Management Report
3. Sales and Earnings Forecast
The following forecasts for 2010 are based on the business performance described in this report, taking into account the potential risks and opportunities. We are adhering to our sales and earnings forecast for the period through 2012 (as given in
chapter 11.4 of the Bayer Annual Report 2009).
Bayer Group
We remain optimistic for 2010. The strong recovery at MaterialScience is compensating for the below-forecast business performance at HealthCare and CropScience. Currency parities have also continued to trend positively.
We continue to target currency- and portfolio-adjusted sales growth of more than 5%. Research and development spending is now expected to total some €3.1 billion (previously: some €2.9 billion). It remains our aim to increase EBITDA before special items to more than €7 billion.
Core earnings per share are expected to improve by more than 15%. Our estimates are based on the exchange rates prevailing at the end of the second quarter of 2010.
HealthCare
We are adjusting our sales forecast for HealthCare in 2010 overall following the unexpected market entry of a generic competitor to YAZ® in the United States. We now expect sales in the Pharmaceuticals segment to remain level year on year on a currency- and portfolio-adjusted basis. In Consumer Health, however, we still expect to expand faster than the market. After adjusting for currency and portfolio effects, we anticipate a slight increase in sales at HealthCare (previously: about 3%). In part because of the situation pertaining to YAZ®, we now believe that EBITDA before special items will at least REACH the prior-year level (previously: further year-on-year increase).
CropScience
Against the background of the unfavorable weather and market conditions in the first half of the year, we are lowering our sales and earnings forecast for 2010 at CropScience. Provided market conditions return to normal in the second half of the year, we anticipate that sales in 2010 overall will be slightly lower than the prior-year level on a currency- and portfolio-adjusted basis (previously: increase of between 2% and 3%). We expect EBITDA before special items to decline significantly in 2010 (previously: level with the previous year).
MaterialScience
We remain optimistic concerning our MaterialScience subgroup in the second half of 2010 and expect business to continue trending positively. In light of what we know today, we now view as conservative our previous targets of achieving a sales increase in the region of 20% and more than doubling EBITDA before special items. We expect to exceed these forecasts. In the third quarter, we anticipate that sales and EBITDA before special items will be in line with those of the previous quarter.