11.4 Sales and Earnings Forecast
The following forecasts are based on the business performance described in this report, taking into account the potential risks and opportunities.
The Bayer Group is confident for 2011. Provided that the economy continues to improve, we expect to see growth in sales and EBITDA before special items in all subgroups. For the full year 2011, we are targeting a currency- and portfolio-adjusted sales increase of between 4% and 6%. Based on our currency assumptions – including a rate of US$1.40 (2010 average: US$1.32) to the euro – we therefore expect to report Group sales of between €35 billion and €36 billion.
We aim to increase EBITDA before special items toward €7.5 billion. Core earnings per share (calculated as explained in Chapter 4.3
) are expected to improve by about 10%. We anticipate taking special charges of about €0.5 billion for ongoing restructuring programs.
We are planning capital expenditures of €1.5 billion for property, plant and equipment and €0.3 billion for intangible assets. Depreciation and amortization are expected to total about €2.5 billion, including €1.3 billion in amortization of intangible assets. We expect our research and development expenditures to match the record level of 2010 (€3.1 billion).
We can confirm our targets for 2012. If the economic environment remains positive, we continue to expect Bayer Group sales to grow by approximately 5% – after adjusting for currency and portfolio changes – in 2012. We plan to achieve EBITDA before special items in 2012 of approximately €8 billion and core earnings per share of around €5.
In 2011 HealthCare plans to increase sales by a low- to mid-single-digit percentage after adjusting for currency and portfolio effects and to achieve a small improvement in EBITDA before special items.
In the Pharmaceuticals segment, we do not yet expect sales to resume growing with the market in 2011. We plan to increase sales by a low- to mid-single-digit percentage after adjusting for currency and portfolio effects and to raise the EBITDA margin before special items.
In the Consumer Health segment, we anticipate above-market growth in sales after adjusting for currency and portfolio effects. We expect sales and EBITDA before special items to increase by mid-single-digit percentages.
In 2012 we aim to accelerate the pace of growth, especially in Pharmaceuticals, thanks to our new products and to improve EBITDA before special items in both HealthCare segments.
Following a difficult year in 2010, we now anticipate more favorable market conditions for CropScience and are therefore optimistic for 2011. We expect to improve sales in both CropScience segments on a currency- and portfolio-adjusted basis and to grow by at least a mid-single-digit percentage overall. We intend to further reinforce our market positions in Environmental Science, BioScience, and we expect to at least maintain our existing position in Crop Protection. We plan to expand EBITDA before special items at a higher rate than sales.
In 2012 we again aim to grow sales at least with the market and further improve EBITDA before special items.
We expect that the business environment for MaterialScience will continue to recover. Against this background we plan to raise sales in 2011 by a mid-single-digit percentage on a currency- and portfolio-adjusted basis, and to increase EBITDA before special items at a higher rate than sales.
We expect sales in the first quarter of 2011 to be roughly in line with the fourth quarter of 2010 on a currency- and portfolio-adjusted basis. Despite higher raw material prices, we expect EBITDA before special items in the first quarter of 2011 to exceed the level of the fourth quarter of 2010.
Provided that the market environment remains favorable, we plan to further increase sales and EBITDA before special items in 2012.
As the holding company for the Bayer Group, Bayer AG derives most of its income from its subsidiaries. Under profit and loss transfer agreements with the major operating subsidiaries in Germany, their earnings are transferred directly to Bayer AG. The positive expectations for the Group’s business development outlined above are also likely to be reflected in the earnings of Bayer AG. In addition, the net interest position should continue to improve in light of the reduction in financial debt. We therefore expect to maintain a level of after-tax income that allows the payment of an appropriate dividend.