Sales and Earnings Forecast
The forecasts for the alternative performance indicators EBITDA before special items, core earnings per share and currency- and portfolio-adjusted sales changes have been calculated in line with the reporting principles applied in preparing the financial statements and the adjustments described in Calculation of EBIT(DA) Before Special Items and (Core) Earnings Per Share.
We have adjusted the exchange rates relevant to our forecast to reflect current developments. For the second half of 2016 we are now using the exchange rates prevailing on June 30, 2016, including a EUR-USD rate of 1.11. A 1% appreciation (depreciation) of the euro against all other currencies would decrease (increase) sales on an annual basis by some €300 million and EBITDA before special items by about €90 million.
Following the signing in May 2016 of an agreement to sell the Consumer business of Environmental Science in the Crop Science Division, this business is no longer included in continuing operations and therefore is no longer included in the forecast.
The following forecast for the current fiscal year is based on the business development described in this report, taking into account the potential risks and opportunities and assuming the inclusion of the Covestro business for the full year.
For 2016, we are now planning sales of €46 billion to €47 billion (previously: more than €47 billion) for the Bayer Group, including Covestro. This continues to correspond to a low-single-digit percentage increase on a currency- and portfolio-adjusted basis. We now plan to increase EBITDA before special items by a high-single-digit (previously: mid-single-digit) percentage. It is now our aim to increase core earnings per share from continuing operations (calculated as explained in “(Core) Earnings Per Share”) by a mid- to high-single-digit percentage (previously: a mid-single-digit percentage). This takes into account Covestro’s inclusion at around 64% starting on April 19, 2016 (January 1 to April 18, 2016: around 69%).
Life Sciences total
We continue to plan sales of approximately €35 billion for the Life Science activities, i.e. the Bayer Group excluding Covestro. This still corresponds to a mid-single-digit percentage increase on a currency- and portfolio-adjusted basis as previously forecasted. We now plan to increase EBITDA before special items by a mid- to high-single-digit (previously: mid-single-digit) percentage. Our planning includes dissynergies of around €130 million from the legal independence of Covestro and from divestments.
For Pharmaceuticals, we now expect sales above €16 billion (previously: approximately €16 billion) despite some price decreases. This now corresponds to a high-single-digit (previously: mid-single-digit) percentage increase on a currency- and portfolio-adjusted basis. We now plan to raise sales of our recently launched pharmaceutical products toward €5.5 billion (previously: to more than €5 billion). We now expect a low-teens (previously: mid- to high-single-digit) percentage increase in EBITDA before special items. We aim to improve the EBITDA margin before special items.
In the Consumer Health Division, we now expect sales to come in at approximately €6 billion (previously: more than €6 billion). We now plan to grow sales by a low- to mid-single-digit (previously: mid-single-digit) percentage on a currency- and portfolio-adjusted basis. We now expect EBITDA before special items to come in on the level of the prior year (previously: increase by a mid-single-digit percentage).
In light of the continuingly weak market environment, we now expect Crop Science sales to be on the prior-year level (previously: increase by a low-single-digit percentage) on a currency- and portfolio-adjusted basis. This is equivalent to reported sales of about €10 billion. We now expect a low-single-digit percentage decrease (previously: low-single-digit percentage increase) in EBITDA before special items.
At Animal Health, we continue to expect sales to be slightly above the prior-year level. We are still planning a currency- and portfolio-adjusted sales gain and an increase in EBITDA before special items, each by a low- to mid-single-digit percentage.
For 2016, we now expect sales to come in at approximately €1 billion (previously: to be level with the previous year; 2015: €1.1 billion). We are now planning EBITDA before special items of roughly minus €0.1 billion (previously: minus €0.2 billion).
For 2016, Covestro is now expecting a sales decline (previously: sales at the prior-year level) and, for the second half of 2016, EBITDA after adjustment for special items at least at the prior-year level (previously: for the full year, a decline in EBITDA after adjustment for special items).
Further key data for the Bayer Group
We continue to expect special charges in the region of €0.5 billion in 2016, with the integration of the acquired consumer care businesses and charges in connection with the reorganization of the Bayer Group accounting for most of this amount.
Our prediction for the financial result is unchanged at around minus €1.2 billion. The effective tax rate is still likely to be about 24%. We continue to expect net financial debt at below €16 billion at the end of 2016.
Further details of the business forecast are provided in our Annual Report 2015, Forecast for Key Data.