Crop Science

Key Data – Crop Science

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Q3 2015

Q3 2016

Change

9M 2015

9M 2016

Change

€ million

Reported %

Fx & p adj. %

€ million

Reported %

Fx & p adj. %

2015 figures restated; Fx & p adj. = currency- and portfolio-adjusted; Fx adj. = currency-adjusted
¹	For definition see “Calculation of EBIT(DA) Before Special Items.”
²	For definition see “Statements of Cash Flows.”

Sales

2,081

2,057

–1.2

0.0

7,723

7,511

–2.7

+0.6

Change in sales

Volume

+4.3%

–4.0%

0.0%

–1.6%

Price

–2.7%

+4.0%

+0.6%

+2.2%

Currency

+7.4%

–1.2%

+7.4%

–3.4%

Portfolio

+0.6%

0.0%

+0.7%

+0.1%

€ million

Reported %

Fx adj. %

€ million

Reported %

Fx adj. %

Sales by region

Europe

450

463

+2.9

+5.8

2,629

2,576

–2.0

+1.9

North America

351

368

+4.8

+5.7

2,132

2,089

–2.0

+0.9

Asia / Pacific

363

367

+1.1

1,165

1,164

–0.1

+2.7

Latin America / Africa / Middle East

917

859

–6.3

–5.3

1,797

1,682

–6.4

–2.5

EBITDA¹

313

247

–21.1

1,986

1,966

–1.0

Special items

(3)

(71)

(73)

(104)

EBITDA before special items¹

316

318

+0.6

2,059

2,070

+0.5

EBITDA margin before special items¹

15.2%

15.5%

26.7%

27.6%

EBIT

187

135

–27.8

1,603

1,602

–0.1

Special items

(4)

(71)

(79)

(104)

EBIT before special items¹

191

206

+7.9

1,682

1,706

+1.4

Gross cash flow²

213

187

–12.2

1,433

1,421

–0.8

Net cash flow²

603

1,027

+70.3

574

1,449

+152.4

Third quarter of 2016

Sales

In the third quarter of 2016, Crop Science posted sales of €2,057 million (Fx & portfolio adj. 0.0%). Business at Crop Protection / Seeds was steady overall at the prior-year level despite an ongoing weak market environment, particularly in Latin America. Sales of Environmental Science developed very encouragingly.

Sales by Business Unit

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Q3 2015

Q3 2016

Change

9M 2015

9M 2016

Change

€ million

Reported %

Fx & p adj. %

€ million

Reported %

Fx & p adj. %

2015 figures restated; Fx & p adj. = currency- and portfolio-adjusted
¹	Environmental Science now comprises only the business for professional users. The key data and prior-year figures are restated accordingly

Crop Protection / Seeds

1,957

1,911

–2.4

–1.1

7,318

7,093

–3.1

+0.3

Crop Protection

1,833

1,759

–4.0

–2.6

6,262

5,996

–4.2

–0.9

Herbicides

487

480

–1.4

–1.0

2,180

2,094

–3.9

–0.4

Fungicides

577

615

+6.6

+8.1

2,234

2,282

+2.1

+5.4

Insecticides

471

385

–18.3

–16.8

1,166

971

–16.7

–14.1

SeedGrowth

298

279

–6.4

–3.7

682

649

–4.8

–1.3

Seeds

124

152

+22.6

+21.6

1,056

1,097

+3.9

+7.9

Environmental Science¹

124

146

+17.7

405

418

+3.2

+6.2

Sales by region

Sales in Europe climbed to €463 million (Fx adj. +5.8%). Following a weak prior-year quarter, Fungicides developed especially well with double-digit growth. We also considerably improved sales at Herbicides and business with oilseed rape / canola seed. By contrast, we registered a decline at SeedGrowth. Business at Environmental Science developed very positively.
Sales in North America advanced by 5.7% (Fx adj.) to €368 million. We achieved strong double-digit sales growth in the Seeds unit, particularly for soybean seeds. At Crop Protection, business with herbicides for application in corn developed very positively. By contrast, there were considerable sales declines at Fungicides and Insecticides. Sales at Environmental Science increased by a double-digit percentage.
In the Asia / Pacific region, sales edged forward to €367 million (Fx adj. +1.1%). A gratifying, weather-related increase in sales at Fungicides more than offset declines at Herbicides and Insecticides. Sales at Seeds came in well below the prior-year quarter. Environmental Science developed very positively.
Sales in the Latin America / Africa / Middle East region declined by 5.3% (Fx adj.) to €859 million. We again registered a substantial decrease in sales in Brazil, due to the difficult market and liquidity situation. Business contracted at both Insecticides and Herbicides. By contrast, there was an increase in sales at Fungicides, primarily with products for use in soybeans and corn. Business with soybean seeds developed very encouragingly. Environmental Science also grew business substantially.

Earnings

EBITDA before special items of Crop Science increased by 0.6% to €318 million in the third quarter of 2016 (Q3 2015: €316 million). Higher selling prices and a positive currency effect of around €80 million stood against lower volumes, higher write-downs on receivables and higher research and development expenses, among other things.

EBIT moved back by 27.8% to €135 million after special charges of €71 million (Q3 2015: €4 million), largely in connection with the agreed acquisition of Monsanto and efficiency improvement measures.

First nine months of 2016

Sales

Sales of Crop Science in the first nine months of 2016 were level year on year at €7,511 million (Fx & portfolio adj. +0.6%) despite the difficult market environment. At Crop Protection, higher sales at Fungicides were offset by a considerable decline at Insecticides and slightly lower sales at SeedGrowth. We expanded business at Seeds and Environmental Science. Sales increased slightly in the Asia / Pacific and Europe regions, whereas business remained at the prior-year level in North America and declined slightly in Latin America / Africa / Middle East.

Earnings

EBITDA before special items of Crop Science in the first nine months of 2016 was level year on year at €2,070 million (+0.5%; 9M 2015: €2,059 million). Higher selling prices and a positive currency effect of around €60 million stood against lower volumes, higher write-downs on receivables and higher research and development expenses, among other things.

EBIT decreased by only a slight 0.1% to €1,602 million after special charges of €104 million (9M 2015: €79 million), largely in connection with the agreed acquisition of Monsanto and efficiency improvement measures.

Cautionary Statements Regarding Forward-Looking Information

Certain statements contained in this communication may constitute “forward-looking statements.” Actual results could differ materially from those projected or forecast in the forward-looking statements. The factors that could cause actual results to differ materially include the following: the risk that Monsanto Company’s (“Monsanto”) stockholders do not approve the transaction; uncertainties as to the timing of the transaction; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected time-frames or at all and to successfully integrate Monsanto’s operations into those of Bayer Aktiengesellschaft (“Bayer”); such integration may be more difficult, time-consuming or costly than expected; revenues following the transaction may be lower than expected; operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the transaction; the retention of certain key employees at Monsanto; risks associated with the disruption of management’s attention from ongoing business operations due to the transaction; the conditions to the completion of the transaction may not be satisfied, or the regulatory approvals required for the transaction may not be obtained on the terms expected or on the anticipated schedule; the parties’ ability to meet expectations regarding the timing, completion and accounting and tax treatments of the merger; the impact of indebtedness incurred by Bayer in connection with the transaction and the potential impact on the rating of indebtedness of Bayer; the effects of the business combination of Bayer and Monsanto, including the combined company’s future financial condition, operating results, strategy and plans; other factors detailed in Monsanto’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) for the fiscal year ended August 31, 2016 and Monsanto’s other filings with the SEC, which are available at http://www.sec.gov and on Monsanto’s website at www.monsanto.com; and other factors discussed in Bayer’s public reports which are available on the Bayer website at www.bayer.com. Bayer assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

Additional Information and Where to Find It

This communication relates to the proposed merger transaction involving Monsanto Company (“Monsanto”) and Bayer Aktiengesellschaft (“Bayer”). In connection with the proposed merger, Monsanto and Bayer intend to file relevant materials with the U.S. Securities and Exchange Commission (the “SEC”). Monsanto has filed with the SEC a preliminary proxy statement on Schedule 14A and will file and provide to Monsanto stockholders a definitive proxy statement (the “Proxy Statement”) that will contain important information regarding the proposed merger. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, and is not a substitute for the Proxy Statement or any other document that Monsanto may file with the SEC or send to its stockholders in connection with the proposed merger. STOCKHOLDERS OF MONSANTO ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE DEFINITIVE PROXY STATEMENT, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain the documents (when available) free of charge at the SEC’s website, http://www.sec.gov, and Monsanto’s website, www.monsanto.com, and Monsanto stockholders will receive information at an appropriate time on how to obtain transaction-related documents for free from Monsanto. In addition, the documents (when available) may be obtained free of charge by directing a request to Corporate Secretary, Monsanto Company, 800 North Lindbergh Boulevard, St. Louis, Missouri 63167, or by calling (+1) (314) 694-8148.

Participants in Solicitation

Monsanto, Bayer and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the holders of Monsanto common stock in respect of the proposed transaction. Information about the directors and executive officers of Monsanto is set forth in the proxy statement for Monsanto’s 2016 annual meeting of stockholders, which was filed with the SEC on December 10, 2015, and in Monsanto’s Annual Report on Form 10-K for the fiscal year ended August 31, 2016, which was filed with the SEC on October 19, 2016. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Proxy Statement and other relevant materials to be filed with the SEC in respect of the proposed transaction when they become available

Crop Science

Third quarter of 2016

Sales

Sales by region

Earnings

First nine months of 2016

Sales

Earnings

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Cautionary Statements Regarding Forward-Looking Information

Additional Information and Where to Find It

Participants in Solicitation