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 fourth quarter of 2016 we are now using the exchange rates prevailing on September 30, 2016, including a EUR-USD rate of 1.12. A 1% appreciation (depreciation) of the euro against the relevant 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 the Bayer Group, including Covestro, we are still planning sales of €46 billion to €47 billion in 2016. This continues to correspond to a low-single-digit percentage increase on a currency- and portfolio-adjusted basis. As before, we plan to increase EBITDA before special items by a high-single-digit percentage. It is now our aim to also increase core earnings per share from continuing operations by a high-single-digit percentage (previously: a mid- to high-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. As before, we plan to increase EBITDA before special items by a mid- to high-single-digit percentage. Our planning includes dissynergies of around €130 million from the legal independence of Covestro and from divestments.
For Pharmaceuticals, we continue to expect sales above €16 billion. As before, this corresponds to a high-single-digit percentage increase on a currency- and portfolio-adjusted basis. We continue to plan to raise sales of our recently launched pharmaceutical products toward €5.5 billion. We are still expecting a low-teens percentage increase in EBITDA before special items. We aim to improve the EBITDA margin before special items.
In the Consumer Health Division, we continue to expect sales to come in at approximately €6 billion. As before, we plan to grow sales by a low- to mid-single-digit percentage on a currency- and portfolio-adjusted basis. We still expect EBITDA before special items to come in on the level of the prior year.
In light of the persistently weak market environment, we continue to expect Crop Science sales to be on the prior-year level on a currency- and portfolio-adjusted basis. As before, this is equivalent to reported sales of about €10 billion. We continue to expect a low-single-digit percentage decrease in EBITDA before special items.
At Animal Health, we continue to expect sales to be slightly above the prior-year level. This still corresponds to a low- to mid-single-digit percentage increase on a currency- and portfolio-adjusted basis, as previously forecasted. We now expect EBITDA before special items to come in on the level of the prior year (previously: increase by a low- to mid-single-digit percentage).
For 2016, we continue to expect sales to come in at approximately €1 billion. We are still planning EBITDA before special items of roughly minus €0.1 billion.
For 2016, Covestro is still expecting a sales decline. For the full year, EBITDA after adjustment for special items is expected to come in at about €1.9 billion (previously: at least at the prior-year level for the second half of 2016).
Further key data for the Bayer Group
We continue to anticipate special charges in EBITDA in the region of €0.5 billion in 2016. The integration of the acquired consumer care businesses, charges in connection with the reorganization of the Bayer Group and the agreed acquisition of Monsanto are expected to account for most of this amount.
Our prediction for the financial result is unchanged at around minus €1.2 billion. The effective tax rate is now likely to be about 23% (previously: 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.