Segment Reporting

At Bayer, the Board of Management – as the chief operating decision-maker – allocates resources to the operating segments and assesses their performance. The reportable segments and regions are identified, and the disclosures selected, in line with the internal financial reporting system (management approach) and based on the Group accounting policies outlined in Note “Basic principles, methods and critical accounting estimates.”

As of December 31, 2018, the Bayer Group comprises the four reportable segments Pharmaceuticals, Consumer Health, Crop Science and Animal Health. Their activities are as follows:

Activities of the Segments

Segment

 

Activities

Pharmaceuticals

 

Development, production and marketing of prescription products, especially for cardiology and women’s health; specialty therapeutics in the areas of oncology, hematology and ophthalmology; diagnostic imaging equipment and the necessary contrast agents

Consumer Health

 

Development, production and marketing of mainly nonprescription (OTC = over-the-counter) products in the dermatology, nutritional supplements, pain, digestive health, allergy, cough and cold, foot care and sun protection categories

Crop Science

 

Development, production and marketing of a broad portfolio of products in seeds and plant traits, crop protection and nonagricultural pest control

Animal Health

 

Development, production and marketing of prescription and nonprescription veterinary products

In connection with the acquisition of Monsanto, the reporting structure of the Crop Science segment was adjusted to reflect the future relative sizes of the various strategic business entities.

Business activities that cannot be allocated to any other segment are reported under “All Other Segments.” These primarily include the services provided by the service areas: Business Services and Currenta.

The items in “Corporate Functions and Consolidation” mainly comprise the Bayer holding companies and Leaps by Bayer, which focuses on the development of crucial, cross-species innovations. Also recognized are gains and losses incurred upon the ongoing revaluation of nonmonetary assets and liabilities and of equity according to IAS 29 (Financial Reporting in Hyperinflationary Economies) for Bayer S.A. in Argentina. They also include the increase or decrease in expenses for Group-wide long-term stock-based compensation arising from fluctuations in the performance of Bayer stock, and the consolidation of intersegment sales (2018: €2.8 billion; 2017: €2.4 billion), along with expenses, income, assets, liabilities and certain contingent liabilities of comparable central functions of the acquired Monsanto Group.

The segment data are calculated as follows:

  • The intersegment sales reflect intra-Group transactions effected at transfer prices fixed on an arm’s-length basis.
  • The net cash provided by operating activities is the cash flow from operating activities as defined in IAS 7 (Statement of Cash Flows).
  • The segment assets comprise all assets serving the respective segment, stated as of December 31, including material participating interests of direct relevance to business operations.
  • The equity items reflect the earnings and carrying amounts of investments accounted for using the equity method.
Key Data by Segment

 

 

Pharmaceuticals

 

Consumer Health

 

Crop Science

 

Animal Health

 

 

2017

2018

 

2017

2018

 

2017

2018

 

2017

2018

 

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

1

For definition see Combined Management Report, Chapter “Alternative Performance Measures Used by the Bayer Group”.”

Net sales (external)

 

16,847

16,746

 

5,862

5,450

 

9,577

14,266

 

1,571

1,501

Currency-adjusted change1

 

+4.3%

+3.1%

 

–1.7%

–1.3%

 

–2.2%

+53.3%

 

+4.1%

+0.5%

Intersegment sales

 

38

37

 

14

3

 

33

39

 

8

9

Net sales (total)

 

16,885

16,783

 

5,876

5,453

 

9,610

14,305

 

1,579

1,510

EBIT1

 

4,325

3,213

 

518

(2,077)

 

1,235

3,138

 

307

312

EBITDA before special items1

 

5,711

5,598

 

1,231

1,096

 

2,043

2,651

 

381

358

ROCE1

 

21.0%

16.6%

 

2.7%

(12.9)%

 

9.6%

6.3%

 

47.1%

38.0%

Net cash provided by operating activities

 

3,867

4,376

 

1,059

727

 

1,884

3,743

 

209

271

Equity-method income (loss)

 

1

16

 

1

1

 

(1)

1

 

Equity-method carrying amounts

 

3

 

11

11

 

35

140

 

Assets

 

21,753

20,687

 

14,896

12,224

 

13,106

76,809

 

935

1,001

Capital expenditures

 

1,126

888

 

181

228

 

670

1,030

 

41

55

Depreciation, amortization and impairments

 

1,251

1,584

 

627

3,112

 

481

1,362

 

45

39

of which impairment losses / loss reversals

 

217

603

 

213

2,732

 

71

13

 

9

Research and development expenses

 

2,888

2,893

 

240

226

 

1,166

1,950

 

155

143

Key Data by Segment (continued)

 

 

Reconciliation

 

 

 

 

All Other Segments

 

Corporate Functions and Consolidation

 

Group

 

 

2017

2018

 

2017

2018

 

2017

2018

 

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

1

For definition see Combined Management Report, Chapter “Alternative Performance Measures Used by the Bayer Group”.

Net sales (external)

 

1,142

1,605

 

16

18

 

35,015

39,586

Currency-adjusted change1

 

+10.5%

+40.4%

 

 

+1.6%

+17.2%

Intersegment sales

 

2,324

2,682

 

(2,417)

(2,770)

 

Net sales (total)

 

3,466

4,287

 

(2,401)

(2,752)

 

35,015

39,586

EBIT1

 

4

397

 

(486)

(1,069)

 

5,903

3,914

EBITDA before special items1

 

358

735

 

(436)

(891)

 

9,288

9,547

ROCE1

 

 

 

10.8%

4.4%

Net cash provided by operating activities

 

256

324

 

(664)

(1,524)

 

6,611

7,917

Equity-method income (loss)

 

 

19

50

 

20

68

Equity-method carry amounts

 

 

3,958

364

 

4,007

515

Assets

 

2,206

2,977

 

22,191

12,587

 

75,087

126,285

Capital expenditures

 

359

354

 

41

9

 

2,418

2,564

Depreciation, amortization and impairments

 

243

240

 

13

15

 

2,660

6,352

of which impairment losses / loss reversals

 

2

5

 

 

512

3,353

Research and development expenses

 

3

1

 

52

33

 

4,504

5,246

Reconciliations

The reconciliations of the segments’ assets to Group assets and of EBITDA before special items, EBIT before special items and EBIT to Group income before income taxes are given in the following tables:

Reconciliation of Segments’ Assets to Group Assets

 

 

2017

 

2018

 

 

€ million

 

€ million

Operating segments’ assets

 

52,896

 

113,698

Corporate Functions and Consolidation assets

 

4,207

 

613

Nonallocated assets

 

17,984

 

11,974

Group assets

 

75,087

 

126,285

Reconciliation of Segments’ EBITDA Before Special Items to Group Income Before Income Taxes

 

 

2017

 

2018

 

 

€ million

 

€ million

1

For definition see Combined Management Report, Chapter “Alternative Performance Measures Used by the Bayer Group”.

EBITDA before special items of segments

 

9,724

 

10,438

EBITDA before special items of Corporate Functions and Consolidation

 

(436)

 

(891)

EBITDA before special items1

 

9,288

 

9,547

Depreciation, amortization and impairment losses / loss reversals before special items of segments

 

(2,145)

 

(3,052)

Depreciation, amortization and impairment losses / loss reversals before special items of Corporate Functions and Consolidation

 

(13)

 

(15)

Depreciation, amortization and impairment losses / loss reversals before special items

 

(2,158)

 

(3,067)

EBIT before special items of segments

 

7,579

 

7,386

EBIT before special items of Corporate Functions and Consolidation

 

(449)

 

(906)

EBIT before special items1

 

7,130

 

6,480

Special items of segments

 

(1,190)

 

(2,403)

Special items of Corporate Functions and Consolidation

 

(37)

 

(163)

Special items1

 

(1,227)

 

(2,566)

EBIT of segments

 

6,389

 

4,983

EBIT of Corporate Functions and Consolidation

 

(486)

 

(1,069)

EBIT1

 

5,903

 

3,914

Financial result

 

(1,326)

 

(1,596)

Income before income taxes

 

4,577

 

2,318

Information on geographical areas

The following table provides a regional breakdown of external sales by market and of intangible assets, property, plant and equipment:

Information on Geographical Areas

 

 

Net sales (external) – by market

 

Intangible assets and property, plant and equipment

 

 

2017

2018

 

2017

2018

 

 

€ million

€ million

 

€ million

€ million

Europe / Middle East / Africa

 

13,388

14,143

 

21,356

26,478

of which Germany

 

3,392

3,819

 

10,856

16,167

of which Switzerland

 

485

449

 

5,190

5,469

North America

 

10,143

11,569

 

10,354

55,644

of which United States

 

8,561

9,793

 

10,056

54,073

Asia / Pacific

 

7,637

8,115

 

1,771

1,997

of which China

 

2,594

2,927

 

853

529

Latin America

 

3,847

5,759

 

577

3,717

of which Brazil

 

1,647

2,869

 

209

2,573

Total

 

35,015

39,586

 

34,058

87,836

Information on major customers

Revenues from transactions with a single customer in no case exceeded 10% of Bayer Group sales in 2018 or 2017.

Compare to Last Year