DGAP-Adhoc

Bayer Aktiengesellschaft: Bayer to accelerate transformation to address challenging market environment and enable additional growth investments

DGAP-Ad-hoc: Bayer Aktiengesellschaft / Key word(s): Forecast Bayer Aktiengesellschaft: Bayer to accelerate transformation to address challenging market environment and enable additional growth investments 30-Sep-2020 / 19:10 CET/CEST Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. Leverkusen, September 30, 2020 - Bayer AG announced today that the company confirms its adjusted outlook for 2020 and expects 2021 sales at approximately 2020 levels despite significant headwinds from the COVID-19 pandemic, especially in the agricultural market. Core earnings per share in 2021 are expected to be slightly below 2020 levels at constant exchange rates. To further advance Bayer in a market environment that continues to be challenging, its Board of Management has decided to introduce additional operational savings of more than 1.5 billion euros annually as of 2024, on top of annual earnings contributions of 2.6 billion euros as of 2022, which were announced in November 2018. The incremental cash flow from these efforts will mainly be allocated for investments in further innovation, profitable growth opportunities and debt reduction. Like most companies, the COVID-19 pandemic has led to headwinds in the 2020 fiscal year for Bayer, with significant currency effects presenting an additional burden on sales and earnings growth. However, Bayer expects to offset the impact of lower revenues in the Crop Science and Pharmaceuticals divisions through appropriate countermeasures, such as the acceleration of existing efficiency programs and cost contingencies. For 2021, growth and cash flow generation are expected to be lower than planned and can only be partially compensated by further savings measures. The direct and indirect effects of the pandemic will be deeper than expected on the Crop Science business. The agricultural sector, in which Bayer has a leading role, is characterized by reduced growth expectations due to low commodity prices for major crops, intense competition in soy, and reduced biofuel consumption. This is compounded by negative currency effects, some of which are significant as in the case of the Brazilian Real. This situation is unlikely to improve considerably in the near-term. Against that background, Bayer expects to take non-cash impairment charges in the mid to high-single-digit billion-euros range on assets in the agricultural business.