- Bayer CropSCIence Your partner for growth A New Market Leader Takes Shape Goldman Sachs Annual Ag Forum February 27th, 2003 Dr. Esmail Zirakparvar Member of the Board of Management Bayer CropScience AG Disclaimer: Forward-Looking Statements This presentation may contain forward-looking statements based on current assumptions and forecasts made by Bayer Group management. Various known and unknown risks, uncertainties and other factors could lead to substantial differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in our public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including our Form 20-F). The company accepts no obligation to continue to report or update these forward-looking statements or adjust them to future events or developments. February 27, 2003 • slide 3 A New Market Leader Takes Shape c Formation of Bayer CropScience à Milestones à Integration & Divestments à Business Development Q1 - Q3 2002 d A Successful Future Market Leader à Goals à Strong Market Position in All Segments à Rich Development Pipeline à Critical Success Factors à Company Aspirations February 27, 2003 • slide 4 A New Market Leader Takes Shape Milestones Formation Bayer CropScience Oct 2, 2001 Signing of purchase agreement for the acquisition of Aventis CropScience Apr 17, 2002 EU approval May 30, 2002 FTC approval June 3, 2002 Closing June 4, 2002 Day One Bayer CropScience Oct 1, 2002 Legal Entity Bayer CropScience AG fully operational Nov 4, 2002 Finalization of divestment process and submission to authorities February 27, 2003 • slide 5 Integration and Divestment Status … One Face to the Customer ƒ Year end 2002: 90 % of countries ƒ Q2 2003: complete … Implementation of integration now completely in line function … Divestment process on track ƒ ƒ ƒ ƒ ƒ All contracts signed (31 agreements) Successful submission to trade commissions within the restricted timelines Value of divested products pending approval: € 1,700 million; Multiple of 2.4 7 contracts closed, 4 approved, rest pending approval* Expected completion within Q1 2003 * status as of January 2003 February 27, 2003 • slide 6 Business Development Q1 - Q3 2002 (in million €) Maintained market share despite intensive integration process External Net Sales 3,262 +46 % EBIT -6% pro forma Sales • Pro forma sales development in line with overall market reduction 2,237 EBIT (major factors) • Brazil, Argentina -60 (Bad debt / channel inventory reduction) 369 Q1-Q3 2001 -52 Q1-Q3 2002 • Goodwill from ACS acquisition* • Acquisition / Integration / Carve-out / Restructuring/ Synergies * impact of preliminary Purchase Accounting including step-up inventory February 27, 2003 • slide 7 -329 -80 Business Development 2002 - Key Factors North America - Drought conditions in Midwest / Canadian Plains and downward price pressure affects Herbicides sales negatively - US distributors adjust inventory Latin America - Strong devaluation due to economic and political instability West Europe - Downward price pressure on distributors - Growth in Fungicide market North East Asia - Increasing competitive pressure in East Asia - Further reduction in Japanese rice area International - Severe drought in key countries India and Australia February 27, 2003 • slide 8 A New Market Leader Takes Shape c Formation of Bayer CropScience à Milestones à Integration & Divestments à Business Development Q1 - Q3 2002 d A Successful Future Market Leader à Goals à Strong Market Position in All Segments à Rich Development Pipeline à Critical Success Factors à Company Aspirations February 27, 2003 • slide 9 A New Market Leader Takes Shape Growth Target Goal: Growth Target of 4 % p.a. - Net Sales* 2001 - Net Sales* 2002E - Net Sales Target 2006 Assumption: € 6.5 billion € 6.0 billion € 7.0 billion Expected market growth of 2 % p.a. How do we get there? • Strong market position in all segments allows over-proportional growth participation • Best-in-class pipeline allows further market share increase * pro forma - continued business excluding divestments February 27, 2003 • slide 10 A New Market Leader Takes Shape Profitability Target Goal: 29% EBITDA in 2006 How do we get there? • Realization of growth targets • Fast realization of synergies of € 570 million related to one-time restructuring costs of total € 550 million • Increase of operating margins through portfolio optimization and migration to new products February 27, 2003 • slide 11 What Are the Future Risks? … Market Environment ƒ Further market deterioration in Latin America ƒ Impact of generic producers ƒ No sustained upturn for agricultural commodity prices … Political and Regulatory Environment ƒ Higher registration and re-registration hurdles ƒ Increased political pressure on agrochemicals ƒ Public acceptance of Biotechnology still low February 27, 2003 • slide 12 Different Business Segments to Address Specific Market Needs Crop Protection Bayer CropScience Bio Science February 27, 2003 • slide 13 Environmental Science Crop Protection Insecticides Strengthen Leadership KeyFigures Figures2001 2001** Key Turnover •• Turnover Marketshare share •• Market 1.6bn bn €€1.6 20% % 20 Marketrank rank •• Market 11 Strategy Strategy Expandneonicotinoid neonicotinoidbusiness businesswith with •• Expand introductionofofCalypso Calypso introduction GrowLeadership Leadershipininpyrethroid pyrethroidmarket marketfocusing focusing •• Grow onDecis Decisand andBulldock Bulldock on Defend“classics” “classics”portfolio portfolio •• Defend Rapidlyintroduce introducethree threenew newpipeline pipelineproducts products •• Rapidly * pro forma excluding divested products February 27, 2003 • slide 14 TopProducts Products2001 2001 Top Confidor •• Confidor Temik •• Temik Imidacloprid Imidacloprid Aldicarb Aldicarb Decis •• Decis Deltamethrin Deltamethrin Crop Protection Seed Treatment Consolidate Leading Position KeyFigures Figures2001 2001** Key Turnover •• Turnover Marketshare share •• Market 0.4bn bn €€0.4 39% % 39 Marketrank rank •• Market 11 Strategy Strategy Expandneonicotinoid neonicotinoidinsecticidal insecticidalseed seedtreatment treatment •• Expand businessthrough throughlaunch launchofofnew newproducts productsbased basedon on business Chlothianidin(Poncho) (Poncho)inincereals, cereals,corn, corn,sugar sugarbeet beetand and Chlothianidin OSR/canola OSR/canola Launchnew newfungicidal fungicidalseed seedtreatment treatmentproducts products •• Launch (Bariton,Redigo, Redigo,Scenic) Scenic)inincereals cereals (Bariton, ExpandGaucho Gauchobusiness business •• Expand * pro forma excluding divested products February 27, 2003 • slide 15 TopProducts Products2001 2001 Top Gaucho ••Gaucho Raxil ••Raxil Imidacloprid Imidacloprid Tebuconazole Tebuconazole Premis ••Premis Triticonazole Triticonazole Crop Protection Fungicides Growth Strategy KeyFigures Figures2001 2001** Key Turnover •• Turnover Marketshare share •• Market 1.4bn bn €€1.4 22% % 22 Marketrank rank •• Market 22 Strategy Strategy Aboveaverage averagegrowth growththrough throughFlint Flintand andnew new •• Above products products Exploitfull fullpotential potentialofofother otherproducts productsthrough through •• Exploit effectivelife lifecycle cyclemanagement management effective TopProducts Products2001 2001 Top Folicur/ /Raxil Raxil •• Folicur Flint/ /Stratego Stratego •• Flint Tebuconazole Tebuconazole Trifloxistrobin Trifloxistrobin Utilisefull fullpotential potentialofofbest-in-class best-in-classpor portfolio •• Utilise tfolio through tailor made offerings and mixtures for through tailor made offerings and mixtures for allsignificant significantmarkets markets all Aliette •• Aliette Rovral •• Rovral Fosetyl Fosetyl Iprodione Iprodione * pro forma excluding divested products February 27, 2003 • slide 16 Crop Protection Herbicides Profitable Growth KeyFigures Figures2001 2001** Key Turnover •• Turnover Marketshare share •• Market 2.0bn bn €€2.0 15% % 15 Marketrank rank •• Market 33 Strategy Strategy Growmarket marketposition positioninincorn cornthrough throughkey key •• Grow productsBalance, Balance,Foramsulfuron, Foramsulfuron,Axiom, Axiom, products Mikadoand andLiberty Liberty Mikado Extendleading leadingposition positioninincereals cerealsthrough through •• Extend launchofofMesosulfuron Mesosulfuronand andAttribute Attribute launch Continueddevelopment developmentofofthe theGlufosinate Glufosinate •• Continued businessininboth bothselective selectiveand andGMO-crops GMO-crops business (corn,cotton, cotton,canola) canola) (corn, * pro forma excluding divested products February 27, 2003 • slide 17 TopProducts Products2001: 2001: Top •• •• •• •• •• •• Puma Puma Balance Balance Basta/ /Liberty Liberty Basta Buctril Buctril Betanal Betanal Sencor Sencor Fenoxaprop Fenoxaprop Isoxaflutole Isoxaflutole Glufosinate Glufosinate Bromoxynil Bromoxynil PMP/DMP/Etho. PMP/DMP/Etho. Metribuzin Metribuzin Environmental Science Leader in the Non Agricultural Markets KeyFigures Figures2001 2001** Key Turnover: •• Turnover: Marketshare share •• Market 0.8bn bn €€0.8 24% % 24 Marketrank rank •• Market 11 Strategy Strategy GrowBayer BayerAdvanced AdvancedLawn Lawn&&Garden Garden •• Grow marketininthe theUS USthrough throughpartnership partnership market Expanduser userand andenvironmental environmentalfriendly friendly •• Expand productrange range product Maintaintop topposition positionininProfessional Professional •• Maintain markets markets * pro forma excluding divested products February 27, 2003 • slide 18 TopProducts Products/ /Brands Brands2001 2001 Top Premise,Merit Merit Imidacloprid ••Premise, Imidacloprid Maxforce Fipronil ••Maxforce Fipronil Tempo,Kothrine Kothrine Cyfluthrin,Deltamethrin Deltamethrin ••Tempo, Cyfluthrin, Chipco26 26GT GT Iprodione ••Chipco Iprodione BayerAdvanced Advanced&&Bayer BayerGarden Garden ••Bayer BioScience Expand in Growing Biotechnology … A separate business group, focusing upon the research, development and commercialization of products derived from biotechnology and seeds … A € 0.2 billion business operating globally with a significant investment in R&D in germplasm and traits primarily in ƒ Nunza, a stand alone conventional vegetable seed business ƒ 5 crop sectors (Corn, Cotton, Canola, Rice & Vegetables) ƒ 5 technology areas (Crop Protection, Crop Yield, Reproductive Biology, Stress Tolerance & Carbohydrate Modification) … A complementary business to the conventional crop protection February 27, 2003 • slide 19 BioScience Expand in Growing Biotechnology KeyFigures Figures2001 2001** Key Turnover: Turnover: 0.2bn bn €€0.2 Strategy Strategy Continuewith withprofitable profitableseed seedbusiness businessNunza Nunza •• Continue Convertexisting existingIP IPestate estateinto intoaasustainable sustainable •• Convert revenuestream stream(herbicide (herbicidetolerance tolerance&&insect insect revenue resistance) resistance) Continuedgrowth growthinincotton, cotton,rice riceand andvegetable vegetable •• Continued businessesintegrating integratingin-house in-housetechnologies technologies businesses Buildupon uponcanola canolaand andcorn cornseed seedmarket marketshare shareinin •• Build NorthAmerica Americaintroducing introducingnew newtraits traitsinto intothe thecrop crop North * pro forma February 27, 2003 • slide 20 KeyBrands Brands/ /Technology Technology2001 2001 Key Nunza:Sunseeds, Sunseeds,Nunhems Nunhems •• Nunza: LibertyLink, Link,Seed SeedLink Link •• Liberty Bttechnology technology •• Bt FiberMax •• FiberMax Rich Development Pipeline Boosts Future Growth Thiacloprid (Calypso®) Foramsulfuron (MaisTer®) Ethiprole (Curbix®) Fluoxastrobin (Fandango®) Picobenzamid Fenamidone (Fenomen®) Mesosulfuron (Atlantis®) Clothianidin (Poncho®) Prothioconazole (Proline®) Spiromesifen (Oberon®) Fentrazamide (Innova®) Methoxyfenozide Spirodiclofen (Envidor®) (Runner®) Goal: Goal:22- -33 new newcompounds compounds per peryear year Propoxycarbazone (Attribut®) 2001 2002 2003 2004 Fungicides Herbicides Insecticides February 27, 2003 • slide 21 2005 Rich Development Pipeline Boosts Future Growth Projected sales > € 800 million Insecticides Herbicides Fungicides 2002 February 27, 2003 • slide 22 2003 2004 2005 2006 Bayer CropScience Matching the Critical Success Factors Š Economies of scale Š Cost structure Š Bundling capabilities Strong position in all segments Š Herbicide #3 Š Fungicide #2 Š Insecticide #1 Š Environmental Science #1 Competitive pricing Š Environmental Science Š Seed treatment Š Player in input traits (LibertyLink®, Bt) Š Seed business (breeding know-how) Š Output trait know-how February 27, 2003 • slide 23 Specialty applications Ag Bio solutions Complete product portfolio Strong presence in key regions Š Š Š Š North America Europe Latin America Asia #3 #1 #2 #2 Innovative chemistry Š Excellent research platform Š 2-3 new launches per year Bayer CropScience Company Aspirations We will be the global leading provider of innovative products and integrated solutions for agriculture and environmental health Customer We are committed to providing our customers with economic and efficient tailormade solutions and services Employees We are committed to providing our employees with a working environment based on integrity, trust and teamwork, fostering individual talents, encouraging entrepreneurship in order to build together our own company culture Shareholder We are committed to being a profitable and predictable company, growing our business above our markets. In the medium-term, our goal is to achieve 29% EBITDA at an annual sales growth rate of 4% External Stakeholders We are committed to communicating openly with our external Stakeholders and to contributing actively to the health and well-being of our communities and the environment February 27, 2003 • slide 24 A New Market Leader Takes Shape A successful future market leader: Starting from a strong basis ...  Leader in conventional Crop Protection  Leader in Environmental Science  Emerging player in BioScience  Rich development pipeline ... to reach its ambitious growth and profitability targets ! February 27, 2003 • slide 25 g\ . Bayer CropSCIence Your partner for growth