Tuesday - April 28, 2020
Annual Stockholders' Meeting

Address by Werner Baumann

Chairman of the Board of Management

(Please check against delivery)

Ladies and gentlemen,
valued stockholders,

To remain a reliable partner in these unusual times, you sometimes have to resort to unusual measures. And that’s what we’re doing today – together with you. So I would also like to welcome you to the first virtual stockholders’ meeting in Bayer’s history. It’s also the first-ever online-only stockholders’ meeting of any DAX company.

I have to admit this creates quite a special situation for all of us here. On the one hand it makes us a digital pioneer – but we will also miss the direct dialog with you. I had looked forward to welcoming you to our meeting in Bonn today in person. But the corona crisis currently makes that impossible. This is a matter of great regret to us, but it’s the right thing to do in this situation as there’s no room for compromise when it comes to your health and safety.

We naturally looked closely at the possibility of postponing the meeting to a later date. But then you would have had to wait months to exercise your right to ask questions and cast your votes. And today we also want to clear the way for the dividend to be paid on time and in full.

For these reasons it’s in your best interests that we make use of the new options provided by law and hold today’s Annual Stockholders’ Meeting in virtual form. In doing so we are also aiming to achieve some degree of normality in these difficult times.

And that normality also means I will be reporting to you today on the 2019 fiscal year and the first quarter of 2020. I’ll be speaking about our operational business and the milestones we’ve reached in our strategic development. And as I do so, you will see that we’ve worked hard and we’ve delivered. We’ve succeeded in doing what we promised.

However, ladies and gentlemen,

the coronavirus is currently by far the dominant issue. So I’d like to tell you how we at Bayer have addressed this pandemic – and will continue to address it. And I’ll explain the effects we believe it will have on our business.

I think I can speak for our employees worldwide and also for my colleagues on the Board of Management when I say that the past two months have presented one of the biggest challenges that any of us have faced during our working lives. We are all contending with restrictions on a scale we could never have imagined: at work, in our private lives and often both.


Always at the top of the agenda are the health and safety of our more than 100,000 employees. Since the start of the crisis, we have been continually reassessing the situation and adapting our protective measures accordingly. Whether it’s face masks, protective clothing, distancing rules, separating employees who work different shifts, or taking people’s temperatures as they enter the site: our policy is safety first – with no ifs and buts.

I’m personally very pleased that all these measures are proving effective. That way we are currently keeping our production operations well on track. Let me briefly explain why that is so important:


In many countries we’ve seen that once the pandemic reaches a certain point, only plants classified as essential for ensuring supplies are allowed to continue operating. Wherever this has been the case, Bayer has been included.

That’s because health and nutrition count among humanity’s basic needs. Patients, consumers and farmers worldwide trust us and our products. That’s why we’ve done everything in our power in recent weeks to live up to this responsibility.

Our colleagues are more aware than ever of the importance of this task. With their dedication and their creativity, they are helping every day to ensure that we can – quite literally – deliver. That’s something we’re all very proud of.

One example is our colleague Mehmet Cimit, who heads up our production site in Garbagnate. Garbagnate is a suburb of Milan in northern Italy, one of the global epicenters of the pandemic. Mehmet Cimit and his team have been holding out for weeks, maintaining the production of essential medicines for Italy and the global market. Even more importantly, they’ve managed to ensure that not a single employee in Garbagnate has been infected with COVID-19 so far. That’s a tremendous achievement!

Just as outstanding is the work being done by our colleagues along the supply chain, who are making sure our products get to where they’re needed. That demands a tremendous effort in a world of closed borders, canceled flights and disruptions to established freight routes. And all this serves to ensure supplies of our products.

Of course we conduct our business with commercial success in mind. But we’re also an integral part of society – in the countries in which we operate and in the cities and communities where our sites are located and our employees live with their families. So it’s just as important to us that we assume responsibility at the local level. That means setting about the tasks quickly and efficiently – and also sometimes in unconventional ways.


We’re in constant contact with governments, health authorities, aid organizations and hospitals worldwide to provide specific, pragmatic assistance locally: with donations of medicines and materials, with our expertise and manpower, or with urgently needed financial support. Specifically we are supporting ongoing studies that are testing existing drugs for a possible effect against the coronavirus. We are also donating large quantities of medicines that could help people.

A good example is chloroquine, a long-used malaria drug from Bayer. We have now donated large quantities of chloroquine to numerous countries, including China, Italy, the United States and Germany. Laboratory and hospital tests provided initial indications that chloroquine might help in treating patients with COVID-19. As a prescription medicine, chloroquine may of course only be taken under medical supervision.

The scientists hope to gain meaningful results in the coming weeks. Should the benefit be scientifically proven, chloroquine, for example, could be used globally on a large scale. If that were the case, we would do everything in our power to manufacture sufficient quantities of the drug – including in Germany. We would produce the medicine entirely for the public good and supply it to governments free of charge.

In addition, there are countless examples of colleagues throughout the world bringing about tangible progress: Take the example of our colleague Kirsten Leineweber, who leads a cardiovascular research team in Wuppertal. Thanks to her efforts, ventilators from Bayer are now being used in Wuppertal hospitals. She and her team also ensured that testing devices from Bayer’s drug research were provided to medical laboratories, where they are being used to perform thousands of additional corona tests every day.

In Berlin we have granted leave of absence to more than 140 colleagues who have volunteered to work in our new test laboratory. In addition, we are donating other medicines and self-care products, such as antibiotics or vitamin supplements, in numerous countries.

Chet Barber, an American colleague in technical development in St. Louis, saw a report on television about a company making special face masks using a 3D printer. Four days later we started making them ourselves. Since then our colleagues in St. Louis have been producing 500 of these protective masks every day and supplying them to hospitals and fire departments in the area.

This is by no means a complete list. But these individual examples serve to highlight the incredible level of personal initiative shown by our people. That makes me very proud. Being there when it matters. Supporting those most in need. That’s how I’ve experienced this company for more than 30 years, and especially in these times.

I’d therefore like to sincerely thank all of our employees – also on behalf of my colleagues on the Board of Management and, I’m sure, on your behalf as stockholders – for their tremendous commitment.

Ladies and gentlemen,

The coronavirus crisis is a challenge to all of us. But it also confirms the focus we chose for our company. We’re staying the course and we’re active in the right businesses. After all, what could be more important than contributing to health and nutrition around the world?

We’re also on course to implement the extensive measures that we initiated at the end of 2018 and have continued to pursue with vigor since last year’s Annual Stockholders’ Meeting. We also took to heart the disappointing voting results at last year’s Annual Stockholders’ Meeting. We engaged in close dialog with investors, took on board the criticisms expressed and worked to improve.

You will see that both the strategic and operational development in the past fiscal year is exactly what we promised you.


At our Capital Markets Day at the end of 2018, we communicated ambitious medium-term financial targets and spoke about strategic levers, including in the area of sustainability. Just before that, we had announced comprehensive portfolio, efficiency and structural measures to put Bayer in a good position for the future. Today I can say that we kept our promises in all of these areas. We achieved our financial targets in 2019 despite encountering a challenging market environment in the agriculture sector in particular.

We also delivered on the portfolio measures we announced. Our Animal Health business is to be sold to Elanco for 7.6 billion dollars. We continue to expect this transaction to close in the middle of this year. And we also successfully divested our stake in the site services provider Currenta and sold off the Dr. Scholl’s™ and Coppertone™ brands. We were able to implement all of these portfolio measures more quickly than expected in 2019. And even more importantly, we achieved attractive divestment proceeds of nearly 10 billion euros for Bayer.

We made very good progress with the efficiency and structural measures, and are targeting gross annual contributions of 2.6 billion euros starting in 2022. This includes the planned synergies from the integration in the agricultural business. We already achieved 30 percent of this efficiency target in 2019. So here again, we’re progressing ahead of schedule.

Ladies and gentlemen,

We had already spoken about the importance of sustainability when we completed the acquisition of Monsanto. I had promised you at our Annual Stockholders’ Meeting two years ago that we would apply the same determination to achieving our sustainability goals as we do to reaching our financial targets. Here again, we’ve delivered. We believe the new sustainability goals we defined in 2019 are very ambitious. We decided that Bayer will become a 100 percent carbon-neutral company by 2030.

In addition, we have set ourselves specific goals in terms of sustainable development and integrated them into our strategy, operational targets and compensation system. Under the compensation system for the Board of Management that you’re voting on today, 20 percent of the Board’s long-term variable compensation will be linked to the attainment of our sustainability goals starting next year. That makes us one of the pioneers among the DAX companies.

At the same time, we again demonstrated in 2019 what makes us special as a science company. In total, we invested 5.3 billion euros in research and development. That’s a record amount. Bayer has been a science-based company for more than 150 years, but never before has so much been spent on research and development as last year.


More than 16,000 of our colleagues at Bayer work in research and development. We collaborate with over 8,000 different partners across the world. Our corporate purpose puts it in a nutshell: “Science for a better life.” Bayer scientists are constantly working on specific projects for the benefit of patients, consumers or farmers. Here are some examples:

Just a few weeks ago we received marketing approval in Europe for our new cancer drug Nubeqa™. This prostate cancer treatment with a novel molecular structure was jointly developed with a partner in Finland.

In agriculture, a pilot project has been under way in Mexico since January for short-stature corn, a new innovative corn plant. This crop requires less water and can better withstand difficult environmental conditions such as strong winds. In addition, the new corn can be better managed, resulting in significantly higher yields for the farmer. Based on what we’ve seen so far, we’re very hopeful that this innovation can revolutionize the growing of corn, one of the most important crops – both for smallholder farmers and large-scale agricultural operations.

Increasingly important among the products of our Consumer Health Division is the Elevit™ brand, the global number one in pregnancy multivitamins. Studies clearly show that nutrients and vitamins during pregnancy and after birth have important effects on the health of babies and small children. The first 1,000 days of development are the most important of all. Last year we continued to strengthen the brand through innovations, such as a product line extension for the postnatal phase or a direct sales model in some countries.

Since 2016 our colleagues at BlueRock have been carrying out research into stem cell therapies that could be effective against Parkinson’s, for example. No causal treatment currently exists for this disease. The new approach could even lead to a cure for Parkinson’s at some time in the future. That is our goal, although our work is still at a very early stage. Incidentally, BlueRock was the first investment of our disruptive innovations unit known as “Leaps by Bayer.” Bayer wholly acquired BlueRock in 2019 to create the basis for a long-term leadership position in cell and gene therapy.


Ladies and gentlemen,

That brings me to the details of our business development in 2019. The Bayer Group posted sales of 43.5 billion euros in fiscal 2019. Adjusted for currency and portfolio effects – which is the way we generally report the change in sales – our business grew by 3.5 percent.

After adjusting for special items, EBITDA – or earnings before interest, taxes, depreciation and amortization – amounted to 11.5 billion euros. That’s the highest figure Bayer has ever achieved.

We achieved a free cash flow of 4.2 billion euros, exceeding even the upper end of our targets. At the same time, we reduced net financial debt by around 1.6 billion euros.


Our agricultural business developed particularly well in Latin America. In North America we maintained the level of the previous year, despite the difficulties our customers faced due to the extreme rainfall in the United States. Here you can see some images from farms in the Midwest. The rainfall in some states of the U.S. in the summer of 2019 was the highest since weather records began. In other parts of the world such as Europe or Australia, farmers had to contend with exactly the opposite extreme, namely drought. That underlines once again how farmers – and therefore Bayer too – are being affected by climate change. In 2019, the acquired agricultural business was included in the full year for the first time. The earnings contribution and the synergies from the integration resulted in an 81 percent jump in EBITDA at Crop Science to 4.8 billion euros.


Sales at our Pharmaceuticals Division grew by 5.6 percent in 2019, driven mainly by strong growth in China and our two top products Xarelto™ and Eylea™. Sales of each of these medicines rose by about 13 percent from the prior year. So here we continue to have a remarkable success story. Earnings at Pharmaceuticals rose by nearly 7 percent in 2019. The underlying increase was actually much greater, because in 2018 there had been a special gain of about 190 million euros from a milestone payment.

Sales of our self-care products moved ahead in 2019. We saw encouraging growth in the Allergy & Cold category, driven by our antihistamine Claritin™. Earnings at Consumer Health came in level with the previous year.

Ladies and gentlemen,

we naturally also want you, our stockholders, to share appropriately in last year’s success. We have therefore proposed to the Annual Stockholders’ Meeting that a dividend of 2.80 euros per share be paid for 2019. This is the same amount as for the previous year. It gives a payout of some 44 percent of core earnings per share, which is in excess of the target range of 30 to 40 percent. It’s important to us that we pay your dividend on schedule and in full, even in these uncertain times.


The positive operational development continued into the first quarter of 2020. We published the relevant figures yesterday. Our start to the year was of course greatly marked by the corona crisis. This has shown that with our product portfolio in health and nutrition we can successfully continue our business operations even under difficult conditions and make a positive contribution. On the one hand, the pandemic led to sales growth as a result of a sharp increase in demand in some business units. We assume that part of this increase in customers, consumers and patients was also due to inventory buildup. On the other hand, our business has also been negatively affected to some extent by the restrictions. All in all, the steps we’ve taken have enabled us to maintain our business operations worldwide.

Group sales in the first quarter rose by 6 percent to 12.8 billion euros. EBITDA before special items increased by 10.2 percent to 4.4 billion euros. Sales and earnings moved ahead in all three divisions. Demand was particularly high at Consumer Health for products such as nutritional supplements.


Ladies and gentlemen,

Let’s move on now to the glyphosate litigation. As you know, there are numerous lawsuits pending in this matter in the United States. The number has continued to increase over the past quarters, although this figure is not a reflection of the merits of the claims asserted by plaintiffs.

Our position on this remains unchanged and is consistent with the assessment of the regulatory authorities worldwide, where experts work who bear responsibility for product safety and thus for people. They have repeatedly confirmed, based on current information, that glyphosate-based products are safe when used as directed. For decades, farmers around the world have relied on glyphosate to protect their crops.

So where do we actually stand in this litigation complex? There are three cases in which jury verdicts have been issued against our company. We have appealed all of these cases. We expect a decision in the first appeal during summer of this year.

At the same time, discussions on a possible agreement with the plaintiffs are ongoing under the auspices of the mediator Ken Feinberg. We declared very early on our willingness to engage constructively in the mediation discussions. We had made some progress in this – before the outbreak of COVID-19 overshadowed this topic as well. Specifically, this has caused numerous meeting cancellations, and, as a result, significantly slowed down progress in the negotiations. Ken Feinberg also explained this recently. The content of the negotiations is of course confidential. I therefore ask for your understanding that I cannot go into details.

What I can tell you though is that our basic attitude has not changed.

- We will continue to engage constructively in mediation.

- Regardless of the duration of the negotiations, we will continue to consider a solution only if it is financially reasonable and puts in place a mechanism to resolve potential future claims efficiently. Against the background of the looming recession and looking at, in part, considerable liquidity challenges, this applies more than ever.

We are convinced that we are thus representing the interests of the company, and also your interests as stockholders, in the best possible way.


Ladies and gentlemen,

Looking to the future in the context of the COVID-19 pandemic, we have to deal with numerous uncertainties at the moment. We are in the middle of a crisis whose further development cannot be predicted at present. In the coming months, it will be crucial for us to keep our supply chains as resilient as possible and thus further secure our business operations. Apart from this, there are a number of factors that will affect the development of our business in the current year:

We will have to see, for example, how the continuing crisis impacts the financial markets or our customers’ solvency.

We must also monitor how demand for our products develops. It may be that demand for some of our pharmaceutical products will decrease if patients can’t see their doctors and elective treatments are postponed.

For our over-the-counter products, we need to analyze whether the current high demand is primarily due to stockpiling or to a real increase in consumption.

In agriculture, too, we must wait to see how demand develops, for example for crops that are also used for biofuels.

We published our forecast for the full year 2020 in February, before COVID-19 developed into a pandemic. This forecast continues to reflect our targets. We anticipate that COVID-19 will continue to impact our business over the course of 2020. It will not be possible to reliably assess the positive and negative effects until later in the year.

But as well as all the challenges, we can also see a number of opportunities for our company. I believe these exceptional times can also teach us something for Bayer’s future. To end my speech, I’d like to share three important observations with you.


My first observation is that in handling the corona crisis we get very impressive confirmation yet again of just how relevant our businesses are.

If you think about it: Who are our heroes these days? I would say: They are the doctors and nurses in the hospitals. They are the sales staff in supermarkets. They are the people who manufacture masks or medicines, conduct research into vaccines or maintain our food supplies.
Health and nutrition – in this crisis these two sectors are proving how essential they are everywhere. And it’s precisely in these sectors that Bayer is now a world leader.

But our company’s relevance is also apparent irrespective of COVID-19. Take the example of climate change, another pressing challenge facing humankind. According to experts, there are two things we need to do to combat climate change: mitigation and adaptation.

Mitigation is about lowering greenhouse gas emissions and being commercially successful at the same time. Here, Bayer has clearly stated its goal of becoming carbon-neutral by 2030. Above all, however, we’ve acknowledged our responsibility as a market and innovation leader in the agricultural industry to contribute to sustainable farming. This can help reduce emissions by amounts equivalent to the total emissions of medium-sized countries. Few other companies are in a position to contribute on this scale.

However, properly addressing climate change also means adaptation. People throughout the world are already being affected by climate change, and its impact will continue to increase. That applies particularly to smallholder farmers in low- and middle-income countries. They are crucial to regional food supplies. But they lack the resources and expertise to withstand even more droughts or floods. The risk of harvest losses, malnutrition and therefore other diseases increases from year to year.

According to Bill Gates, “the best thing we can do to help people in poor countries adapt to climate change is to make sure they are healthy enough to survive it.” Health and nutrition – these sectors are systemically relevant for dealing with climate change, too.


The second lesson from this crisis is the importance of science. An alarming development in recent years has been the decline of trust in science and the role of experts in general. It sometimes seemed as if people would only accept facts if they fitted their own worldviews.

Now, in the corona crisis, is the hour of science and experts. The advice of researchers is being listened to again. Whether as advisers to governments, in hospitals or on the development of vaccines – experts have a powerful voice, and that’s a good thing. It is to be hoped that this return to science-based discussions will remain with us after the crisis – we will do our part.


And there’s a third insight to be gained from the present crisis as far as Bayer’s future is concerned. We’re now seeing that providing for people’s basic needs is taking priority throughout the world. It’s not about luxuries for the few but about vital access to health and nutrition for as many people as possible. That’s the right approach and it’s also the key to truly sustainable development.

We dealt at great length last year with the question of what sustainability really means for a company that is as large as Bayer and bears such great responsibility.

A few years ago, the United Nations set a total of 17 Sustainable Development Goals for the period through 2030.

I have already talked about climate protection and Bayer’s systemically relevant role. But sustainability is much more than climate. It’s about tackling many challenges at once and improving living conditions for as many people as possible while conserving natural resources. With the products and solutions Bayer has available, we can contribute substantially to multiple goals of the United Nations. We can be a systemic factor in achieving the goals by 2030.

This awareness is reflected in our own sustainability targets that we have also set for 2030. These include an explicit commitment to reach an additional several hundred million people and their families.

We plan to provide everyday health products in underserved areas around the world. We aim to give smallholder farmers in developing countries access to innovations in agriculture.

And we intend to help women in developing countries steer their own futures by giving them access to modern contraceptives.

Our goals for 2030 are very ambitious – but even after that we will continue to work on sustainability issues and solutions to improve people’s lives. This basic approach is part of our vision at Bayer: “Health for all, hunger for none.”

We can contribute significantly to preventing, treating or even curing diseases. To improving people’s everyday health. Or helping to feed the world’s growing population while at the same time operating sustainably.

Our vision was developed before COVID-19 happened. Nevertheless, I believe that at this time of crisis we can particularly sense the essential nature of the goals we’re working to achieve. “Health for all, hunger for none” – is the thinking that will shape our company and power it forward in the coming years.

Ladies and gentlemen,

I’m addressing you today in an unusual format and in unusual times. I’ve explained to you how Bayer is dealing with the current emergency. How we’re tackling the tasks at hand in many areas in order to overcome this situation. I’ve reported to you on all the things we did in 2019 to keep our word and take the actions we had announced to our stockholders and to our stakeholders in society. I’ve described to you how our operational activities were developing prior to the COVID-19 outbreak and the factors that will affect the business going forward. And finally, I’ve shown you what we can learn from this global pandemic and why this experience further raises our confidence in the decisions we made for Bayer’s future.

It’s clear that the struggle against the coronavirus is far from over. The uncertainties surrounding it continue. But it’s also clear that the things Bayer has always excelled at are again apparent now. People are at the center of our efforts. We’re working on specific solutions. Our customers can rely on us. We’re living up to our social responsibility.

One person who has embodied this Bayer DNA for decades and at the same time symbolizes the courage needed to initiate necessary changes is Werner Wenning, the Chairman of our Supervisory Board. As you know, his term of office ends with today’s Annual Stockholders’ Meeting. His departure surely also marks the end of an era at our company.

Mr. Wenning has served Bayer for 54 years, which means he has helped to write more than one-third of our company’s nearly 160-year history. He was a member of the Board of Management and then of the Supervisory Board for a total of over 20 years. His legacy also includes our company’s systematic focus on health and nutrition.

Professor Dr. Norbert Winkeljohann, who now takes over the chairmanship of the Supervisory Board, has a proven track record of leadership. He has already been a member of our Supervisory Board for two years and chaired the Audit Committee. At the same time he brings along a fresh external perspective and his experience with other companies.

Dear Professor Winkeljohann, I look forward very much to working with you and the Supervisory Board under your leadership.

Dear stockholders,

I would like to thank you for your support over the past year and for your attention during this unfamiliar kind of Annual Stockholders’ Meeting. I hope I have been able to give you a good overview of the most important developments at our company. We will respond to the questions you have submitted in advance during the further course of the Annual Stockholders’ Meeting.

Thank you very much.

Forward-Looking Information
This release may contain forward-looking statements based on current assumptions and forecasts made by Bayer 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.

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