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Ladies and gentlemen,

May I also welcome you to today's conference call on behalf of the Board of Management.

This year has been marked by the effects of the economic crisis, which remain at the focus of public attention. Sales and earnings were sharply down in many sectors of business.


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We are therefore very pleased to have reversed the earnings trend in the third quarter. For the first time this year, EBITDA before special items – an important financial indicator for us – again showed a slight year-on-year increase, to EUR 1.5 billion.

HealthCare and MaterialScience contributed to this positive performance. We succeeded in compensating for negative currency effects of some EUR 50 million that held back earnings, particularly at CropScience.

Ladies and gentlemen,

You received our information material this morning, so you are aware of the facts and figures concerning Bayer's performance. I will therefore limit my remarks to a few further core statements about the third quarter.

Despite a tremendous effort, Bayer, like other companies, was unable to prevent a drop in sales. Group sales moved back by 7 percent to EUR 7.4 billion. To facilitate comparison, my comments will refer entirely to currency- and portfolio-adjusted changes.


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Sales of HealthCare rose by 4 percent, with all divisions contributing to this growth. The subgroup increased EBITDA before special items by a gratifying 12 percent to more than EUR 1.1 billion.

The higher earnings were mainly due to the growth in business and to lower selling expenses. So once again, HealthCare saw a strong quarter overall.


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By contrast, CropScience had a weak third quarter compared with the strong prior-year period. At the start of the year, with producer prices at a high level, farmers and wholesalers placed their orders early, expecting crop protection products to remain in short supply. Purchases by our customers in the third quarter were distinctly restrained as a result.

The market environment was also marred in the third quarter of 2009 by lower prices for key crop commodities and by adverse weather conditions. As a result, sales were down by 8 percent. Growth in Latin America was not sufficient to offset considerable declines in sales in Europe and North America.

EBITDA before special items for this subgroup fell from EUR 207 to EUR 108 million. A third of this decline resulted from negative currency effects. The drop in earnings was also attributable to lower volumes for our Crop Protection and Environmental Science products and slight declines in selling prices.

Ladies and gentlemen,

There is no doubt that the quarterly view is not always meaningful when evaluating the CropScience business. Shifts can occur due to the diversity of the business and the peculiarities of regional markets.

If we look at the first three quarters of this year, sales were up nearly 2 percent and EBITDA before special items down by only 6 percent compared with the same period of 2008.


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At MaterialScience the turnaround already suggested by the second-quarter figures was confirmed. Business recovered tangibly in the third quarter, enabling the subgroup to nearly double underlying EBITDA from EUR 121 million in the second quarter to EUR 238 million in the third quarter – only just short of the EUR 255 million achieved in the prior-year period.

Sales fell by 22 percent compared with the prior-year period due to the economic situation. However, volumes already increased again in the Asia/Pacific region. And MaterialScience saw demand increase in all the main customer industries worldwide compared with the second quarter.
Ladies and gentlemen,

Let me give you a few more key data for the Group. Net income for the third quarter came in at EUR 249 million.


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For several quarters now we have been publishing our core earnings per share. The aim is to make it easier to compare our performance with that of other companies, particularly in light of the impact of major acquisitions. Core earnings per share declined to EUR 0.78, compared with EUR 0.85 for the same period of 2008.

Gross cash flow in the third quarter was level with the prior-year period at EUR 1.2 billion.Net cash flow climbed by 23 percent to EUR 1.5 billion due to improvements in working capital at HealthCare and CropScience.

As a result, we reduced net financial debt by a billion euros during the third quarter, to EUR 10.7 billion. This brought us closer to our goal of further reducing net financial debt toward EUR 10 billion by the end of the year.

Ladies and gentlemen,

We have also been successful from a strategic point of view this year. For example, we strengthened key parts of our business through further acquisitions and numerous licensing and cooperation agreements.


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At HealthCare, for example, these so far included the following:
- research, development and marketing collaborations, particularly in the area of oncology,
- the purchase of exclusive rights to an insulin product in the Chinese market, and
- the acquisition of two dermatology products in the United States.

CropScience has concluded extensive license agreements in the area of plant traits. The agreed acquisition of the U.S.-based biotech company Athenix is also intended to strengthen our BioScience business.

Ladies and gentlemen,

Now let's take a look ahead. Our previous prediction has proven justified: the global economy seems to have passed the bottom of the cycle. We expect this trend to continue through the end of the year. However, it is still too early to speak of a self-sustaining upswing in industry.

Our forecast for HealthCare has been confirmed so far this year. The increases in sales and EBITDA before special items support this view. In the fourth quarter, too, we anticipate slight growth at HealthCare compared with the very strong prior-year quarter. We continue to expect that we will improve the underlying EBITDA margin toward 28 percent.

The situation looks less positive for CropScience: here, the market environment deteriorated in the third quarter. Despite this, this subgroup plans to increase sales year on year both in the fourth quarter and for 2009 as a whole. In light of the weak third quarter, we anticipate that EBITDA before special items will come in below the high prior-year level. Accordingly we now expect to achieve an EBITDA margin before special items of between 23 and 24 percent.

At MaterialScience, third-quarter sales and earnings significantly exceeded the low levels of the second quarter. We anticipate that the economic environment will continue to stabilize in the fourth quarter. Due to the usual seasonal weakening of business activity toward the end of the year, we expect underlying EBITDA in the fourth quarter to be below the third quarter but well ahead of the prior-year period.


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Against this background we still expect to post full-year Group sales of between EUR 31 billion and EUR 32 billion and are adhering to our ambitious target of limiting the decline in Group EBITDA before special items to about 5 percent. That means we are confirming our full-year guidance for the Bayer Group.

Ladies and gentlemen,

One of the reasons our guidance can remain unchanged is that MaterialScience took extensive action in response to the dramatic drop in demand. Substantial production capacities in all areas were temporarily shut down at an early stage.

Certain production capacities for Polyurethanes, Coatings, Adhesives, Specialties and Basic Chemicals will have been shut down permanently by the end of this year. In addition, we are speeding up the implementation of all the restructuring measures already announced for MaterialScience.

Ladies and gentlemen,

Years ago we embarked on improving our competitiveness in all subgroups and service companies.

Since the reorganization we initiated in 2002, we have implemented efficiency-improvement and cost-containment measures with a total volume of some EUR 4 billion. Thus we have continuously strengthened the foundation for our long-term success.

We plan to complete our current restructuring programs by the end of this year. We expect to incur special charges of approximately EUR 350 million in this connection.

Apart from this, we already took some EUR 200 million in other special charges – including those for litigation – in the first nine months of this year. However, the additional funding for the German corporate pension assurance association accounts for more than half of this amount, in other words more than EUR 100 million.

It is the large corporations in particular, with their extensive pension systems, who are instrumental in assuring employees' corporate pension benefits following company insolvencies in Germany through the disproportionately large contributions they make to the pension assurance association.

In this way the solidarity principle across German industry contributes significantly to social welfare. Even and precisely in these economically troubled times, industry continues to live up to the responsibility it holds toward its employees.

Ladies and gentlemen,

As you have seen, we are on track to close this year relatively successfully despite the challenging environment.

We will present our forecast for 2010 when we publish the 2009 Annual Report.

Particularly in light of the portfolio realignment we have undertaken in recent years, we are confident about the ongoing development of our enterprise in the coming quarters.

Thank you very much.



Forward-Looking Statements
This release may contain forward-looking statements based on current assumptions and forecasts made by Bayer Group or subgroup management. Various known and unknown risks, uncertainties and other factors could lead to material 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 Bayer's public reports which are available on the Bayer website at www.bayer.com. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.