related expenses. We reduced funds tied up in working capital by a substantial €1.0 billion. Net cash flow of the Group rose by 7.4% to €5,773 million (2009: €5,375 million). Net cash flow reflected income tax payments of €838 million (2009: €500 million).

Investing cash flow

Net cash outflow for investing activities in 2010 totaled €2,414 million (2009: €1,501 million). Cash outflows for property, plant and equipment and intangible assets were 3.9% lower at €1,514 million (2009: €1,575 million). Of this amount, HealthCare accounted for €573 million (2009: €528 million), CropScience for €302 million (2009: €341 million) and MaterialScience for €498 million (2009: €504 million). These outflows included expenditures for the expansion of our polymers production site in Shanghai, China, and our production capacities in Berkeley, California, United States, as well as expenses related to a licensing and development agreement in the area of aesthetic dermatology and a strategic alliance in the field of cancer research. The €31 million in cash outflows for acquisitions included MaterialScience’s purchase of Artificial Muscle, Inc., United States, in March 2010. The cash outflows for acquisitions in the previous year came to €308 million. Among the cash inflows in 2010 were €101 million (2009: €70 million) from divestitures and €53 million (2009: €56 million) in interest and dividends received. The increase in cash outflows for current financial assets mainly resulted from €623 million (2009: €11 million) in monetary investments on the capital market.
The principal strategically relevant capital expenditures for property, plant and equipment in the operating segments of the Bayer Group in 2010 and 2009 are listed in the following table:
Capital Expenditures for Property, Plant and Equipment[Table 3.20]
SegmentDescription
Capital expenditures 2010 
Pharmaceuticals







Expansion of production capacities for new Kogenate™ formulations in Berkeley, California, U.S.A.
Installation of packaging capacities for the YAZ™ product family, Berlin, Germany
Capacity expansion for contrast media, Bergkamen, Germany
Consumer Health

Expansion of production and packaging capacities for vitamin tablets, Myerstown, Pennsylvania, U.S.A.
Crop Protection




Expansion of production capacity for fungicides in Kansas City, Missouri, U.S.A.and Dormagen, Germany
Capacity expansions for insecticidal active ingredients in Dormagen, Germany
Environmental Science,
BioScience




Expansion of research facilities in Nunhem, Netherlands
Extension to a research laboratory in Ghent, Belgium
Capacity expansion for the production of vegetable seeds in Parma, Idaho, U.S.A.
MaterialScience







Construction of a "world-scale" TDI production complex in Shanghai, China
MakroColor production plant in Noida, India
Construction of a polyurethanes systems house in Moscow, Russia
Installation of an NaCl electrolyzer with an oxygen depolarized cathode for demonstration purposes in Uerdingen, Germany

Capital expenditures 2009

Pharmaceuticals










Expansion of the production facility for contrast agents in Bergkamen, Germany
Expansion and modernization of the Kogenate™ facility in Berkeley, California, U.S.A.
Expansion of production capacities for the YAZ™ product family in Berlin, Germany
Expansion of production capacity in Jakarta, Indonesia
Consumer Health




Expansion of the production facility for vitamins in Myerstown, Pennsylvania, U.S.A.
Construction of a new distribution center in Lerma, Mexico, to consolidate storage capacities existing in different parts of Mexico
Crop Protection













Capacity expansions for herbicidal active ingredients in Frankfurt am Main and Knapsack, Germany, and Muskegon, Michigan, U.S.A.
Expansion of production capacity for fungicides in Dormagen, Germany and Kansas City, Missouri, U.S.A.
Expansion of production capacity for high-activity herbicides in Dormagen, Germany and Kansas City, Missouri, U.S.A.
Expansion of formulating capacity for non-herbicides in Belford Roxo, Brazil
Expansion of production capacity for fungicides in Muttenz, Switzerland
Environmental Science,
BioScience


Capacity expansion for the production of vegetable seeds in Parma, Idaho, U.S.A.
Extension to a BioScience research laboratory in Ghent, Belgium
MaterialScience













Construction of a "world-scale" TDI production complex in Shanghai, China
Production facility for polyisocyanates in Ankleshwar, India
Roll-to-roll coating line in Leverkusen, Germany
Construction of a systems house in Guangzhou, China
Nitrous oxide reduction unit at the nitric acid production facility in Dormagen, Germany
Construction of a pilot plant for carbon nanotubes in Leverkusen, Germany
EcoCommercial Building in Noida, India

Financing cash flow

Net cash outflow for financing activities in 2010 amounted to €3,230 million (2009: €3,246 million), including net loan repayments of €1,544 million (2009: €1,442 million). Net interest payments were 34.1% lower at €517 million (2009: €785 million), partly due to the reduction in financial debt. There was a €1,160 million outflow for “dividend payments and withholding tax on dividends” (2009: €973 million).

Liquid assets and net financial debt

Net Financial Debt[Table 3.21]
 Dec. 31, 2009Dec. 31, 2010
 € million€ million
Bonds and notes/promissory notes8,301 8,209
of which hybrid bond1,267 1,303
Liabilities to banks3,251 2,271
Liabilities under finance leases550 562
Liabilities from derivatives578 529
Other financial liabilities178 196
Positive fair values of hedges of recorded transactions(426) (331)
Financial debt12,432 11,436
Cash and cash equivalents(2,725) (2,840)
Current financial assets(16) (679)
Net financial debt9,691 7,917
Net financial debt of the Bayer Group declined substantially in 2010, from €9.7 billion to €7.9 billion (-18.3%). This was attributable to cash inflows from operating activities, while negative currency effects came to €0.5 billion. As of December 31, 2010 the Group had cash and cash equivalents of €2.8 billion (2009: €2.7 billion). Financial liabilities amounted to €11.4 billion (2009: €12.4 billion), including the €1.3 billion subordinated hybrid bond issued in July 2005. Net financial debt should be viewed against the fact that Moody’s and Standard & Poor’s treat 75% and 50%, respectively, of the hybrid bond as equity. Unlike conventional borrowings, the hybrid bond thus only has a limited effect on the Group’s rating-specific debt indicators. Our noncurrent financial liabilities declined in 2010 from €11.5 billion to €9.9 billion, while current financial liabilities rose from €1.5 billion to €1.9 billion.
Last updated: February 28, 2011

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