lehman globalchemical 20040401 cropscience

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Lehman Brothers, April 1, 2004 Dr. Esmail Zirakparvar Slide 3

Bayer CropScience - a Strong Pillar after the Strategic Realignment of Bayer Group

New Bayer Group Target Structure excluding Lanxess and Plasma Activities

HealthCare

TO: € 8.3 bn

Animal Health

Biological Products

Consumer Care

Diagnostics

Pharmaceuticals

CropScience

TO: € 5.8 bn

Crop Protection

Environmental Science

BioScience

MaterialScience

TO: € 7.5 bn

Polyurethanes

Coating Raw Materials

Polycarbonates

Wolff Walsrode

H.C. Starck

Turnover approx. € 22 bn Employees approx. 93.000

38% 27% 35% % of TO

Basis: 2003 results


Significant Progress in 2003

Successful Management

of Integration

Maintained Business

Momentum

Gained Market Share




• Strong Euro Impact on EU-based Companies

• Upswing of Farm Economy due to Recovery of Commodity Prices& US Farm Bill

• Drought in Europe resulted in high Channel Inventories

• NAFTA Market benefited from a positive Cereals Herbicides and

Insecticides Campaign

• Brazil recovering from economical Crisis and benefiting from reduced

Channel Inventories in 2002

• Japanese Market suffers due to declining Rice Acreage and strong

Competition

Development of Global Markets

World Market Development 2003*: In US-$ + 5% In € - 12%

* Source: Cropnosis


0

50

100

150

200

250

300

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Recovery of Crop Commodity Prices in Key Crops

Soybean

Rice

Wheat

Corn

CottonIn US-Cents / lb

In US-$ / ton

Source: FAO, March 2004

2002 20032001




Crop Science Business Environment 2003(in € Million)

* Bayer CropScience Sales 2002 pro-forma, portfolio adjustedExchange Rate: 1 € = 2002: 0.945 US-$; 2003: 1.131 US-$Source: Cropnosis, Company Reports, Bayer CropScience Business Intelligence, March 2004

Conventional Crop Protection

Biotech & Seeds

Change to 2002*

(-11 %)

(-2 %)

(-10 %)

(-9 %)

(-8 %)

(+28 %)

(+11 %)

(-13 %)

(+8 %)


Bayer CropScience Gained Market Share in 2003

2002 Pro-Forma 2003

In Bn. $In Bn. €

Source: Cropnosis Fcst. November 2003Sales 2002 12+12 pro-forma Portfolio adjustedExchange Rate: 1 € = US $ 0.945 in 2002; US-$ 1.13 in 2003Figures Rounded

24.828.2

5.9 5.8

2002 Pro-Forma 2003

27.826.6

6.55.5

-12%

-2%

+5%

+17%

Agrochemical Market excl. Biotech / Seeds

Bayer CropScience Sales




Sales 2003: € 5,764 Mio.

BioScience € 271 Mio.

Solid Growth in Core Segments• Canola Sales up 22 % vs. 2002

• Strong Increase in Cotton Business

• Solid Performance of Nunza Business

• Broad Settlement with Monsanto

Crop Protection € 4,801 Mio.

Strengthened Leading Position

• Great Cereal Herbicides Campaign in Europe

• Strong Performance in Cereals & Corn in US

• Australia & India recovering from ‘02 Drought

• Excellent Year for Fungicide Portfolioin Brazil on Asian Rust

2003

Maintained #1 Position

• Consumer Business US grew > 30 %

• Progress on US Distribution Partnership

• Successful Repositioning of Premise®

Environmental Science € 692 Mio.

Strong Performance in all Businesses


Significant Growth from New A.I.s(Launched in Key Countries since 2000 - in € Million, Figures Rounded)

2002Pro-Forma

2003

+49%

350

520

Trifloxystrobin (200)

Iodosulfuron (90)

Mesosulfuron (58)

Foramsulfuron (61)

Thiacloprid (25)Clothianidin (19)

Others (67)

100

200

300

400

500

+25%




• Finalized Divestment Process*

• Completed 85 % of global Integration Activities

• All Countries “One-Face-to the Customer”

• Site Consolidation Process on Track

• Uninterrupted Supply of Product

• Synergies / Integration Costs on Track

• Net P&L Effect of € 51 Million in 2003

• Synergy Target of € 570 Million in 2006 confirmed

Successful Management of the Integration

* One Minor Project Pending


What We Told You - Targets What We Did - Achievements

Integration /Synergies

Portfolio

New ProductLaunches

WorkingCapitalManagement

• Complete Divestiture Process

• Continue Integration Activities

• Achieve Synergy Targets

• 2% above Market Growth

• Portfolio Streamlining

• Launch of 2 – 3 new Productsper Year

• Reduce Risk in Brazil

• Focus on Receivables Mgt. (A/R)

• Reduce Working Capital

• Spirodiclofen (Envidor ®) andClothianidin (Poncho®) launched

• Reduced DSO from >480 to ~260

• A/R reduced by ~225 Mio. € **

• Reduced WC by ~270 Mio. € **

• Forced Divestments completed*

• 85% of Activities completed

• Delivered 2003 Synergy Targets

• Significantly Outperformed Market

• Streamlined 5 Own A.I.s and30% (96) of 3rd party Products

Delivering on our Commitments

* One Minor Project Pending

** Valuation Date: December 31




Significant Increase in Operating Profit & Margin(in € Million)

5,764

4,697

-108324

2002 Legal View * 2003

Sales

EBIT**

-2%pro-forma

* 12 Month Bayer Crop Protection +7 Month Aventis CropScience** EBIT post exceptional items

18.6%

11.0%

+23%

EBITDA-Margin

Major Deviations:

• Sales Increase

• Synergies / OTC

• Step Up Inventory

• Brazil Bad Debt

• Goodwill Amortization

• Profit Divestments

• Others


Manage Innovation

Crop Protection

Capitalize on Best in Class Portfolio


Expand Specialty Business

BioScience

Develop Next Generation Biotech Solutions

Strategic Priorities




Identify new Active Ingredients

• State of the Art Technology

• New Modes of Action

• Favorable environmental Profile

Optimize existing Portfolio

• New Formulations / Mixtures

• Improved Application Technology

• Proximity Innovation in Specialty Business

Partnership Approach

• Seek active Dialogue with Stakeholders

• Enhance Acceptability of Science

Manage Innovation


Continuous Stream of Innovation Drives FutureGrowth

Herbicides

Insecticides

Fungicides

Clothianidin

Picobenzamid

Herbicides plusSafener

Ketoenole #3

2002 2003 2004 2005 2006…

Mesosulfuron

Spirodiclofen FluoxastrobinMethoxyfenozide

Prothioconazole

Spiromesifen

Ethiprole

Foramsulfuron





Manage Innovation

Crop Protection




BioScience



Key Pillars of our CNI Strategy:

• Strong Growth from new Molecules

• Building Blocks in Imidachloprid Defense Strategy

• Product Diversification: Foliar, Soil, Seed Treatment & Specialty Applications

• Regional Diversification: ~160 Crops in 120 Countries

400

450

500

550

600

650

1998 1999 2000 2001 2002 2003

The Only Company to Offer 3 Chloronicotinyls (CNI)

Sales (in € Million)

Imidacloprid

Thiacloprid

Clothianidin

CAGR 1998 – 2003: +7.3 %




Devastation by “Asian Rust” in Soybean - Brazil

Treated Untreated 8 Days afterwards

• Left untreated Asian rust leads to a

complete devastation and defoliation


Brazil - the Future Focus for Agricultural Production

• Brazil offers exciting opportunities for contributing to the future challenges in

food, feed and fiber production





Manage Innovation

Crop Protection




BioScience



Proximity Innovation in Environmental Sciencewith Imidacloprid

Consumer Business(Sales 2003: € 41 Million)

Professional Business(Sales 2003: € 87 Million)

Proximity Innovation to offer tailor-made

Solutions for the specific Requirements of the

Consumer and Professional Market Segments

Active Ingredient

• Innovation

• Development

• Production

Consumer

Competitive Advantage through Forward Integration:

• Business Risk Diversification

• Augmented Value of innovative Active Ingredients

• Markets with strong Growth Potential

• Higher Margins through Branding

Crop Protection





15%

25%

60%

Room for Growth in US Consumer Market(in € Billion)

Global Consumer Market*

Market

Growth

€ 1.9 bn

5%

1%

2%

NAFTA

Europe

RoW

55%

24%

21%

€ 0.25 bn

Market Share: ~ 13 %

* Estimation Bayer CropScience

Bayer Environmental Science



Manage Innovation

Crop Protection




BioScience





• Focus on Three Key Business Fields:

Vegetables, Agricultural Crops,

New Business Ventures

• Concentrate Resources in Agricultural

Crops on: Cotton, Canola and Rice

• Significantly increase Investment in

New Business Ventures covering:

Health, Nutrition and BioMaterials

Realignment of Strategic Business Focus


BioScience Strategy

• Short - Term- Expand Vegetable Seed Business Nunza

- Leverage FiberMax® Brand and Cotton Expertise

- Enhance InVigor ® Position in Canola

- Continue Crop Production Model(Seeds + Technology + Chemicals)

• Mid - Term- Build on Technology Platform in Cotton, Canola & Rice

- Expand leading Position in Cotton Fiber Quality

- Engage in Downstream Product Development

through Partnerships (e.g. Starch Modification)

• Long - Term- Increase Investment in New Business Ventures covering:

Health, Nutrition and BioMaterials

lehman globalchemical 20040401 cropscience

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