Earnings; Asset and Financial Position of the Bayer Group

Value-Based Performance

Value-Based Performance by Segment

 

 

Pharmaceuticals

 

Consumer Health

 

Crop Science

 

Animal Health

 

Group1

 

 

2017

2018

 

2017

2018

 

2017

2018

 

2017

2018

 

2017

2018

 

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

 

€ million

€ million

1

For definition see Chapter “Alternative Performance Measures Used by the Bayer Group”

2

Including Reconciliation

3

24% on EBIT; based on historical average of tax rates

EBIT1

 

4,325

3,213

 

518

(2,077)

 

1,235

3,138

 

307

312

 

5,903

3,914

Taxes1,3

 

(1,038)

(771)

 

(124)

498

 

(296)

(753)

 

(74)

(75)

 

(1,417)

(939)

NOPAT1

 

3,287

2,442

 

394

(1,579)

 

939

2,385

 

233

237

 

4,486

2,975

Average capital employed1

 

15,630

14,721

 

14,404

12,278

 

9,814

37,614

 

495

623

 

41,600

67,537

ROCE1

 

21.0%

16.6%

 

2.7%

(12.9)%

 

9.6%

6.3%

 

47.1%

38.0%

 

10.8%

4.4%

WACC1

 

6.9%

6.7%

 

6.9%

6.7%

 

6.9%

6.7%

 

6.9%

6.7%

 

6.9%

6.7%

Bayer’s ROCE in 2018 amounted to 4.4%, which was 2.3 percentage points below the Bayer Group’s cost of capital of 6.7%. The year-on-year changes were driven primarily by special items, which had a significant impact on all segments. Special gains from one-time divestment proceeds, such as those from the divestments of Crop Science businesses made to satisfy antitrust requirements, had a positive impact on ROCE. By contrast, the results of annual impairment tests (Pharmaceuticals and Consumer Health) and a significantly higher capital employed basis as a result of the Monsanto acquisition (Crop Science) weighed heavily on the ROCE of the respective segments.

The following overview shows the composition of the average capital employed that was used to calculate ROCE.

Components of Capital Employed1

 

 

Dec. 31, 2017

 

Dec. 31, 2018

 

 

€ million

 

€ million

1

For definition see Chapter “Alternative Performance Measures Used by the Bayer Group”

2

Selected items of the component: nonoperative or non-interest-bearing items eliminated within capital employed

Goodwill

 

14,751

 

38,146

Other intangible assets

 

11,674

 

36,746

Property, plant and equipment

 

7,633

 

12,944

Other financial assets2

 

47

 

42

Inventories

 

6,550

 

10,961

Trade accounts receivable

 

8,582

 

11,836

Other receivables2

 

1,293

 

1,850

Deferred tax assets2

 

2,371

 

1,666

Claims for income tax refunds

 

474

 

809

Assets held for sale

 

2,081

 

234

Gross capital employed

 

55,456

 

115,234

Other provisions2

 

(5,602)

 

(6,807)

Trade accounts payable

 

(5,129)

 

(5,414)

Other liabilities2

 

(2,093)

 

(1,685)

Refund liabilities

 

 

(3,789)

Contract liabilities

 

 

(4,221)

Financial liabilities2

 

(4)

 

(1)

Deferred tax liabilities2

 

(910)

 

(4,532)

Income tax liabilities

 

(917)

 

(2,465)

Liabilities directly related to assets held for sale

 

(111)

 

(12)

Capital employed

 

40,690

 

86,308

Average capital employed

 

41,600

 

67,537

The Monsanto acquisition closed in June 2018, and thus during the year. This is taken into account in the average capital employed calculation through a month-based weighting of the capital employed values for the Crop Science segment and thus, on a prorated basis, for the Group as well. This approach serves to illustrate the corresponding impact on average capital employed over the course of the year due to the point in time the acquisition occurred.

Compare to Last Year