Performance Indicators

Economic indicators


Business sustainability	Net sales by subgroup and segment
Income taxes

Business sustainability

The significant increase in sales in fiscal 2006 was primarily due to the acquisition of Schering, Berlin, Germany. 2006 was also a particularly successful year in terms of after-tax income, with a 14.1 percent return on stockholders’ equity. Moreover, important parameters for mid- and long-term business sustainability, such as personnel expenses and pension obligations, remained at a constant and healthy level. As a result of the Schering acquisition, net debt increased to €17.5 billion. However, despite the purchase price of approximately €17 billion for Schering, net debt rose by only €12 billion from the previous year.

Economic indicators (in € million)

	2002	2003	2004	2005	2006
Net sales	29,624	28,567	23,278	24,701	28,956
Sales outside Germany	86.4 %	85.8 %	86.9 %	84.4 %	84.4 %
Income (loss) before income taxes	956	-1,994	1,222	1,912	1,980
Income (loss) after taxes	1,063	-1,349	682	1,595	1,695
Return on stockholders’ equity	6.5 %	-9.7 %	6.1 %	14.4 %	14.1 %
Personnel expenses of which pension expenses	8,176 544	7,906 531	6,026 771	5,318 1,009	6,630 1,414
Pension obligations*	13,375	14,192	15,025	15,561	16,708
Net debt	8,861	5,952	5,422	5,494	17,539

Figures for 2002 – 2004 as reported, 2005 figures restated (continuing operations).

present value of the defined benefit obligation for pensions and other post-employment benefits

Income taxes

Included under income taxes are those paid or accrued in the individual countries, plus deferred taxes. The reduction in tax expense was principally due to the first-time recognition of deferred tax assets on loss carryforwards relating to structural changes in the Bayer Group, which were agreed with the relevant tax authorities.

Bayer Group income taxes (in € million)

Net sales by subgroup and segment

The rise in sales in fiscal 2006 due the Schering acquisition also contributed to substantial growth at Bayer HealthCare. This subgroup’s sales from continuing operations grew by €3.7 billion (+46.6 percent) in 2006. The marked rise in the relative importance of the Pharmaceuticals segment was also attributable to the Schering acquisition and made Bayer HealthCare the largest subgroup in terms of sales. Following the Schering acquisition the pharmaceuticals business also gained significantly in importance for Bayer HealthCare, accounting for about two thirds of subgroup sales, compared to one half in 2005. Bayer HealthCare’s stronger position did not mean, however, that this subgroup dominated the Bayer Group as a whole.

Net sales by subgroup and segment (in € million)

	2005*	2005 Anteil am Konzern	2006*	2006 Anteil am Konzern
HealthCare	7,996	32	11,724	40
Pharmaceuticals	4,067	16	7,478	26
Consumer Health	3,929	16	4,246	14
CropScience	5,896	24	5,700	20
Crop Protection	4,874	20	4,644	16
Environmental Science/BioScience	1,022	4	1,056	4
MaterialScience	9,446	38	10,161	35
Materials	2,837	11	2,925	10
Systems	6,609	27	7,236	25
Reconciliation	1,363	6	1,371	5
Group	24,701	100	28,956	100

continuing operations

In 2006, the Bayer Group invested a total of €2,297 million in research and development (compared with €1,729 million for continuing operations in 2005). Of this amount, Bayer HealthCare accounted for 62 percent, Bayer CropScience for 27 percent and Bayer MaterialScience for 10 percent. Here, too, the increase at Bayer HealthCare is largely attributable to the acquisition of Schering.

Research and development expenses (in € million)