Ladies and gentlemen,
thank you for
standing by. Welcome to
Bayer's Investor and
Analyst
Conference
Call
on
the
Full
Year
and
Fourth
Quarter
2021 Results. Throughout
today's
recorded
presentation,
all
participants
will
be
in
a
listen-only
mode.
The presentation
will
be
followed
by
a
question-and-answer
session.
[Operator Instructions]
I'd
now
like to
turn
the
conference
over
to
Mr.
Oliver
Maier, Head
of
Investor
Relations
of
Bayer
AG.
Please
go
ahead,
sir.
O
Oliver Maier
Head-Investor Relations, Bayer AG
Great. Thank
you
so
much,
Nairobi.
Good
afternoon
and
thanks
for
joining
us
today.
I'd
like
to
welcome
all
of
you
to
our
fourth
quarter
full
year
2021
conference
call.
With
me
on
the
call
today
are Werner
Baumann,
our
CEO;
and
Wolfgang
Nickl,
our
CFO.
The
divisions
are
represented
by
the
responsible
management
board
members.
Slightly
different
layout
for
the
fiscal
year,
Werner
will
begin
today's
call
with
the
highlights
of
2021
and
frame
the
year
ahead
of
us.
We
will
then
have
Rodrigo,
Stefan
and
Heiko
comment
on
the
respective
business
performances
and
the
divisional
outlook
for
2022.
Wolfgang
will
wrap
it
up
with
an
overview
of
the
group
performance
and
outlook
before
we
open
up
for
the
Q&A
session.
As
always,
I
would
like
to
draw
your
attention
to
the
cautionary
language
that
is
included
in
our
safe
harbor
statement
as
well
as
in
all
the
materials
that
we
have
distributed
today.
With
that, I'll
hand
it
over
to
you,
Werner.
W
Werner Baumann
All
right.
Thanks,
Oliver,
and
good
afternoon,
ladies
and
gentlemen.
It's
my
pleasure
to
welcome
you
to
our
conference
call.
Before
we
go
into
the
business
performance,
let
me
start
with
what
is
certainly
top
of
mind
for
all
of
us.
With
the
Russian
invasion
in
Ukraine,
the
geopolitical
order
has
shaken.
And
we
are
deeply
shocked
and
concerned
about
what
is happening
to
the
Ukrainian
people.
This
war
is
no
less
than
a
threat
to
our
freedom
and
democracy.
And
we
as
Bayer
condemn
in
the
most
vigorous
way
this
Russian
attack.
While
we
hope
that
concerted
political
actions
will
help
to
improve
the
situation
as
soon
as
possible,
we
as
a
company
try
to
step
up
as
a
reliable
partner
and
a
good
corporate
citizen
true
to
our
vision,
help
for
all,
hunger
for
none.
Of
course,
the
safety
of
our
employees
is
now
our
top
priority.
And
we
are
taking
all
appropriate
measures
to
protect
our
700
colleagues
in
the
Ukraine.
At
the
same
time,
we
are
doing
everything
we
can
to
further
ensure
supply
of
our
products
to
the
civilian
population,
including
vital
medicines
and
agriculture
products
to
safeguard
food
supplies.
And
of
course,
we
are
prepared
to
step
up
our
humanitarian
help
with
financial
support
and
donations
of
our
medical
products,
as
we
have
shown
during
the
COVID
pandemic.
Now,
there's
certainly
no
smooth
transition,
but
let
me
take
a
step
back
and
comment
on
some
key
macro
factors
relevant
for
our
business
last
year. We
saw
a particularly
favorable
agricultural
market
dynamics,
with
high
soft
commodity
prices
and
tight
global
supply
leading
to
increased
levels
of
glyphosate
prices.
In
pharma,
elective
treatments
increased
again
after
COVID-19
restrictions
in
2020.
And
for
Consumer
Health,
we
saw
continued
growing
demand
for
preventive
health
solutions.
On
the
downside,
we
know that
increasing
inflationary
pressure
and
volatility
of
global
supply
chains
across
industries.
Let
me also
provide
a
very
brief
update
on
the
status
of
the
glyphosate
litigation.
In
December,
the
US
Supreme
Court
requested
the
views
of
the
Solicitor
General
in
the
Hardeman
case.
Notwithstanding
what
the
brief
concludes,
there
are
two
potential
outcomes.
If
the
Supreme
Court
decides
to
review
the
Hardeman
case
after
input
from
the
Solicitor
General,
and
finally,
rules
in
our
favor,
this
will
effectively
end
the
glyphosate
litigation.
If
the
Supreme
Court
denies
accepting
the
case
for
review
or
finally
rules
against
us,
we
will
activate
the
voluntary
claims
administration
program
in
our
five-point
plan
to
help
bring
closure
to
the
litigation.
From
a
financial
point
of
view,
we
have
incorporated
this
specific
scenario
already
into
our
provisions
in
2021.
Now
let's
move
on
to
our
business
performance.
I'm
very
pleased
to
share
that
we
have
overachieved
our
updated
guidance,
which
we
communicated
with
our
Q3
earnings
release. While
2021
started
as
a
transitional
year
for
Bayer,
we
ended
2021
with
strong
momentum
that
provides
an
excellent
base
for
further
growth
and
earnings
expansion
in
2022.
Overall,
and
supported
by
a
positive
market
environment,
we
did
much
better
than
expected
at
the
beginning
of
the
year.
We
substantially
increased
our
top
line
by
9%,
with
strong
contributions
from
all
divisions.
Crop
Science
strengthened
its
market
position,
with
market
share
gains
specifically
in
corn
and
continued
expansion
in
fungicides.
We
also
saw
strong
price
increases
across
the
board,
particularly
for
our
glyphosate-based
products,
driven
by
tight
global
supply.
Pharmaceuticals
generated
another
year
of
healthy
growth
for
our
key
products,
Eylea
and
Xarelto,
despite
the
first
impacts
from
volume-based
procurement
in
China
for
Xarelto.
We
also
reentered
the
US
market
in
cardiology
and
saw
pleasing
contributions
from
our
launch
products.
Consumer
Health
delivered
industry-leading
growth
across
regions
and
categories,
with
a
focus
on
excellence
in
execution
and
innovation.
The
substantial
volume
growth,
strong
price
performance
and
the
contributions
from
our
ongoing
performance
programs
contributed
positively
and
more
than
offset
inflationary
pressure
and
cost
normalization
after
an
exceptional
2020,
while
enabling
us
to
invest
in
launches
and
innovation.
However,
still
reported
performance
in
[ph]
euro (00:06:42)
was
held
back
as
we
faced
significant
foreign
exchange
headwinds
of
roughly
€1
billion
in
top
line
and
approximately
€500
million
in
bottom
line.
Now
let's
look
at
innovation,
which
is
key
for
our
future
growth.
We
have
made
significant
progress
on
our
innovation
agenda
and
are
looking
ahead
to
a
promising
2022.
For
pharmaceuticals,
we
have
achieved
important
approvals
and
entered
commercialization
stage
for
our
new
products,
resulting
in
a
very
much
derisked
late-stage
pipeline.
For
our new
products,
Nubeqa,
Kerendia
and
Verquvo,
we
see
ongoing
strong
launch
momentum
and
planned
further
rollouts
in
2022.
To
that
end,
we
just
recently
received
the
approval
to
market
Kerendia
in
the
European
Union.
And
just
a
week
ago,
for
our
prostate
cancer
drug,
Nubeqa,
we
did
raise
our
peak
sales
expectation
from
more
than
€1
billion
to
now
more
than
€3
billion.
We
also
made
great
progress
on
our
early stage
pipeline
with
our
cell
and
gene
therapy
platform
and
strengthened
our
drug
discovery
capabilities
with
the
acquisition
of
Vividion
Therapeutics.
For our
number
one
product,
Xarelto,
we
saw
the
positive
patent
ruling
confirming
our
once-daily
administration
patent
in
the
EU.
With
that,
we
will
now
have
extended
exclusivity
until
2026
in
Europe
for
our
most
important
pharma
product,
which
complements
the
2027
exclusivity
extension
we
already
achieved
in
the
US.
In
Crop
Science,
we
successfully
commercialized
hundreds
of
next-generation
corn
and
soybean
seed
products
and
advanced
short stature
corn.
We
also
made
significant
progress
on
our
digital
platform,
including
the
successful
launch
of
our
carbon
farming
initiative,
expansion
of
our
Orbia
digital
ag
marketplace
in
Brazil,
and
entered
into
important
collaboration
agreements
with
Microsoft
and
other
external
partners.
In
Consumer
Health,
we
saw
successful
launches
of
Bepanthen
Dry
Skin
and
AleveX
Topical
Pain
as
well
as
regulatory
clearance
for
the
2022
Rx-to-OTC
switch
of
Astepro
in
the
US,
the
first
and
only
steroid-free
nasal
decongestant
in
the
market.
We
also
made
significant
progress
regarding
our
sustainability
goals
and
the
sustainable
development
of
our
businesses.
At
Crop
Science,
we
are
advancing
carbon
farming,
a
completely
novel
field
of
business
which
financially
rewards
farmers
for
adopting
practices
that
improve
carbon
sequestration
into
the
soy.
In
pharmaceuticals,
we
enable
access
to
modern
contraceptives
by
investing
more
than
€400 million
into
facilities
in
Costa
Rica
and
Finland.
And
at
Consumer
Health,
we
are
investing
€100 million
to
make
our
products
more
sustainable.
We
intend
to
make
the
packaging
for
all
our
consumer
products
recyclable
or
reusable
by
2030.
Looking
ahead,
we
are
focused
on
carrying
the
strong
business
momentum
to
2022,
translating
into
growth
and
earnings
expansion. We
expect
that
momentum
to
be
significantly
skewed
towards
the
first
half of
the
year.
On
the
downside,
we
anticipate
inflationary
cost
pressures
to
persist
and
supply
chains
to
remain
stretched,
resulting
in
a
very
volatile
supply
situation
across
industries.
Also,
our
plans
assume
a
stable
geopolitical
environment
in
Eastern
Europe,
which
meanwhile
changed
dramatically.
We
will closely
monitor
and
mitigate
these
risks
to
the
extent
possible.
For
innovation
activities,
we
expect
further
important
news
flow
across
divisions
and
our
Leaps
entity
in
2022,
including
the
news
we
shared
with
you
10
days
ago
on
the
ARASENS
data
for
Nubeqa.
Looking
forward
to
keeping
you
updated.
Stefan
will
also
outline
the
major
pipeline
in
Pharma
and
the
catalysts
we
have
seen
for
the
coming
year.
I'd
also
take
the
opportunity
to
welcome
Rodrigo
Santos
for
his
first
earnings
call.
It's
great
to
have
Rodrigo
on
the
team
as
a
successor
to
Liam.
And
the
business
is
off
to
a
good
start
and
a
bright
future
under
his
leadership.
And now, over to you, Rodrigo.
R
Rodrigo Santos
Thank
you,
Werner,
and
thanks
to
all
of
you
joining
us
today.
I'm
really
excited
to
begin
by
sharing
some
excellent
results
from
this
past
year.
We
saw
great
progress
in
our
pipeline,
in
our
digital
farm
solutions,
well
aligned
with
our
objective
to
transform
agriculture
for
a
more
sustainable
future.
At
the
same
time,
we
clearly
demonstrated
performance
of
a
market
leader
with
share
gain
in
corn
seeds
and
traits
in
key
markets,
such
as
Brazil
and
Argentina,
and
taking
the
number
one
brand
position
in
the US.
This
was
supported
by
the
launch
of
new
hybrids
and
our
next-generation
and
industry-first
RNAi-based
corn
rootworm
trait
as
part
of
the
VTPro4
offering
in
Brazil.
In
soybeans,
we
launched
Intacta
2
Xtend
with
more
than
800,000
acres
in
the
first
year in
Brazil,
and
we
expect
it
to
grow
to
6
million
acres
in
the
next
season.
Meanwhile,
in
North
America,
we
reached
16 million
acres
with
XtendFlex
in
the
first
year
of commercialization,
successfully
defending
our
position
as
the
number
one
soybean
weed
control
system
in
North
America.
So,
I'm
pleased
to
share
that
the
combination
of
innovation
and
disciplined
execution
resulted
in
record
sales
for
Crop
Science
in
2021,
with
growth
across
all
regions
and
all
business
units.
The
11.1%
sales
growth
was
driven
by
higher
prices
for
our
herbicides,
coupled
with
combined
expansion
in
fungicides,
as
well
as
by
market
share
gains
in
corn
and
stronger
pricing
and
volume
gains
in
soybean
seeds
and
traits.
This
performance,
combined
with
our
ongoing
efficiency
measures,
more
than
offset
significant
cost
inflation
as
well
as
negative
currency
effects
of
€387
million.
This
led
to
a
4%
overall
increase
in
EBITDA
before
special
items,
with
a
margin
of
23.2%
or
24.3%
at
prior
year
currency
rates,
consistent
with
our
guidance
for
the
year.
As
we
move to
2022,
we
have
two
primary
objectives,
to
continue
to
perform
and
transform
at
the
same
time.
With
these
results
and
this
innovation
at
our
back,
combined
with
high
commodity
price,
we
see
strong
momentum
moving
into
2022.
As
a
result,
we
are
guiding
to
a
7%
sales
growth
and
EBITDA
before
special
items
margin
of
25%
to
26%.
Overall,
earnings
growth
is
expected
to
come
from
stronger
prices,
share
gains
and
new
efficiency
measures,
which
are
expected
to
more
than
offset
continued
inflationary
cost
pressures,
particularly
in
crop
protection
where
we,
like
the
rest
of
the
industry,
are
experiencing
unprecedented
supply
chain
challenges.
Given
these cost
pressures
and
the
value
of
our
high performance
products
creates,
we
expect
pricing
to
be
the
primary
contributor
to
our
sales
growth
for
the year.
Roughly,
half
of
the
pricing
growth
is
expected
to
come
from
herbicides
and
about
half
from
corn
seeds
and
traits
and
the
rest
of
our
crop
protection
portfolio.
The
annual
refresh
of
our
corn
seed
portfolio
and
upgrades
to
the
next-generation
technologies
in
insecticides and fungicides
like
Fox
Xpro,
enabled
that
growth
with
6%
to
7%
price
increases
globally.
While
volume
is
not
expected
to
be
as
significant
as
pricing,
we
do
expect
share
gains
in
corn
and
strong
demand
from
fungicides
to
contribute
to
our
overall
growth.
In
our
models,
we
expect
herbicides
price
to
be
higher
in
the
first half of
2022
and
lower
on
the
second
half,
with
possible
improvement
of
the
global
supply
of
glyphosate.
This
trend
influences
our
total
outlook
with
our
total
sales
growth
rate,
expected
to
be
above
7%
for
the
first
half
and
below
that
level
for
the
second
half
of
the
year.
Similarly,
our
EBITDA
before
special
items
margin
expected
to
expand
strongly
in
the
first
half
and
compress
in
the
second
half,
on
the
path
to
the
25%
to
26%
for
the
full
year.
This
year,
however,
is
not
expected
to
be
without
challenges.
Our
growth
outlook
in
this
plan
is
constrained
by
potential
competitive
dynamics
and
some
regulatory
uncertainty,
plus
some
potential
supply
challenges
across
all
our
crop
protection
portfolio.
Agriculture
has
always
had
its
challenges
and
always
will.
But
as
the
market
leader
in
this
business,
our
organization
will
focus
on
maximizing
the
opportunities
that
the
innovation
provides,
while
working
to
minimize
the
risks.
I
look
forward
to
updating
you
on
the
performance
against
this
plan
and
ongoing
efforts
to
transform
agriculture
in
the
year
ahead.
With
that,
I
will
hand
over
to
Stefan
to
share
an
update
on
the
Pharma
business.
S
Stefan Oelrich
Thank
you,
Rodrigo.
More
than
happy
to
do
that
and
good
afternoon
to
everyone.
Bayer
Pharma's
top line
saw
a
strong
recovery
in
2021
after
COVID-19
limited
our
patients'
ability
to
get
their
medications
in
the
prior
year.
Sales
grew
7%,
slightly
above
our
upgraded
guidance
from
August,
driven
by
higher
volumes
that
were
up
by
9%.
Around
60%
of
this
increase
came
from
our
two
flagship
products.
Eylea
sales
improved
by
19%,
driven
by
a
double-digit
increase
across
all
regions,
which
was
also
supported
by
continuously
growing
adoption
and
higher
shipments
of
the
prefilled
syringes
that
were
launched
in
2020.
Also,
our
biggest
single
sales
contributor,
Xarelto,
showed
a
strong
performance
in
2021,
growing
6%
year-on-year.
A
healthy
volume
trend
more
than
offset
lower
prices
from
volume-based
procurement
reductions
in
China,
which
started
to
take
effect
in
September
2021
and
were
implemented
in
all
provinces
by
October.
Concluding
my
comments
on
last
year's
key
top line
drivers,
Adalat
and
Adempas
both
achieved
around
20%
growth
in
2021.
For
Adempas,
this
included
a
one-time
milestone
payment
of
€190 million
that
came
in
the
fourth
quarter
driven
by
its
strong
market
momentum
that
led
to
more
than
$1
billion
of
in-market
sales
in
2021.
With
this,
we
have
reached
the
final
sales
threshold
that
triggers
milestone
payments
related
to
this
product.
Looking
at
our
late-stage
assets.
We
successfully
launched
Kerendia
in
the
United
States
last
September.
Despite
limited
ability
to
reach
healthcare
providers
during
the
COVID-19
pandemic,
we
are
excited
to
report
a
launch
uptake
that
is
in
line
with
other
successful
cardiovascular
medicines
that
have
been
introduced
in
the
US
market,
and
we
do
expect
this
trend
to
continue.
Only
recently,
the
American
Diabetes
Association
updated
their
guidelines
with
an
A
recommendation
for
the
use
of
Kerendia
for
patients
with
chronic
kidney
disease
who
are
at
increased
risk
for
cardiovascular
events
or
chronic
kidney
disease
progression.
We
also
continued
to
make
good
progress
with
the
rollout
of
Verquvo
in
the
treatment
of
heart
failure
with
reduced
ejection
fraction,
following
last
year's
approvals
in
the
US,
Japan
and
in
the
EU.
The
continued
rollout
of
our
new
prostate
cancer
drug,
Nubeqa,
was
particularly
successful,
generating
sales
of
€219
million
in
2021.
In
the
second
year
after
market
launch,
it
is
already
one
of
our
top
15 products.
This
strong
performance
is
the
result
of
Nubeqa's
unique
clinical
profile,
which
was
impressively
confirmed
by
a consistent
set
of
strong
efficacy
and
tolerability
data
from
Nubeqa's
second
successful
Phase
III
ARASENS
trial
released
two
weeks
ago.
With
an
EBITDA
before
special
items
of
€5.8
billion,
equivalent
to
a
margin
of
31.5%,
we
also
delivered
on
our
earnings
guidance
in
2021.
As
already
stressed
last
year,
the
2020
margin
was
a
tough
comparison
in
the
first
place
as
it
benefited
significantly
from
cost
containment
we
had
initiated
in
the
face
of
the
evolving
COVID-19
pandemic.
Also,
higher
investments
into
innovation
and marketing
of
new
products
weighed
on
profitability
in
2021.
For
2022,
we
expect
to
grow
divisional
sales
by
3%
to
4%.
We
see
new
launches
increasingly
contributing
to
top line
and
expect
Eylea
to
continue
playing
out
its
market leading
position
with
mid-single-digit
percent
growth
this
year.
Overall,
sales
growth
in
the
division
is
expected
to
exceed
by
far
the
VBP pricing
headwinds
we
are
facing
in
China
for
Xarelto
and
Adalat
this
year.
Please
be
reminded
that
Xarelto
sales
in
2021
only
included
four
months
of
adverse
impact
from
China
VBP,
but
they
will
fully
materialize
in
this
year.
Going
forward,
while
Xarelto
is
expected
to
continue
growing
in
our
largest
region,
Europe,
we're
facing
a
more
heterogeneous
development
in
other
regions,
mainly
due
to
softer
pricing
as
well
as
ending
exclusivity.
Closing
my
comments
on
VBP
in
China,
Adalat
is
likely
to
see
first
impact
by
the
second
half
of
this
year.
In
terms
of
late-stage
pipeline
news
flow,
we've
kicked
off
the
year
strongly,
with
a
second
set
of
very
positive
clinical
Phase
III
data
from
Nubeqa's
ARASENS
trial
and
the
EU
approval
for
Kerendia.
Continuing
the
launch
dynamics
of
our
late-stage
pipeline
assets
and
getting
Nubeqa
submitted
for
the
indication
extension
in
the
metastatic
hormone-sensitive
prostate
cancer
is
one
of
our
key
priorities
this
year.
For
Eylea,
we
are
currently
running
two
Phase
III
studies
with
an
8
milligram
formulation,
with
the
objective
to
potentially
prolong
injection
intervals
and
improve
patient
convenience
while
keeping
superior
efficacy.
Data
from
these
studies
are
expected
to
deliver
results
in
the
second
half
of
this
year.
On
top
of
this,
our
Factor
XI
program
will
be
Phase
III
decision
ready
this
year,
with
a
highly
competitive
profile
that
could
eventually
be
leading
in
the
class.
Targeting
Factor XI
in
the
anti-coagulation
pathway
promises
a
novel
and
disruptive
route
to
decouple
prevention
from
cardiovascular
risks,
from
bleeding
risks.
In
addition,
it
could
offer
options
to
patients
for
which
treatments
are
not
available
at
all
today.
In
the
early
phase
of
our
pipeline,
we
may
see
news
this
year
that
have
the
potential
to
be
transformative
in
fighting
Parkinson's
disease
in
area
of
utmost
clinical
needs.
With
BlueRock
stem
cell-based
therapy
candidate,
DA01,
we're
developing
a
treatment
that
uses
authentic
dopaminergic
neurons
to
reinnervate
the
affected
regions
of
the
human
brain
and
reverse
the
degenerative
process.
We have
included
a
total
of seven
patients
in
the
potentially
groundbreaking
procedure
and
expect
interim
data
from
the
study
in
this
year's
second
half.
The
ongoing
investments
into
technologies
as
well
as
our
progress
in
advancing
our
pipeline
from
early
to
late
stage
to
launches
and
rollouts
reflect
the
consistent
execution
of
our
strategy
to
generate
sustainable
long-term
growth.
At
the
same
time,
our
ambition
is
to
maintain
attractive
returns.
With
the
EBITDA
margin
goal
of
around
32%
before
special
items
for
this
year,
we're
committed
to
deliver
on
both
ends,
supported
by
a
stringent
cost
management
and
reallocation
of
resources.
And
now
it's
Heiko's
turn
to
update
you
on
Consumer
Health.
H
Heiko Willem-Jan Schipper
All
right.
Thank
you,
Stefan,
and
good
afternoon,
everybody.
It's
a
pleasure
for
me
to
go
into
Consumer
Health
performance
in
2021
and
also
share
you
our
outlook
for
2022.
Starting
with
2021,
we
delivered
strong
broad-based
growth
of
6.5%
across
all
our
regions
and
nearly
all
our
categories.
We
are
consistently
performing
at
the
high
end
of
our
industry,
which
is
really
a
demonstration
of
the
quality
of
our
Consumer
Health
business,
our
brands
and
our
people.
In
short,
our
results
prove
our
ability
to
execute
on
our
strategy
and
outperform
in
an
increasingly
competitive
environment.
The
standout
category
performance
was
again
Nutritionals.
We
have
now
seen
strong
double-digit
growth
in
this
category
for
the
past
two
years
with
in
particular,
our
power
brands
One
A
Day
and
Redoxon
performing
very
well.
In
addition,
our
growth
was
supported
by
successful
launches
behind
brands
like
Bepanthen
and
Aleve,
demonstrating
our
ability
to
strengthen
iconic
brands
with
innovation
that
win
with
customers
and
with
consumers.
Cough
and
cold
was
a
tale
of
two
halves.
The
first
half
of
the
year
was
negative
due
to
a
historically
weak
flu
season.
But
for
the
second
half of
2021,
we
saw
robust
growth
following
the
opening
up
of
many
countries.
However,
the
category
finished
2021
slightly
below
prior
year.
All
our
other
categories
delivered
mid-
to
high-single-digit
growth.
These
broad-based
contributions
positioned
us
again
ahead
of
the
overall
market
in
2021,
which
grew
around
4%.
Moving
to
the
bottom
line.
Continued
disciplined
operational
execution
of
our
strategy
once
again
led
to
margin
expansion.
In
2021,
we
improved
our
profitability
by
50
basis
points
to
22.5%,
or
in
absolute
terms,
earnings
before
special
items
amounted
to
€1.2
billion.
This
margin
expansion
was
driven
by
disciplined
spending
and
pricing
measures,
compensating
for
the
inflationary
cost
increases
and
still
enabling
us
to
invest
in
marketing
and
innovation
behind
our
brands.
Now
let's
look
ahead
and
move
to
the
outlook.
Consumer
Health
remains
fully
on
track
to
successfully
deliver
on
our
growth
strategy.
In
2022,
we
expect
to
grow
4%
to
5%,
with
a
further
step-up
in
innovation.
Growth
is
likely
to
be
front-loaded
for
the
first
half
of
the
year
with
an
easier
comp
versus
2021,
especially
in
cough
and
cold.
We
expect
earnings
before
special
items
to
be
within
the
22%
to
23%
range.
We
do
everything
we
can
to
compensate
rising
input
costs
with
efficiency
measures
as
well
as
a
focus
on
pricing.
At
the
same
time,
we
plan
higher
investment
in
the
brands
behind
our
launches
as
well
as
in
research
and
development.
One
major
growth
driver
in
2022 and
beyond
will
be
the
launch
in
the
US
of
a
new
brand
called
Astepro.
It
is
the
first
and
only
steroid-free
antihistamine
nasal
spray
for
allergies
approved
as
an
over-the-counter
product.
This
Rx-to-OTC
switch
represents
a
significant
milestone
for
our
business
as
it
strengthens
our
leading
allergy
portfolio
and
offers
a
differentiated
solution
to
the
50
million
Americans
who
suffer
from
allergies.
In
conclusion,
we
look
forward
to
another
exciting
year
for
our
Consumer
Health
business
at
Bayer.
Over
the
past
three
years,
we
have
delivered
growth
at
the
forefront
of
our
industry
and
improve
margins
at
the
same
time.
We
are
well
placed
to
win
in
this
market
with
our
leading
brands,
broad
geographic
footprints
and
a
proven
track
record
to
win
with
consumers.
And
with
that, I will hand it over to Wolfgang who will guide you through our financials.
W
Wolfgang U. Nickl
Thank
you,
Heiko.
I
will
now
walk
you
through
the
group
financials
of 2021
and
combine
what
you
have
heard from
my
colleagues
in
the
group
outlook
for
fiscal
year
2022.
Group
net
sales
came
in
at
€44
billion
and
9%
growth
over the
prior
year.
This
is
€1
billion
above
our
updated
guidance
and
includes
a
significant,
but
anticipated
currency
headwind
of
€1.1
billion.
The
weakness
of
the
US
dollar
and
the
Brazilian
real against
the
euro
has
the
biggest
effect,
but
the
Japanese
yen,
Turkish
lira
and
Russian
ruble
also
contributed.
Earnings
before
special
items
of
€11.2
billion
declined
by
3%,
resulting
in
a
margin
of
25.4%
in
line
with
our
latest
guidance.
Negative
currency
effects
of
about €500
million
weighed
on
group
EBITDA,
representing
a
50 basis
point
margin
decline
versus
the
prior
year.
For
our
underlying
operations
we
were
by
and
large
able
to
compensate
inflationary
pressure
on
input
costs
with
adjusted pricing
and
efficiency
gains,
while
increasing
investments
into
innovation
and
product
launches.
Inflation
particularly
impacted
our
cost
for
energy,
active
ingredients,
freight
and
labor.
As
an
example,
the
global
container
freight
costs
for
a
40 foot
container
increased
from
roughly
$2,000
in
2020
to
roughly
$10,000
in
2021.
Furthermore,
as
communicated
last
year,
we
were
sold
our
cost
profile
on
the
short-term
incentives
in
a
year-over-year
comparison,
cycling
over
50%
payout
in
2020.
Core
earnings
per
share
grew
by
2%
to
€6.51
and
are
roughly
€0.20
above
the
upper
end
of
our
latest
guidance,
including
currency
impact.
Positive
contribution
from
Crop
Science
and
Consumer
Health
compensated
for
lower
pharma and
reconciliation
results
as
well
as
a
higher
core
tax
rate.
Better
financial
results
contribute
more
than
€0.30,
thanks
to
lower
interest
rates
for
new
financing
and
favorable
currency
effects
as
well
as
a
positive
remeasurement
for
our
[ph]
two
Leaps (00:30:15)
investment.
The
largest
difference
between
core
earnings
per
share
of
€6.51
and
earnings
per
share
of
€1.02
relates
to
increase
provision
for
the
glyphosate
litigation
and
expenses
related
to
our
restructuring
programs
as
shown
in
the
backup
of
the
slide
deck.
Our
free
cash
flow
came
in
at
€1.4
billion.
This
represents
a
5%
increase
over
the
prior
year,
despite
€400
million
higher
net
settlements
and
increased
tax
payments.
The
strong
cash
performance
was
mainly
driven
by
disciplined
working
capital
management,
particularly
in
Crop
Science.
Compared
to
our
updated
guidance,
we
saw
lower
than
anticipated
net
settlement
payments,
which
came
in
at
€4.3
billion
for
the
full
year.
These
factors
are
also
the
reason
why
our
net
financial
debt
came
in
€2
billion
better
than
our
latest
guidance.
The
increase
of
net
financial
debt
year-over-year
from
roughly
€30
billion
to
€33
billion
is
mainly
driven
by
the
financing
of
the
Vividion
acquisition
of
€1.2
billion,
negative
foreign
exchange
effects
of
€900
million
and
dividend
payouts
of
€2
billion
which
more
than
consumed
the
free
cash
flow.
I
would
like
to
close
our
presentation
with
our
group
guidance
for
2022. Let
me
start by
pointing
out
that
our
guidance
reflects
our
current
business
and
does
not
include
any
impact
of
the
planned
sale
of
the
professional
part
of
our
environmental science
business.
Please
also
note
that,
an
arbitration
with
BASF,
as
regularly
reported
in
the
risk
section
of
the
Annual
Report, will
likely
be
concluded
towards
mid-2022,
but
possibly
even
sooner,
with
strong
arguments
in
defense
of
our
case,
and
therefore,
not
taken
any
provisions.
As
in
previous
years,
we
focus
on
the
guidance
at
constant
currencies,
or
in
other
words,
at
average
actual
2021
exchange
rates.
The
estimated
FX
impact,
if
we
would
use
month
and
December
2021
spot
rates,
is
reflected
in
the
right
column
and
shows
a
tailwind
for
net
sales
of
roughly
€1
billion
and
€0.10
on
core
EPS.
We
estimate
Bayer
Group
sales
to
be
at
approximately
€46
billion,
an
increase
of
around
5%.
While
we
significantly
invest
into
future
growth,
particularly
in
Pharma
and
Consumer
Health,
we
expect
to
see
margin
expansion
through
strong
top
line
growth
and
further
contributions
from
our
efficiency
programs.
Our
EBITDA
margin
before
special
items
is
anticipated
to
increase
to
approximately
26%
bringing
absolute
EBITDA
before
special
items
to
around
€12
billion.
Based
on
the
divisional
projections,
we
expect
a
strong
phasing
of
top
line
and
profitability
towards
the
first
half
of
the
year,
with
an
anticipated
normalization
in
the
second
half.
For
core
EPS,
we
lift
our
guidance
to
approximately
€7
at
constant
currencies.
For
the
core
tax
rate,
we
continue
with
our
guidance
of
approximately
23%
for
the
time
being.
In
case,
we
see
the
proposed
introduction
of
minimum
taxes
or
attempted
tax
rate
rises
by
government
facing
high
pressure
to
refinance
COVID-19-related
expenditures,
this
level
would
become
increasingly
challenging.
Our
reconciliation
result
is
anticipated
with
minus €500
million
to
minus
€600
million.
The
reflected
increase
versus
the
prior
year
was
mainly
driven
by
the
planned
start
of
an
upgrade
of
our
system
infrastructure.
We
keep
our
strong
focus
on
cash
generation
and
expect
free
cash
flow
to
increase
to
a
range
between
€2
billion and
€2.5
billion.
This
includes
total
anticipated
net
payouts
for
litigation
settlements
of
approximately
€2.5
billion,
consisting
of
phased
payouts
for
glyphosate-related
settlement
agreed
to
prior
to
the
Supreme
Court
requesting
the
opinion
of
the
US
government
on
the
Hardeman
case.
Excluding
settlements,
we
target
an
underlying
free
cash
flow
of
around
€4.5
billion
to €5 billion.
Our
net
financial
debt
is
forecasted
to
be
in
the
range
of
€33
billion
to €34 billion.
Please
note
that
we
have
listed
other
major
KPIs
in
the
appendix
of
our
investor
presentation.
For
the
fiscal
year
2021,
we
proposed
a
dividend
payment
of
€2
per
share,
which
is
subject
to
approval
by
the
AGM.
The
payout
ratio
of
approximately
31%
remains
within
the
target
corridor
of
30%
to
40%
of
our
core
EPS.
And
with
that,
Oliver,
I'll
hand
the
call
back
over
to
you
to
start up
on
the
Q&A.
O
Oliver Maier
Head-Investor Relations, Bayer AG
Thank
you
so
much,
Wolfgang.
Thank
you
all
for
the
comments
and
for
the
insight.
Before
we
begin,
I
would
remind
you
to
please
keep
your
questions
to
hopefully
about
two
per
person,
so
that
we
are
able
to
take
as
many
questions
from
as
many
participants
as
possible.
And
with
that,
Nairobi,
I
think
you
may
open
up
the
lines
for
questions.
Operator
Ladies
and
gentlemen,
at
this
time, we
will
begin
the
question-and-answer
session.
[Operator Instructions]
The
first question
is
from
the
line
of
Vincent
Andrews
from
Morgan
Stanley.
Please
go
ahead.
V
Vincent Stephen Andrews
Analyst, Morgan Stanley & Co. LLC
Thank
you
and
good
morning,
everyone.
Rodrigo,
wondering
if
I
could
ask
you
to
speak
a
little
bit
more
about
glyphosate
pricing,
and
I'll
do
my
two
questions
in
one.
The
first
would
be,
if could
you
just
talk
about
how
you're
thinking
about
how
you're
pricing
your
product
versus
where
the
Chinese
prices
have
gone
given
just
sort of
the
parabolic
nature
of
the
Chinese
price
increase.
Historically,
you
tend
to
try
to
price
$1
to
a
gallon
above
the
Chinese.
But
I
think
if
you
were
actually going
to
do
that,
your
pricing
will be
a
lot
higher
than
what
seems to
be
embedded
in
the
guidance.
So
what's
the
strategy?
And
then,
I
guess
the
second
part
of
my
question
is,
you
talked
about
in the
back
half
of
the
year,
you're
expecting
prices
to
be
down
sequentially.
Is
that
also
sort
of
implying
that
as
we
get
into
2023,
on
a
year-over-year
basis,
prices
will
be
probably
be
lower
than
22%
but
probably
still
higher
than
2021?
Or
how
should
we
be thinking
about
that
in our
models?
R
Rodrigo Santos
Thank
you,
Vincent.
So
let
me talk
a
little
bit
about
glyphosate.
So
if
you
take
a
look
on
our
outlook
of
2021,
we
end
up
with
our
herbicides
with
around
15%
growth.
That's
basically
driven
by
price.
As
you
remember,
we
had
the
volume
impact
because
of
the
Hurricane
Ida.
If
you
think
about
2022,
we
see
the
same
scenario,
right?
So
in
the
opposite
direction
that
we
had
in
2021
where
we
had a
lower
price
in
the
first
six
months
and
a
higher
price
on
the
second
half
of
the
year,
this
year,
we
are
expecting
the
opposite.
We're going
to
have
a
higher
price
on
the
first
six
months
and
a
lower
price
for
the
remaining
of
the
year.
At
least
this
is
what
we
see
today.
We
– of
course,
we're
going
to
continue working
very
close
to
that
to
see
if
we
can
capture
any
additional
opportunities
on
that
one.
I
just
want
to
also
reinforce
with
the
opportunity,
Vincent,
that
we
are
guiding
for
2022
half
of
our
price
increase
coming
from
the
herbicides
and
half
of
our
price
increase
coming
from
corn
seeds
and
trait,
fungicides
and
insecticides.
So
we
are
taking
advantage
of
that
market
opportunity
with a
disciplined
execution
to
drive
that
price
increase
for
the year.
So
overall,
we
see
a
strong
first
six
months,
and
we
are
projecting
a
lower
for
the
remaining
of
the
year,
but
we're
going
to
try
to
capture
any
opportunity
that
we
see
in
the
market.
Operator
Mr.
Andrews,
have
you
finished your
question?
V
Vincent Stephen Andrews
Analyst, Morgan Stanley & Co. LLC
No,
I
will
pass it
along.
Those
were
my
two.
Operator
The
next question
is
from
the
line
of
Peter
Verdult.
Please
go
ahead.
P
Peter Verdult
Analyst, Citigroup Global Markets Ltd.
Thank
you. Pete
Verdult,
Citi.
Two
questions.
Heiko
or
Werner
[ph]
you've
seen
competing
(00:38:26) Consumer
businesses
valued
at
five
times
sales.
How
do
you
think
about
ensuring
Bayer's
Consumer
business
[indiscernible]
(00:38:32)
executing
well
but
not
getting
much
recognition
for
that
in
your
current
share
price.
I
think
secondly,
[ph]
this is for (00:38:40)
Rodrigo,
just
to
sort
of
piggyback
on
to
Vincent's
question.
Just
in
terms
of some
of
the
headwinds
you
talked
about,
regulatory,
competitive
and
supply
issues.
Last
year,
you
talked
about
a
lost
corn
license,
regulatory
withdrawal
in
the
Luling
plant.
I
think
you
quantified
that
as
sort of
3%
headwind.
Could
you
give
us
some
sense
as
to
what
these
headwinds
could
be
if
they
came
to
pass?
Thank
you.
O
Oliver Maier
Head-Investor Relations, Bayer AG
Hey,
Pete,
it's
Oliver.
I
had
the
hardest
time
to
understand
the
first
question,
to
be
honest.
Any
chance
you
could
reiterate
that
or
not
using
a
headset
or
something?
Just
checking.
P
Peter Verdult
Analyst, Citigroup Global Markets Ltd.
Yeah.
Oli,
sorry.
Let
me
try
the
first
one
again.
It's
very
quick.
I
just
thought
given
we
are
seeing
consumer
businesses
valued
at
five
times
sales
in
the
market,
how
does
Heiko
or
Werner
think
about
ensuring
that
the
Bayer
Consumer
business
is
properly
valued
given
the
current
share
price
and
how
well
the
Consumer
business
is performing?
W
Werner Baumann
Hi
Peter,
let
me
take
[ph]
care of
(00:39:44)
let's
say,
the
first
question.
There's
no
doubt
that
our
stock
is
not
appropriately
valued.
And
you've
heard
us
say
that
several
times,
which
is
not
limited
to
the
Consumer
business,
but
cuts
across
the
board.
And
against
the
strong
performance
that
you've
seen
in
2021
and
also
the
perspective
of
2022,
let
alone
the
fact
that
we
are
looking
at
a
glyphosate
scenario
that
we
have
fully
provided
for
the
case
that
we
see,
we
hope
and
expect
that
the
value
comes
back
into
our
stock,
and
that
includes
all
businesses.
We've
also
seen
that
relative
to
the
consolidation
in
the
markets,
not
everything
that
was
announced
did
finally
materialize.
Our
performance
in
Consumer
Health
speaks
for
itself.
Heiko
will
now
touch
on
it
again.
So
we
don't
have
any
issue
holding
our
ground,
and
we
continue
to
believe
that
we
are
the
best
owner
and
operator
of
that
business.
H
Heiko Willem-Jan Schipper
Yeah.
Maybe
just
to
add
a
couple
of
words
to
Werner.
I
think
it
shows
that
Consumer
Health
is
in
just
an
extremely
attractive
business,
and
that's
why
we're
in
it.
And
obviously,
if
you
combine
that
then
with
the
performance
that's
at
the
forefront
of
the
industry,
then
it's
obvious
that
we
have
a
very,
very
strong
Consumer
Health
business
with
very
good
brands,
with
a
very
good
geographic
performance
and
also
a
very
solid
performance.
So
all
in
all,
I
think
it
just
confirms
that
this
is
the
right
industry
to
be
in,
and
that's
why we're
in
it.
O
Oliver Maier
Head-Investor Relations, Bayer AG
Pete,
I
think
that
covers
the
Consumer
Health.
Can
you
actually
ask
a
second
question
again
because
that
was
also
hard
to
understand?
P
Peter Verdult
Analyst, Citigroup Global Markets Ltd.
Sorry.
Despite
being
told
not
to
be
on
headset,
I
was
on
a
handset. Hopefully,
you
can
hear
me
clearly
now.
Second
question
was
just
to
Rodrigo.
Just
following
on
from
Vincent's
question.
You
talked
about
some
potential
headwinds
in
terms
of
competitive
supply
and
regulatory.
You
had
similar
headwinds
last
year.
I
think
you
quantified
them.
I
think
you
lost
a
corn
license.
You
had
a
regulatory
withdrawal
in
Europe,
and
you
had
the
plant
closure
in
Louisiana.
I
think
you
quantified
that
about
3%,
just
wanted
to
get
a
sense
from
Rodrigo,
if
some
of
those headwinds
come
to
pass,
what
sort
of quantification
are
we
thinking
about
in
terms
of
those
headwinds?
Thank
you.
R
Rodrigo Santos
Thank
you.
Thank
you on
that
one.
Let
me
say
this
upfront.
So
when
we
look
to
the
market,
similar
to
what
I
heard
from
the
entire
industry,
I
think
the
key
risk
that
we
foresee
is
global
supply.
I
think
that's
the
one
that
we
are
looking
very
close.
We
had
one
that
we
shared
with
you
that
about
glyphosate
was
a
marginal
one
to
the
full
year.
But
that's
the
one
that
I
think
that
we
are
looking
very
close.
We
are
monitoring.
It's
very
hard
to
anticipate
when
it comes
from
a
supplier
of
us.
But
that's
the
one
that
we
are
watching
closely,
right?
So
that's
probably
the
key
one
that
I
would
say
that
the
entire
industry
will
be
facing
this
year,
not
even
considering
the
geopolitical
situation
that
we
are
talking
a
little
bit
earlier
today.
On
the
regulatory
and
the
competitive
dynamics,
we're going
to
have
that
competitive
dynamics,
especially
in
soybean
in US
and
some
of
that
impact
also
in
terms
of
global
regulatory
that
we
have.
We
may
see
something
that –
but
I
would
say
that
if
I
would
highlight
the
one
that
we
are
looking
close
is
the
global
supply
that
I
just
mentioned.
P
Peter Verdult
Analyst, Citigroup Global Markets Ltd.
Thank
you.
O
Oliver Maier
Head-Investor Relations, Bayer AG
Thanks,
Pete.
Operator
The
next
question is
from
the
line
of
Michael
Leuchten
from
UBS.
Please
go
ahead.
M
Michael Leuchten
Analyst, UBS AG (London Branch)
Thank
you very
much.
Two
questions,
please.
One
clarification
question
for
Rodrigo.
You
were
saying
you
expect
most
of
the
growth
coming
from
pricing,
as
you
outlined
a
few
times
now.
How
much
of
the
price
have
you
taken
already
and
how
much
is
to
come
in
the
year?
And
then,
when
you
say
you
are
expecting
to
take
market
share,
but
you
don't
say
– you
don't
expect
volume
uptake.
How
does
that
work?
Is
that
minor
share
gains
that
you're
expecting,
hence,
volume
uptake
not
being
that
significant?
And then
a
question
for
Werner.
Looking
at
the
Annual
Report,
the
outstanding
glyphosate
cases
are
138,000.
When
we
started
this
process,
it
was
125,000
[ph]
clearly of a (00:44:28)
small
uptick
since
then.
I
was
just
wondering
whether
you
could
speak
to
the
dynamic
of
new
cases
coming
in
sort of
the
cadence
that
would
be
helpful.
Thank
you.
R
Rodrigo Santos
So
let me
go
to
the
second
part
of
your
question
about
Crop
Science
in
a
very
straightforward.
The
main
driver
of
growth
for
2022
is
pricing,
but
we
also
see
some
volume
gains
in
terms
of
market
share
for
corn
and
also
some
fungicide
expansion
that
we're
seeing,
particularly
in
LatAm
as
Fox
Xpro
and
the
new
launch
that
we
have.
But
the
main
driver
is
pricing,
let
me
go
to
the
first
part
of
your
question.
So,
we
are
taking
like
an
average
of
6%
to
7%,
a
global
average
price
increase
for
our
crop
protection
products,
excluding
glyphosate
and
also
our
corn
seeds
and
traits.
When
you
think
about
the
northern
hemisphere,
North
America
and
Europe,
that's
the
pricing
that
we
are
running,
the
campaigns
and we
are
implementing
as
well
for
the
tropical
areas,
more
Latin
America
and
APAC
that
will
come
on
the
second
part
of
the
year.
But
I
would
say
that
considering
all
the
innovation
that
we
are
bringing
to
the
market,
all
the
500
seed
deployments
that
we
are
putting in
the
market
this
year, I'm
confident
that
this
price
for
value
that
we
are
putting
in
the
market,
we're
going
to be
able
to
implement
and
execute
for
the
full
year.
W
Werner Baumann
All
right.
Thanks,
Rodrigo.
So
Michael,
to
your
question
on
glyphosate
cases.
Yeah,
as
of
February
1, we
have
about
138,000
cases.
The
case
count
increases
very,
very
slowly.
You
will
have
probably
seen
that
advertising
activity
has
come
down
substantially.
And
with
the
138,000
in
mind,
we
have
settled
107,000,
which
also
includes
the
cases
that
are
not
eligible,
because
they
don't
meet
the
criteria.
So
there's
a
remainder
of
roughly
30,000,
so
not
a
big
difference
compared
to
the
number
before.
And
just
to
make
sure
that
everybody
understands
what
the
dynamic
on
the
30,000 is,
we
decided
to
not
entertain
any
further
settlement
discussions
for
the
time
being
as
we
wait
for
the
recommendation
of
the
Solicitor
General
and
then
how
the
SCOTUS
review
further
unfolds.
So
there's
no
settlement
activity
at
this
point
in
time.
M
Michael Leuchten
Analyst, UBS AG (London Branch)
Thank
you.
O
Oliver Maier
Head-Investor Relations, Bayer AG
Thank
you,
Michael.
Operator
The
next
question
is
from
the
line
of
Sachin
Jain
from
Bank
of
America.
Please
go
ahead.
S
Sachin Jain
Analyst, Bank of America
Hi
there.
Sachin
Jain,
Bank
of
America. I've
got
two
follow-up
questions,
if
I
may,
both
fairly
straightforward, I
think.
First,
on
Kerendia,
obviously,
pointing
to
a
strong
launch.
Stefan,
do you
think you'd
be
a
top 15
product
in
2022
or
any
color
you
can
give
on
sales
structure
for
this
year?
And
then
secondly,
in
your
introductory
comment
cited
the
Factor
XI
Phase
III
decision
by
midyear,
I
just
had a
couple
of
clarification
questions
around this,
if
I
may.
Firstly,
given
you've
got
multiple
assets,
could
you
progress
more
than
one?
You
mentioned
potential
differentiation
on
achieving
efficacy
without
bleeding.
Do you
have
any
data
in-house
that
supports
that
as
yet?
And
then
you
mentioned
potential
of
this
to
be
best-in-class.
Why
do
you think
that's the
case?
Thank
you.
S
Stefan Oelrich
Okay.
Thank
you,
Sachin.
That's
a
long
two
questions.
So
Kerendia,
unfortunately,
I have
a
shorter
answer.
So
it's
a
little
early
to
tell
you
more
for
this
year.
We're
very
confident
with
the
uptake.
A
lot
is –
obviously,
holding
is –
standing
in
the
balance
of
increased
access
and
really
giving
everyone
an
opportunity
beyond
our
programs
that
support
patients
to
actually
be
fully
reimbursed
by
payers.
So
this
is
an
ongoing
effort
and
will
very
much
shape
our
sales
curve
for
this
year.
But
besides
that,
we're
very
optimistic
about
Kerendia.
Whether
it
makes
it
into
the
top
15
this
year
or
next
year
remains
to
be
seen
for
the
time
being.
On
Factor
XI,
so
I
don't
know
if
I
caught
all
of
the
gist
of
your
question,
but
let
me
try
to – if
I
heard
you
right,
first
one
was
whether
we're
looking
into
progressing
multiple
Factor
XI
opportunities
during
the
year
because
we
have
three
different
medicines
that
are
currently
in
Phase
II.
So
this
is
still
something
that
we're
discussing
because
we're
very
happy
with
what
we're
seeing,
especially
on
our
oral
program.
So
obviously,
we're
only
going
to
be
launching
a
Phase
III
into
the
injectables,
if
the
profile
of
our oral
cannot
reach
certain
patients
that
would
also
benefit
from
an
injectable.
So
–
but
we're
very
pleased
with
what
we're
seeing.
You
know
that
I
can't
give
you
much
more
before
we
publish
this
at
a
scientific
meeting,
which
is
foreseen
in
the
–
at
the
American
College
of
Cardiology
that's
upcoming.
And
we've
obviously
taken
a
look
at
some
of
what
our
competitors
have
shown.
And
so
we
have
our
data
on
file,
and
that
makes
us
quite
optimistic
across
the
different
indications
that
we
intend
to
pursue
and
what
we've
seen
so
far.
So
I
think
we
have
a
strong
contender,
which
speaks
to
the
experience
of
our organization
in
developing
anticoagulants.
I
mean,
let's
not
forget
that
we
designed
those
programs
that
made
Xarelto
what
it
is
today.
S
Sachin Jain
Analyst, Bank of America
Thank
you very
much.
O
Oliver Maier
Head-Investor Relations, Bayer AG
Thanks, Sachin.
Operator
The
next question
is
from
the
line
of
James
Quigley
from
Morgan
Stanley.
Please
go
ahead.
J
James P. Quigley
Analyst, Morgan Stanley & Co. International Plc
Hello and thanks
for taking
my
questions.
Just
one
on
the
guidance,
one
on the
pharma
margins.
So
on
the
guidance,
when
I
work
through
on
a
divisional
basis,
it
makes
the
group
margin
looked
a
little
bit
conservative.
So
we're
working
through
on
the
divisions,
that
suggests
around
– about
a
26.5%
margin
[ph]
– was it a (00:50:47)
26%
margin
for
the
group.
Is
that
taking
a
little
bit
of
conservatism?
Or
is
there
something
that
I'm
missing
when
doing
that
calculation?
And
on
the
pharma
margin,
about
50
basis
points
or
so
increase
in
2022
as
you
continue
to
invest
for
growth.
But
how
long
are
you
–
how
far
or how long
are
you
with
that
investment?
Should
we
expect
the
margin
to
start
to
slowly
increase
from
here?
Or
is
a
lot
of
the
costs
already
in
the
base,
giving
potential
from
2023
onwards
to
show
greater
[ph]
gross (00:51:27)
margin
expansion?
Thanks.
W
Wolfgang U. Nickl
Yeah,
James,
this
is
Wolfgang.
Let
me
do
the
group
one
and
then
Stefan
will
do
the
pharma
one.
You're
right.
I
mean,
we're
talking
about
rounding
here.
I
mean
we
said
€12
billion
EBITDA
and
€46
billion.
If
you
do
the
exact
math,
it's
€26.1
billion.
We
had
around
€26 billion,
so
it
could
be
a little
bit
less,
could
be
a
little bit
right.
And
if
you
would
go
exactly
to
the
midpoint
of
everything,
and
that
appears
to
be
the
math
that
you
have
just
done,
you
would
be
above
the
€26.1
billion.
So
we'll
find
out
at
the
end
of
the
year whether
it
was
conservative
or
not.
But
at
this
point,
we
believe
it's
around
26%.
S
Stefan Oelrich
Thanks.
On
the
pharma
margin,
so first
of
all,
I
know
that
you
probably
know
this,
but
there
are
a
lot
of
moving
parts
here
in
terms
of
our
full
year
accounting
of
launch
investments
plus
also
a
shift
of
resources
towards
R&D.
Just
be
reminded
of
some
of
the
acquisitions
that
we
did
that
need
to
be
all
digested
inside
of
our
R&D
line.
So
despite
of
all
of
this,
with
some
of
the
savings
programs
that
we
have
and
tightening
our
belt,
we're
getting
to
the
32%
guidance.
This
is
what
we
had
also
given
in
our
midterm
guidance,
and
we
stand
by
that.
Operator
Mr. Quigley,
have
you
finished
your
question?
J
James P. Quigley
Analyst, Morgan Stanley & Co. International Plc
Yes.
Thank
you.
Operator
The
next question
is
from
the
line
of
Tony
Jones
from
Redburn.
Please
go
ahead.
T
Tony Jones
Analyst, Redburn (Europe) Ltd.
Good
afternoon
everybody.
Thanks
for
taking
my
questions.
I've
got
two,
both
for
Wolfgang,
I
think.
Could
you
quantify
the
EBITDA
impacts
from
supply
chain
disruption
and
cost
inflation
last
year?
And
maybe
give
any
indication
where
you
think
that
will
be
recurring
at
a similar
level
in
this
current
year.
And
then
the
higher
reconciliation
charge,
the €500
million
to
€600
million,
is
that
a
recurring
new
level?
Or
is
that
just
a
one-off
higher
charge
in
the
current
year?
Thank
you.
W
Wolfgang U. Nickl
Yeah.
Thanks
a
lot.
So
on
the
EBITDA
margin
for
last
year,
you
will
recall,
there
were
several
effects.
One
was
the
catch-up
on
STI
and
one
was
currency.
One
was
indeed
the
investments
that
Stefan
just
mentioned
into
growth
in
R&D.
And
then
there
were
inflationary
trends.
We
have
not
spelled
them
out,
and
I
don't
think
we
will
spell
them
out.
But
I
can
tell
you,
if
I
look
at
– I
gave
you
the
little
example
on
ocean
freight,
I
mean,
active
ingredients
and
energy
would
be
other
elements.
But
I
can
probably
give
you
this
much
in
a
division
like
Crop
Science
with
high
[ph]
COGS (00:54:32).
We're
talking
several
hundred
million
euros.
So
it's
quite
substantial.
And
of
course,
Rodrigo,
just
as
Stefan,
just
as
Heiko,
will
do
their
utmost
to
see
what
they
can
factor
into
the
pricing
and
offset
with
other
efficiencies.
That's
very
clear.
As
it
relates
to
the
supply
chain
issues
we
had
last
year,
you
will
probably
see
by
our
growth
numbers
that
they
have
not
held
us
back
super
significantly.
But
in
the
Crop
Science
case,
I
think
that's
probably
the
most
prominent.
We
could
have
sold
significantly
more
had
we
not
had
the
Ida
effect
in
Luling.
Reconciliation,
we're
at
€488
million
last
year.
And
as
a
reminder
for
everybody,
that's
kind
of
the
central
cost
that
we
don't
really
have
an
appropriate
key
to
allocate
to
the
divisions.
It's
a
bit
volatile, because
there
are
also
STI
and
LTI
normalizations
in
there.
But
the
fact
that
we
are
a
little
bit
up
in
2022
stems
from
two
main
reasons.
Number
one,
we
are
starting
the
upgrade
of
our
ERP
systems.
And
this
is
a very
general
work,
so
it's
not
specific
to
a
division.
So
we
put
it
in
reconciliation.
The
second
thing
is
you
can
imagine
that
the
company
of
our
size
pays
quite
a
bit
in
insurance
premiums.
And
we
have
seen
that
market
much
like
every
other
company
going
up
in
prices
quite
significantly.
And
that
would
be
the
second
one.
So
for
now,
again,
there
are
a
couple
of
moving
parts
in
there.
I
would
hope
that
we
would
keep
it
lower
than
that
going
forward.
But
right
now,
we'll
be
with
2022, and
we'll
update
you
on
the
time
after that in
due
course.
I
hope
that
answers...
T
Tony Jones
Analyst, Redburn (Europe) Ltd.
Thank
you.
That's
very
helpful.
Yeah,
thank
you.
W
Wolfgang U. Nickl
Welcome.
O
Oliver Maier
Head-Investor Relations, Bayer AG
Thank
you,
Tony.
Operator
Next
question
is
from
the
line
of
Richard
Vosser
from
JPMorgan.
Please
go
ahead.
R
Richard Vosser
Analyst, JPMorgan Securities Plc
Hi.
Thanks
for
taking my
questions.
Just
a
question
on
those
inflationary
cost
pressures.
Obviously,
we
can
see
energy
prices
going
up
in
the
geopolitical
uncertainty. So
just
could
you
just
talk
about
what
access
you
have
to
long-term
contracts,
how
long
they
are;
and
how
you
have
thought
about
this
or
–
and
the
changes
to
those
in
your
guidance?
Second
question,
just
come
back
to
those
glyphosate
numbers
in
terms
of
the
case
increases,
obviously,
a
very
low
case
increase.
Is
that
in
line
with
the
expectations
you
have
for
provisioning?
And
do
you
continue
to
see
the
case
volume
going
down?
So
just
some
thoughts
about
that
provisioning
and
just
give
us
some
idea
there.
Thanks
very much.
[audio gap]
W
Werner Baumann
(00:57:32-00:57:39)
this
is actually
very
difficult
to
answer
in
general.
But
we
have
a
number
of
long-term
contracts.
Actually
something
that
is
coming
in
very
handy
when
you
look
at
that
massive
inflation
that
we
see
and
cost
pressure
on
the
energy
supplies.
The
fact
that
by
now,
we
have
long-term
contracts
for
roughly
25%
of
our
energy
builds
in
renewables
helped
substantially
to
kind
of
curb
the
cost
increases.
Secondly,
if
we
talk
about,
generally,
about
our
energy
footprint
and
with
that,
that
significant
cost
increase
that
you
see
a
lot of
other
people
talk
about,
at
our
end,
we
are
not
that
energy
intense
a
business
anymore.
And
overall,
our
energy
costs
here,
which
includes
[ph]
SEM (00:58:32)
and
a
few
other
things
already,
it's
about
€0.5
billion.
So
on
a
€44
billion,
€46
billion
top
line,
we
will
see
increases,
of
course,
but
we
assume
that
we
will
be
able
to
absorb.
And
as
Rodrigo
and
Heiko
have
already
talked
about,
we
are
also
in
a
strong
position
when
it
comes
to
pricing
due
to
the
inflationary
tendencies
that
we
see
all over
the
place,
and
we
will
roll
that
over
very
aggressively.
Now,
there
are
other
areas
where,
let's
say,
the
task
at
hand
is
different.
Even
with
higher
costs
that
is
coming
to
us,
the
name
of
the
game
is
securing
supply.
So
Rodrigo
talked
about
it
earlier.
We
see
ultra-stretched
supply
chains,
with
very,
very
high
risk
of
default.
And
that
is
what
we
are
managing
in
order
to
make
sure
that
we
can
produce
and
supply,
which
is
currently
the
focus,
and
that's
what
our
procurement
organization
is
working
on.
The
second
thing,
on
the
case
increases,
well,
we've
just
closed
the
books.
The
books
have
been
audited.
And
the
provisions
have
passed
the
test
of
being
appropriate.
So
there's
no
significant
move
one
way
or
the
other
that
would
inform
our
view
on
the
appropriateness
or
non-appropriateness
for
this
argument
of
the
status
of
our
provisions.
So
we
are
very
preserved
for
the
set
of
futures,
but
also
the
current
that
have
entered
our
[indiscernible]
(01:00:19),
so
no
change.
R
Richard Vosser
Analyst, JPMorgan Securities Plc
Thanks,
Werner.
O
Oliver Maier
Head-Investor Relations, Bayer AG
Thank
you,
Richard.
Operator
The
next
question
is
from
the
line
of
Sebastian
Bray
from
Berenberg.
Please
go
ahead.
S
Sebastian Bray
Hello
and
thank
you
for
taking
my
questions.
I
would
have
two,
please.
The
first
is
just
on
the
driving
forces
behind
the
guidance
within
Crop
Sciences.
And
I'm
particularly
thinking
about
what
has
happened
since
Monsanto
was
bought.
Am
I
right
in
saying
that
negative
FX
effects
have
removed
roughly
€1
billion
of
EBITDA
in
euro
terms
since
late
2018
from
Crop
Sciences?
And
to
the
earlier
points
about
the
competitive
dynamic
in
soybean,
if
we
were
to
return
to
an
FX
environment
that
were
similar
to
2018,
does
all
of
this
come
back,
or some
been
sacrificed
to
drive
market
share
gains?
My
second
question
is
on
working
capital.
Can
you
just
give
a
reminder
of
what
typically
you
carry
as
a
percentage
of
sales
growth
for
Crop
Sciences
and
Pharma,
is
it
about
20%
to
25%?
Thank
you.
W
Werner Baumann
All
right.
Sebastian,
the
first
piece
is
going to
be
answered
by
Rodrigo
and
then
Wolfgang
will
take
your
second
question
on
working
capital.
R
Rodrigo Santos
So
let
me address
the
first
piece.
So
I
think
that
we
are
taking
advantage
of
our
full
portfolio
to
the
market.
We
just
announced
recently
our
pipeline
review
when
we
advanced
like
500
seed
deployments,
but
at
the
same
time,
more
than
300
product
registration
on
crop
protection.
That's
why
I
mentioned
about –
when
we
think
about
crop
protection,
we
have
a
price
increase
similar
to
what
we
have
in
corn
seeds
and
traits
around
6%
to
7%
as
an
average
globally.
There
are
places
that
we
have
in
double-digit
price
and
some
other
regions
different.
But
we
are
taking
full
advantage
of
our
entire
portfolio
to
drive
the
growth
that
we
are
seeing
this
year.
I
think
that's
one
piece.
On
soybeans
here.
So
let
me
divide
the
soybean
discussion
here.
So
one
is
in
South
America,
in
Brazil,
we
just
launched
Intacta
2
Xtend
with
800,000
acres.
We
are
seeing
to
an
increase
to
a
6
million
thousand (sic) [6 million] (01:02:38)
acres.
We
have
a
5%
price
increase.
So
we
are
seeing
great
dynamics
again
in
Brazil.
In
US,
it's
more
a
competitive
market,
and
we're
going
to be
competing
in
the
market
as
we
had
last
year.
I
think
that
the
launch
of
XtendFlex
with
16
million
acres
was
very
important
for
us.
We
defend
our
number
one
position
on
the
weed
control
in
North
America.
We're
going
to
continue to
do
that
for
this
year.
So
overall,
when
I
think
about
the
growth
that
we
have
for
2022, I
think
we
are
taking
advantage
of
our
full
portfolio.
We
are
maximizing
the
opportunities
where
we
see
the
opportunity
and
minimizing
the
risk
that
we
were
talking
before.
So
that's
a
little
bit
of
my
overview
on
the
Crop
Science. I
hope
that
answer
your question.
W
Wolfgang U. Nickl
And
now,
Sebastian,
I'll
go
into
the
working
capital
thing,
and
I'll do
it
more
from
a
corporate
perspective.
First
of
all,
we're
quite
pleased
with
what
all
the
teams
have
done
last
year.
Our
free
cash
flow
was
significantly
better
than
what
we
had
forecasted.
For
the
total
company,
the
working
capital
to
sales
ratio
came
somewhere
from
37%
to
like
34%.
I
think
it's
important
when
you
look
at
this
for
crop
in
particular,
that
you
also
take
the
prepays
in
consideration,
because
your
traditional
receivables,
inventory
and
payables
won't
do
the
trick
because
we
always
have
very
significant
prepays
there.
And
if
you
take
that
into
consideration,
it's
around
the
corporate
average.
I
hope
that
helps
you
with
your
question,
Sebastian.
S
Sebastian Bray
Yes,
indeed.
Thank
you
for
taking
my
question.
W
Wolfgang U. Nickl
You're
welcome.
O
Oliver Maier
Head-Investor Relations, Bayer AG
Thank
you,
Sebastian.
Operator
The
next
question
is
from
the
line
of
Jo
Walton
from
Credit
Suisse.
Please
go
ahead.
J
Jo Walton
Analyst, Credit Suisse Securities (Europe) Ltd.
Thank
you.
Two
questions.
Firstly,
I
wonder
if
you
could
tell
us
a
little
bit
more
about
the
impact
of
your
business
in
Russia
and
Ukraine.
If
the
situation
stays
as
it
is,
and
it's
obviously
very
difficult
to
get
things
in
and
out
of
Ukraine
and
Russia
with
sanctions,
could
you
just
give
us
some
sense
of
what
the
impact
could
be
on
your
business?
And
on
a
Pharma
question, Eylea
is
obviously
doing
extremely
well.
And
you're
telling
us
that
part
of
this
is
the
launch
of
the
prefilled
syringes.
We've
recently
had
the
two-year
data
in
from
faricimab.
I
wonder
if
you
could
tell
us
how
you
feel
Eylea,
particularly
perhaps
the
8-milligram
Eylea
would
compete
with
that
two-year
data
on
faricimab?
And
therefore,
how
long
we
can
expect
to
see
Eylea
continue
to
grow
ignoring
anything
to
do
with
patent
expiries?
Many
thanks.
[audio gap]
(01:05:17-01:05:30)
Operator
Hello,
Mr. Maier.
Can
you
hear
us?
[audio gap]
W
Werner Baumann
(01:05:35) and
catering
to
the
most –
let's
say,
the
most
fundamental
needs
all
of
us
have
and
that
is
access
to
food,
and
access
to
your
health
and
health
supplies.
So
with
that,
currently,
there
are
no
limitations
when
it
comes
to
sanctions.
We,
of
course,
will
be
subjected
to
the
mandate
of
politics.
And
we
will
adhere
and
cater
to
those.
But
as
we
speak,
I
think
all
of
the
sanctions
are
designed
to
hit
those
in
power
and
to
protect
those
who
suffer
from
the
situation
most.
And
this
is
actually
the
civil
population.
And
our
products
are
the
ones
that
we
have
to
continue
to
make
available
to
these
people
because
a
lot
of them
are
kind
of
on
our
medicines.
And
they
need
to
have
access
to
it
and
they'll
go
out
of
our
way
in
order
to
provide
it.
Secondly,
the
overall
situation
in
Ukraine
and
Russia,
of
course,
continues
to
change
by
the
hour.
We
have
strong
crisis
management
resources
and
teams
that
report
to
the
board
on
the
topic
when
it
comes
to
supply,
when
it
comes
to
ensuring
that
we
have
logistics.
And
transport
is
one
of
the
bigger
challenges
right
now.
And
then
first
things
first.
First
things
are
that
we
take
care
of
our
own
people
in
these
countries.
And
there
are
some
very,
very
basic
needs
people
have
right
now.
One
is
access
to
safe
housing
between
shelter
that
we
are organizing
and
providing
also,
with
a
lot
of
private
initiatives
of
our
people
on
the
ground.
And
secondly,
as
you've
seen
the
pictures
in
the
news,
that
people
can't
get
a
hold
of
cash. We
are
providing
our
people
in
Ukraine
with
advanced
cash
payments
so
that
they
get
by
with,
let's
say,
the
most
urgent
needs
that
they
have
locally.
And
the
rest
of
it,
we
have
to
play
it
by
the
hour
really.
S
Stefan Oelrich
Hi
Jo,
Stefan
here.
So
thanks
for
your
question
on
Eylea.
Glad
to
see
that
you're
following
this
closely
and
especially
our
very,
very
positive
growth
momentum
that
we're
seeing.
So
yeah,
we're
following
up
on
–
obviously,
also
on
what's
happening
in
terms
of
clinical
data
from
faricimab,
I
think
this
looks
good,
and
they're
catching
up
to
us.
I
mean,
we're
already
at
the
given
doses
have
a
four-month
dosing
interval
and
with
our
treatment
treat
and
extend.
So
they're
catching
up
to
that
now
with
what
they
have.
I
think
we're
always
one
step
ahead
up
to
now.
So
in
terms
of
growth,
that's
indeed
a
topic
we
will
have
to
address
in
terms
of
also
peak
sales
that
we
can
achieve
with
Eylea
moving
forward,
because
we're
impressed
by
how
solid
Eylea
is.
And
so,
I
would
think
that
we
can
expect
continued
growth
in
the
coming
years,
only
impeded
by
loss
of
exclusivity
that
will
occur
around
2025.
Operator
The
next
question is
from
the
line
of
Marcus
Friedrichs (sic) [Falko Friedrichs].
Please
go
ahead.
F
Falko Friedrichs
Analyst, Deutsche Bank AG
Hello.
It's
Falko
Friedrichs
from
Deutsche
Bank
and
thanks
for
taking
my
questions.
I
also
have
two,
please.
The
first
one
is
going
back
to
your
Crop
Science
guidance.
So
taking
the
7%
organic
growth
that
you're
pointing
out,
you
mentioned
it
several
times
on
this
call
that
the
majority
of
this
should
be
price.
So
is
it
fair
for
us
to
assume
that
the
split
is
roughly
5%
price
and
2%
volume
in
2022?
And
if
that
is
correct,
I
still
don't
fully
understand
why
the
volume
growth
shouldn't
be
bigger
this
year.
And
that's
my
first
question.
And
then
the
second
one
is
on
pharma.
You
mentioned
that
the
volume
growth
for
Xarelto
should
largely
offset
the
VBP
impact.
So,
is
it
a
fair
assumption
to
assume
low-single-digit
growth
for
the
drug
in
2022?
Thank
you.
R
Rodrigo Santos
So
let me
address
first
the
question
here
on
that.
Yeah,
you
fair
to
say
that
you
reinforce
the
point
that
I
made,
yeah,
the
main
driver
of
our
growth
is
pricing
that
we
see
that.
Some
of
the
volume
gain
that
we
have
in
corn
that
I
mentioned,
especially
in
gaining
market
share
and
also
the
expansion
of
fungicides.
You
also
have
some
of
the
downside
including
on
the
plan
in
terms
of
the
cost
increase
and
some
other elements
of
that
equation.
But
overall,
I
would
say
that
the
far
majority
of
that
price
– of
the
growth
that
we
have
for 2023
is
pricing.
Half
of
that
coming
from
the
herbicide line
and
half
of
that
coming
from,
mainly
all
the
other
crop
protection
products
and
the
corn,
that's
right.
That's
right.
S
Stefan Oelrich
Yeah.
Thank
you
for
your
question.
On
Xarelto,
Marcus (sic) [Falko],
I
think
it's
important
that
I
give
you
more
color
on
this
one.
So
we
did
manage
to
compensate
in
2021,
the
price
decreases
by
increased
volumes.
For
2022,
given
that
we
have
a
full
year
of
VBP
impact
in
China,
this
is
going
to
be
much,
much
harder.
So
what
we
do
expect,
given
the
importance of
China
that
for
this
year,
we
may be
facing
a
slight
decrease
even
in
Xarelto
in
2022.
We're
obviously
following
this
closely,
because
Europe
continues
to
be
strong,
but
we're
now
seeing
first
impact,
especially
through
China.
So
2022
is
a
tough
year
for
us.
F
Falko Friedrichs
Analyst, Deutsche Bank AG
Okay.
And
a
brief
follow-up
for
Rodrigo,
if
I
may.
Does
your
guidance
assume
that
you're
winning
market
share
in
corn,
but
losing
market
share
in
soy
in
2022?
R
Rodrigo Santos
No,
we
are
gaining
market
share
in
corn.
We
are
not
assuming
that
in
soybean.
I
think
that
we
are
not
considering
a
significant
expansion
in
soybean.
That's
fair
to
say.
When
we
think
about
the
volumes
that
we
plan
and
especially
for
North
America
different
from
what
I
mentioned
about
South
America,
right?
So
we
always
talk
about
soybean,
I
want
to
split
that
equation.
In
South
America,
we
are
seeing
a
significant
expansion
of
the
Intacta
2
Xtend
platform.
We're
seeing
great
momentum and we're
going
to
continue to
seeing
momentum.
On
the
US
market,
we
are
a
more
competitive
environment
that
we
are
not
planning
a
significant
expansion
on
the
plans.
F
Falko Friedrichs
Analyst, Deutsche Bank AG
Okay.
Thank
you.
O
Oliver Maier
Head-Investor Relations, Bayer AG
Thank
you,
Rodrigo.
Operator
Ladies
and
gentlemen,
we
kindly
ask
you
for
your
understanding
that
we
have
to
close
this
call
now
due
to
time
contracts. Excuse
me,
Mr. Maier,
please
continue
with
any
other
points
you
wish
to
raise.
O
Oliver Maier
Head-Investor Relations, Bayer AG
Right.
Thank
you
so
much,
Nairobi.
Much
appreciated,
and
thanks
to
all
for
your
time
today
and
the
attention.
Greatly
appreciate
it.
And
this
closes
our
call
for
today.
Stay
safe,
and
we
talk
soon.
Thank
you
so
much.
Operator
Ladies
and
gentlemen,
this
concludes
the
full
year
and
fourth
quarter
2021 investor
and
analyst
conference
call
of
Bayer
AG.
Thank
you
for
participating.
You
may
now
disconnect.
Ladies and gentlemen, thank you for standing by. Welcome to Bayer's Investor and Analyst Conference Call on the Full Year and Fourth Quarter 2021 Results. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. [Operator Instructions]
I'd now like to turn the conference over to Mr. Oliver Maier, Head of Investor Relations of Bayer AG. Please go ahead, sir.
Great. Thank you so much, Nairobi. Good afternoon and thanks for joining us today. I'd like to welcome all of you to our fourth quarter full year 2021 conference call. With me on the call today are Werner Baumann, our CEO; and Wolfgang Nickl, our CFO. The divisions are represented by the responsible management board members.
Slightly different layout for the fiscal year, Werner will begin today's call with the highlights of 2021 and frame the year ahead of us. We will then have Rodrigo, Stefan and Heiko comment on the respective business performances and the divisional outlook for 2022.
Wolfgang will wrap it up with an overview of the group performance and outlook before we open up for the Q&A session. As always, I would like to draw your attention to the cautionary language that is included in our safe harbor statement as well as in all the materials that we have distributed today.
With that, I'll hand it over to you, Werner.
All right. Thanks, Oliver, and good afternoon, ladies and gentlemen. It's my pleasure to welcome you to our conference call. Before we go into the business performance, let me start with what is certainly top of mind for all of us. With the Russian invasion in Ukraine, the geopolitical order has shaken. And we are deeply shocked and concerned about what is happening to the Ukrainian people. This war is no less than a threat to our freedom and democracy. And we as Bayer condemn in the most vigorous way this Russian attack.
While we hope that concerted political actions will help to improve the situation as soon as possible, we as a company try to step up as a reliable partner and a good corporate citizen true to our vision, help for all, hunger for none.
Of course, the safety of our employees is now our top priority. And we are taking all appropriate measures to protect our 700 colleagues in the Ukraine. At the same time, we are doing everything we can to further ensure supply of our products to the civilian population, including vital medicines and agriculture products to safeguard food supplies. And of course, we are prepared to step up our humanitarian help with financial support and donations of our medical products, as we have shown during the COVID pandemic.
Now, there's certainly no smooth transition, but let me take a step back and comment on some key macro factors relevant for our business last year. We saw a particularly favorable agricultural market dynamics, with high soft commodity prices and tight global supply leading to increased levels of glyphosate prices.
In pharma, elective treatments increased again after COVID-19 restrictions in 2020. And for Consumer Health, we saw continued growing demand for preventive health solutions. On the downside, we know that increasing inflationary pressure and volatility of global supply chains across industries.
Let me also provide a very brief update on the status of the glyphosate litigation. In December, the US Supreme Court requested the views of the Solicitor General in the Hardeman case. Notwithstanding what the brief concludes, there are two potential outcomes. If the Supreme Court decides to review the Hardeman case after input from the Solicitor General, and finally, rules in our favor, this will effectively end the glyphosate litigation. If the Supreme Court denies accepting the case for review or finally rules against us, we will activate the voluntary claims administration program in our five-point plan to help bring closure to the litigation. From a financial point of view, we have incorporated this specific scenario already into our provisions in 2021.
Now let's move on to our business performance. I'm very pleased to share that we have overachieved our updated guidance, which we communicated with our Q3 earnings release. While 2021 started as a transitional year for Bayer, we ended 2021 with strong momentum that provides an excellent base for further growth and earnings expansion in 2022.
Overall, and supported by a positive market environment, we did much better than expected at the beginning of the year. We substantially increased our top line by 9%, with strong contributions from all divisions. Crop Science strengthened its market position, with market share gains specifically in corn and continued expansion in fungicides. We also saw strong price increases across the board, particularly for our glyphosate-based products, driven by tight global supply.
Pharmaceuticals generated another year of healthy growth for our key products, Eylea and Xarelto, despite the first impacts from volume-based procurement in China for Xarelto. We also reentered the US market in cardiology and saw pleasing contributions from our launch products. Consumer Health delivered industry-leading growth across regions and categories, with a focus on excellence in execution and innovation.
The substantial volume growth, strong price performance and the contributions from our ongoing performance programs contributed positively and more than offset inflationary pressure and cost normalization after an exceptional 2020, while enabling us to invest in launches and innovation. However, still reported performance in [ph] euro (00:06:42) was held back as we faced significant foreign exchange headwinds of roughly €1 billion in top line and approximately €500 million in bottom line.
Now let's look at innovation, which is key for our future growth. We have made significant progress on our innovation agenda and are looking ahead to a promising 2022. For pharmaceuticals, we have achieved important approvals and entered commercialization stage for our new products, resulting in a very much derisked late-stage pipeline.
For our new products, Nubeqa, Kerendia and Verquvo, we see ongoing strong launch momentum and planned further rollouts in 2022. To that end, we just recently received the approval to market Kerendia in the European Union. And just a week ago, for our prostate cancer drug, Nubeqa, we did raise our peak sales expectation from more than €1 billion to now more than €3 billion.
We also made great progress on our early stage pipeline with our cell and gene therapy platform and strengthened our drug discovery capabilities with the acquisition of Vividion Therapeutics. For our number one product, Xarelto, we saw the positive patent ruling confirming our once-daily administration patent in the EU.
With that, we will now have extended exclusivity until 2026 in Europe for our most important pharma product, which complements the 2027 exclusivity extension we already achieved in the US. In Crop Science, we successfully commercialized hundreds of next-generation corn and soybean seed products and advanced short stature corn.
We also made significant progress on our digital platform, including the successful launch of our carbon farming initiative, expansion of our Orbia digital ag marketplace in Brazil, and entered into important collaboration agreements with Microsoft and other external partners.
In Consumer Health, we saw successful launches of Bepanthen Dry Skin and AleveX Topical Pain as well as regulatory clearance for the 2022 Rx-to-OTC switch of Astepro in the US, the first and only steroid-free nasal decongestant in the market.
We also made significant progress regarding our sustainability goals and the sustainable development of our businesses. At Crop Science, we are advancing carbon farming, a completely novel field of business which financially rewards farmers for adopting practices that improve carbon sequestration into the soy.
In pharmaceuticals, we enable access to modern contraceptives by investing more than €400 million into facilities in Costa Rica and Finland. And at Consumer Health, we are investing €100 million to make our products more sustainable. We intend to make the packaging for all our consumer products recyclable or reusable by 2030.
Looking ahead, we are focused on carrying the strong business momentum to 2022, translating into growth and earnings expansion. We expect that momentum to be significantly skewed towards the first half of the year.
On the downside, we anticipate inflationary cost pressures to persist and supply chains to remain stretched, resulting in a very volatile supply situation across industries. Also, our plans assume a stable geopolitical environment in Eastern Europe, which meanwhile changed dramatically. We will closely monitor and mitigate these risks to the extent possible.
For innovation activities, we expect further important news flow across divisions and our Leaps entity in 2022, including the news we shared with you 10 days ago on the ARASENS data for Nubeqa. Looking forward to keeping you updated. Stefan will also outline the major pipeline in Pharma and the catalysts we have seen for the coming year. I'd also take the opportunity to welcome Rodrigo Santos for his first earnings call. It's great to have Rodrigo on the team as a successor to Liam. And the business is off to a good start and a bright future under his leadership.
And now, over to you, Rodrigo.
Thank you, Werner, and thanks to all of you joining us today. I'm really excited to begin by sharing some excellent results from this past year. We saw great progress in our pipeline, in our digital farm solutions, well aligned with our objective to transform agriculture for a more sustainable future.
At the same time, we clearly demonstrated performance of a market leader with share gain in corn seeds and traits in key markets, such as Brazil and Argentina, and taking the number one brand position in the US. This was supported by the launch of new hybrids and our next-generation and industry-first RNAi-based corn rootworm trait as part of the VTPro4 offering in Brazil.
In soybeans, we launched Intacta 2 Xtend with more than 800,000 acres in the first year in Brazil, and we expect it to grow to 6 million acres in the next season. Meanwhile, in North America, we reached 16 million acres with XtendFlex in the first year of commercialization, successfully defending our position as the number one soybean weed control system in North America.
So, I'm pleased to share that the combination of innovation and disciplined execution resulted in record sales for Crop Science in 2021, with growth across all regions and all business units. The 11.1% sales growth was driven by higher prices for our herbicides, coupled with combined expansion in fungicides, as well as by market share gains in corn and stronger pricing and volume gains in soybean seeds and traits.
This performance, combined with our ongoing efficiency measures, more than offset significant cost inflation as well as negative currency effects of €387 million. This led to a 4% overall increase in EBITDA before special items, with a margin of 23.2% or 24.3% at prior year currency rates, consistent with our guidance for the year.
As we move to 2022, we have two primary objectives, to continue to perform and transform at the same time. With these results and this innovation at our back, combined with high commodity price, we see strong momentum moving into 2022. As a result, we are guiding to a 7% sales growth and EBITDA before special items margin of 25% to 26%.
Overall, earnings growth is expected to come from stronger prices, share gains and new efficiency measures, which are expected to more than offset continued inflationary cost pressures, particularly in crop protection where we, like the rest of the industry, are experiencing unprecedented supply chain challenges.
Given these cost pressures and the value of our high performance products creates, we expect pricing to be the primary contributor to our sales growth for the year. Roughly, half of the pricing growth is expected to come from herbicides and about half from corn seeds and traits and the rest of our crop protection portfolio.
The annual refresh of our corn seed portfolio and upgrades to the next-generation technologies in insecticides and fungicides like Fox Xpro, enabled that growth with 6% to 7% price increases globally. While volume is not expected to be as significant as pricing, we do expect share gains in corn and strong demand from fungicides to contribute to our overall growth.
In our models, we expect herbicides price to be higher in the first half of 2022 and lower on the second half, with possible improvement of the global supply of glyphosate. This trend influences our total outlook with our total sales growth rate, expected to be above 7% for the first half and below that level for the second half of the year. Similarly, our EBITDA before special items margin expected to expand strongly in the first half and compress in the second half, on the path to the 25% to 26% for the full year.
This year, however, is not expected to be without challenges. Our growth outlook in this plan is constrained by potential competitive dynamics and some regulatory uncertainty, plus some potential supply challenges across all our crop protection portfolio.
Agriculture has always had its challenges and always will. But as the market leader in this business, our organization will focus on maximizing the opportunities that the innovation provides, while working to minimize the risks. I look forward to updating you on the performance against this plan and ongoing efforts to transform agriculture in the year ahead.
With that, I will hand over to Stefan to share an update on the Pharma business.
Thank you, Rodrigo. More than happy to do that and good afternoon to everyone. Bayer Pharma's top line saw a strong recovery in 2021 after COVID-19 limited our patients' ability to get their medications in the prior year. Sales grew 7%, slightly above our upgraded guidance from August, driven by higher volumes that were up by 9%.
Around 60% of this increase came from our two flagship products. Eylea sales improved by 19%, driven by a double-digit increase across all regions, which was also supported by continuously growing adoption and higher shipments of the prefilled syringes that were launched in 2020.
Also, our biggest single sales contributor, Xarelto, showed a strong performance in 2021, growing 6% year-on-year. A healthy volume trend more than offset lower prices from volume-based procurement reductions in China, which started to take effect in September 2021 and were implemented in all provinces by October.
Concluding my comments on last year's key top line drivers, Adalat and Adempas both achieved around 20% growth in 2021. For Adempas, this included a one-time milestone payment of €190 million that came in the fourth quarter driven by its strong market momentum that led to more than $1 billion of in-market sales in 2021. With this, we have reached the final sales threshold that triggers milestone payments related to this product.
Looking at our late-stage assets. We successfully launched Kerendia in the United States last September. Despite limited ability to reach healthcare providers during the COVID-19 pandemic, we are excited to report a launch uptake that is in line with other successful cardiovascular medicines that have been introduced in the US market, and we do expect this trend to continue.
Only recently, the American Diabetes Association updated their guidelines with an A recommendation for the use of Kerendia for patients with chronic kidney disease who are at increased risk for cardiovascular events or chronic kidney disease progression. We also continued to make good progress with the rollout of Verquvo in the treatment of heart failure with reduced ejection fraction, following last year's approvals in the US, Japan and in the EU.
The continued rollout of our new prostate cancer drug, Nubeqa, was particularly successful, generating sales of €219 million in 2021. In the second year after market launch, it is already one of our top 15 products. This strong performance is the result of Nubeqa's unique clinical profile, which was impressively confirmed by a consistent set of strong efficacy and tolerability data from Nubeqa's second successful Phase III ARASENS trial released two weeks ago.
With an EBITDA before special items of €5.8 billion, equivalent to a margin of 31.5%, we also delivered on our earnings guidance in 2021.
As already stressed last year, the 2020 margin was a tough comparison in the first place as it benefited significantly from cost containment we had initiated in the face of the evolving COVID-19 pandemic. Also, higher investments into innovation and marketing of new products weighed on profitability in 2021.
For 2022, we expect to grow divisional sales by 3% to 4%. We see new launches increasingly contributing to top line and expect Eylea to continue playing out its market leading position with mid-single-digit percent growth this year. Overall, sales growth in the division is expected to exceed by far the VBP pricing headwinds we are facing in China for Xarelto and Adalat this year.
Please be reminded that Xarelto sales in 2021 only included four months of adverse impact from China VBP, but they will fully materialize in this year. Going forward, while Xarelto is expected to continue growing in our largest region, Europe, we're facing a more heterogeneous development in other regions, mainly due to softer pricing as well as ending exclusivity.
Closing my comments on VBP in China, Adalat is likely to see first impact by the second half of this year. In terms of late-stage pipeline news flow, we've kicked off the year strongly, with a second set of very positive clinical Phase III data from Nubeqa's ARASENS trial and the EU approval for Kerendia. Continuing the launch dynamics of our late-stage pipeline assets and getting Nubeqa submitted for the indication extension in the metastatic hormone-sensitive prostate cancer is one of our key priorities this year.
For Eylea, we are currently running two Phase III studies with an 8 milligram formulation, with the objective to potentially prolong injection intervals and improve patient convenience while keeping superior efficacy. Data from these studies are expected to deliver results in the second half of this year. On top of this, our Factor XI program will be Phase III decision ready this year, with a highly competitive profile that could eventually be leading in the class.
Targeting Factor XI in the anti-coagulation pathway promises a novel and disruptive route to decouple prevention from cardiovascular risks, from bleeding risks. In addition, it could offer options to patients for which treatments are not available at all today. In the early phase of our pipeline, we may see news this year that have the potential to be transformative in fighting Parkinson's disease in area of utmost clinical needs.
With BlueRock stem cell-based therapy candidate, DA01, we're developing a treatment that uses authentic dopaminergic neurons to reinnervate the affected regions of the human brain and reverse the degenerative process. We have included a total of seven patients in the potentially groundbreaking procedure and expect interim data from the study in this year's second half.
The ongoing investments into technologies as well as our progress in advancing our pipeline from early to late stage to launches and rollouts reflect the consistent execution of our strategy to generate sustainable long-term growth. At the same time, our ambition is to maintain attractive returns. With the EBITDA margin goal of around 32% before special items for this year, we're committed to deliver on both ends, supported by a stringent cost management and reallocation of resources.
And now it's Heiko's turn to update you on Consumer Health.
All right. Thank you, Stefan, and good afternoon, everybody. It's a pleasure for me to go into Consumer Health performance in 2021 and also share you our outlook for 2022. Starting with 2021, we delivered strong broad-based growth of 6.5% across all our regions and nearly all our categories. We are consistently performing at the high end of our industry, which is really a demonstration of the quality of our Consumer Health business, our brands and our people.
In short, our results prove our ability to execute on our strategy and outperform in an increasingly competitive environment. The standout category performance was again Nutritionals. We have now seen strong double-digit growth in this category for the past two years with in particular, our power brands One A Day and Redoxon performing very well. In addition, our growth was supported by successful launches behind brands like Bepanthen and Aleve, demonstrating our ability to strengthen iconic brands with innovation that win with customers and with consumers.
Cough and cold was a tale of two halves. The first half of the year was negative due to a historically weak flu season. But for the second half of 2021, we saw robust growth following the opening up of many countries. However, the category finished 2021 slightly below prior year. All our other categories delivered mid- to high-single-digit growth. These broad-based contributions positioned us again ahead of the overall market in 2021, which grew around 4%.
Moving to the bottom line. Continued disciplined operational execution of our strategy once again led to margin expansion. In 2021, we improved our profitability by 50 basis points to 22.5%, or in absolute terms, earnings before special items amounted to €1.2 billion. This margin expansion was driven by disciplined spending and pricing measures, compensating for the inflationary cost increases and still enabling us to invest in marketing and innovation behind our brands.
Now let's look ahead and move to the outlook. Consumer Health remains fully on track to successfully deliver on our growth strategy. In 2022, we expect to grow 4% to 5%, with a further step-up in innovation. Growth is likely to be front-loaded for the first half of the year with an easier comp versus 2021, especially in cough and cold. We expect earnings before special items to be within the 22% to 23% range.
We do everything we can to compensate rising input costs with efficiency measures as well as a focus on pricing. At the same time, we plan higher investment in the brands behind our launches as well as in research and development. One major growth driver in 2022 and beyond will be the launch in the US of a new brand called Astepro. It is the first and only steroid-free antihistamine nasal spray for allergies approved as an over-the-counter product. This Rx-to-OTC switch represents a significant milestone for our business as it strengthens our leading allergy portfolio and offers a differentiated solution to the 50 million Americans who suffer from allergies.
In conclusion, we look forward to another exciting year for our Consumer Health business at Bayer. Over the past three years, we have delivered growth at the forefront of our industry and improve margins at the same time. We are well placed to win in this market with our leading brands, broad geographic footprints and a proven track record to win with consumers.
And with that, I will hand it over to Wolfgang who will guide you through our financials.
Thank you, Heiko. I will now walk you through the group financials of 2021 and combine what you have heard from my colleagues in the group outlook for fiscal year 2022.
Group net sales came in at €44 billion and 9% growth over the prior year. This is €1 billion above our updated guidance and includes a significant, but anticipated currency headwind of €1.1 billion. The weakness of the US dollar and the Brazilian real against the euro has the biggest effect, but the Japanese yen, Turkish lira and Russian ruble also contributed. Earnings before special items of €11.2 billion declined by 3%, resulting in a margin of 25.4% in line with our latest guidance.
Negative currency effects of about €500 million weighed on group EBITDA, representing a 50 basis point margin decline versus the prior year. For our underlying operations we were by and large able to compensate inflationary pressure on input costs with adjusted pricing and efficiency gains, while increasing investments into innovation and product launches. Inflation particularly impacted our cost for energy, active ingredients, freight and labor. As an example, the global container freight costs for a 40 foot container increased from roughly $2,000 in 2020 to roughly $10,000 in 2021.
Furthermore, as communicated last year, we were sold our cost profile on the short-term incentives in a year-over-year comparison, cycling over 50% payout in 2020. Core earnings per share grew by 2% to €6.51 and are roughly €0.20 above the upper end of our latest guidance, including currency impact. Positive contribution from Crop Science and Consumer Health compensated for lower pharma and reconciliation results as well as a higher core tax rate. Better financial results contribute more than €0.30, thanks to lower interest rates for new financing and favorable currency effects as well as a positive remeasurement for our [ph] two Leaps (00:30:15) investment.
The largest difference between core earnings per share of €6.51 and earnings per share of €1.02 relates to increase provision for the glyphosate litigation and expenses related to our restructuring programs as shown in the backup of the slide deck. Our free cash flow came in at €1.4 billion. This represents a 5% increase over the prior year, despite €400 million higher net settlements and increased tax payments.
The strong cash performance was mainly driven by disciplined working capital management, particularly in Crop Science. Compared to our updated guidance, we saw lower than anticipated net settlement payments, which came in at €4.3 billion for the full year. These factors are also the reason why our net financial debt came in €2 billion better than our latest guidance. The increase of net financial debt year-over-year from roughly €30 billion to €33 billion is mainly driven by the financing of the Vividion acquisition of €1.2 billion, negative foreign exchange effects of €900 million and dividend payouts of €2 billion which more than consumed the free cash flow.
I would like to close our presentation with our group guidance for 2022. Let me start by pointing out that our guidance reflects our current business and does not include any impact of the planned sale of the professional part of our environmental science business.
Please also note that, an arbitration with BASF, as regularly reported in the risk section of the Annual Report, will likely be concluded towards mid-2022, but possibly even sooner, with strong arguments in defense of our case, and therefore, not taken any provisions.
As in previous years, we focus on the guidance at constant currencies, or in other words, at average actual 2021 exchange rates. The estimated FX impact, if we would use month and December 2021 spot rates, is reflected in the right column and shows a tailwind for net sales of roughly €1 billion and €0.10 on core EPS.
We estimate Bayer Group sales to be at approximately €46 billion, an increase of around 5%. While we significantly invest into future growth, particularly in Pharma and Consumer Health, we expect to see margin expansion through strong top line growth and further contributions from our efficiency programs.
Our EBITDA margin before special items is anticipated to increase to approximately 26% bringing absolute EBITDA before special items to around €12 billion. Based on the divisional projections, we expect a strong phasing of top line and profitability towards the first half of the year, with an anticipated normalization in the second half.
For core EPS, we lift our guidance to approximately €7 at constant currencies. For the core tax rate, we continue with our guidance of approximately 23% for the time being. In case, we see the proposed introduction of minimum taxes or attempted tax rate rises by government facing high pressure to refinance COVID-19-related expenditures, this level would become increasingly challenging.
Our reconciliation result is anticipated with minus €500 million to minus €600 million. The reflected increase versus the prior year was mainly driven by the planned start of an upgrade of our system infrastructure.
We keep our strong focus on cash generation and expect free cash flow to increase to a range between €2 billion and €2.5 billion. This includes total anticipated net payouts for litigation settlements of approximately €2.5 billion, consisting of phased payouts for glyphosate-related settlement agreed to prior to the Supreme Court requesting the opinion of the US government on the Hardeman case. Excluding settlements, we target an underlying free cash flow of around €4.5 billion to €5 billion.
Our net financial debt is forecasted to be in the range of €33 billion to €34 billion. Please note that we have listed other major KPIs in the appendix of our investor presentation.
For the fiscal year 2021, we proposed a dividend payment of €2 per share, which is subject to approval by the AGM. The payout ratio of approximately 31% remains within the target corridor of 30% to 40% of our core EPS.
And with that, Oliver, I'll hand the call back over to you to start up on the Q&A.
Thank you so much, Wolfgang. Thank you all for the comments and for the insight. Before we begin, I would remind you to please keep your questions to hopefully about two per person, so that we are able to take as many questions from as many participants as possible. And with that, Nairobi, I think you may open up the lines for questions.
Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] The first question is from the line of Vincent Andrews from Morgan Stanley. Please go ahead.
Thank you and good morning, everyone. Rodrigo, wondering if I could ask you to speak a little bit more about glyphosate pricing, and I'll do my two questions in one. The first would be, if could you just talk about how you're thinking about how you're pricing your product versus where the Chinese prices have gone given just sort of the parabolic nature of the Chinese price increase. Historically, you tend to try to price $1 to a gallon above the Chinese. But I think if you were actually going to do that, your pricing will be a lot higher than what seems to be embedded in the guidance. So what's the strategy?
And then, I guess the second part of my question is, you talked about in the back half of the year, you're expecting prices to be down sequentially. Is that also sort of implying that as we get into 2023, on a year-over-year basis, prices will be probably be lower than 22% but probably still higher than 2021? Or how should we be thinking about that in our models?
Thank you, Vincent. So let me talk a little bit about glyphosate. So if you take a look on our outlook of 2021, we end up with our herbicides with around 15% growth. That's basically driven by price. As you remember, we had the volume impact because of the Hurricane Ida.
If you think about 2022, we see the same scenario, right? So in the opposite direction that we had in 2021 where we had a lower price in the first six months and a higher price on the second half of the year, this year, we are expecting the opposite. We're going to have a higher price on the first six months and a lower price for the remaining of the year. At least this is what we see today. We – of course, we're going to continue working very close to that to see if we can capture any additional opportunities on that one.
I just want to also reinforce with the opportunity, Vincent, that we are guiding for 2022 half of our price increase coming from the herbicides and half of our price increase coming from corn seeds and trait, fungicides and insecticides. So we are taking advantage of that market opportunity with a disciplined execution to drive that price increase for the year. So overall, we see a strong first six months, and we are projecting a lower for the remaining of the year, but we're going to try to capture any opportunity that we see in the market.
Mr. Andrews, have you finished your question?
No, I will pass it along. Those were my two.
The next question is from the line of Peter Verdult. Please go ahead.
Thank you. Pete Verdult, Citi. Two questions. Heiko or Werner [ph] you've seen competing (00:38:26) Consumer businesses valued at five times sales. How do you think about ensuring Bayer's Consumer business [indiscernible] (00:38:32) executing well but not getting much recognition for that in your current share price.
I think secondly, [ph] this is for (00:38:40) Rodrigo, just to sort of piggyback on to Vincent's question. Just in terms of some of the headwinds you talked about, regulatory, competitive and supply issues. Last year, you talked about a lost corn license, regulatory withdrawal in the Luling plant. I think you quantified that as sort of 3% headwind. Could you give us some sense as to what these headwinds could be if they came to pass? Thank you.
Hey, Pete, it's Oliver. I had the hardest time to understand the first question, to be honest. Any chance you could reiterate that or not using a headset or something? Just checking.
Yeah. Oli, sorry. Let me try the first one again. It's very quick. I just thought given we are seeing consumer businesses valued at five times sales in the market, how does Heiko or Werner think about ensuring that the Bayer Consumer business is properly valued given the current share price and how well the Consumer business is performing?
Hi Peter, let me take [ph] care of (00:39:44) let's say, the first question. There's no doubt that our stock is not appropriately valued. And you've heard us say that several times, which is not limited to the Consumer business, but cuts across the board. And against the strong performance that you've seen in 2021 and also the perspective of 2022, let alone the fact that we are looking at a glyphosate scenario that we have fully provided for the case that we see, we hope and expect that the value comes back into our stock, and that includes all businesses.
We've also seen that relative to the consolidation in the markets, not everything that was announced did finally materialize. Our performance in Consumer Health speaks for itself. Heiko will now touch on it again. So we don't have any issue holding our ground, and we continue to believe that we are the best owner and operator of that business.
Yeah. Maybe just to add a couple of words to Werner. I think it shows that Consumer Health is in just an extremely attractive business, and that's why we're in it. And obviously, if you combine that then with the performance that's at the forefront of the industry, then it's obvious that we have a very, very strong Consumer Health business with very good brands, with a very good geographic performance and also a very solid performance. So all in all, I think it just confirms that this is the right industry to be in, and that's why we're in it.
Pete, I think that covers the Consumer Health. Can you actually ask a second question again because that was also hard to understand?
Sorry. Despite being told not to be on headset, I was on a handset. Hopefully, you can hear me clearly now. Second question was just to Rodrigo. Just following on from Vincent's question. You talked about some potential headwinds in terms of competitive supply and regulatory. You had similar headwinds last year. I think you quantified them. I think you lost a corn license. You had a regulatory withdrawal in Europe, and you had the plant closure in Louisiana. I think you quantified that about 3%, just wanted to get a sense from Rodrigo, if some of those headwinds come to pass, what sort of quantification are we thinking about in terms of those headwinds? Thank you.
Thank you. Thank you on that one. Let me say this upfront. So when we look to the market, similar to what I heard from the entire industry, I think the key risk that we foresee is global supply. I think that's the one that we are looking very close. We had one that we shared with you that about glyphosate was a marginal one to the full year. But that's the one that I think that we are looking very close. We are monitoring. It's very hard to anticipate when it comes from a supplier of us. But that's the one that we are watching closely, right? So that's probably the key one that I would say that the entire industry will be facing this year, not even considering the geopolitical situation that we are talking a little bit earlier today.
On the regulatory and the competitive dynamics, we're going to have that competitive dynamics, especially in soybean in US and some of that impact also in terms of global regulatory that we have. We may see something that – but I would say that if I would highlight the one that we are looking close is the global supply that I just mentioned.
Thank you.
Thanks, Pete.
The next question is from the line of Michael Leuchten from UBS. Please go ahead.
Thank you very much. Two questions, please. One clarification question for Rodrigo. You were saying you expect most of the growth coming from pricing, as you outlined a few times now. How much of the price have you taken already and how much is to come in the year? And then, when you say you are expecting to take market share, but you don't say – you don't expect volume uptake. How does that work? Is that minor share gains that you're expecting, hence, volume uptake not being that significant?
And then a question for Werner. Looking at the Annual Report, the outstanding glyphosate cases are 138,000. When we started this process, it was 125,000 [ph] clearly of a (00:44:28) small uptick since then. I was just wondering whether you could speak to the dynamic of new cases coming in sort of the cadence that would be helpful. Thank you.
So let me go to the second part of your question about Crop Science in a very straightforward. The main driver of growth for 2022 is pricing, but we also see some volume gains in terms of market share for corn and also some fungicide expansion that we're seeing, particularly in LatAm as Fox Xpro and the new launch that we have.
But the main driver is pricing, let me go to the first part of your question. So, we are taking like an average of 6% to 7%, a global average price increase for our crop protection products, excluding glyphosate and also our corn seeds and traits.
When you think about the northern hemisphere, North America and Europe, that's the pricing that we are running, the campaigns and we are implementing as well for the tropical areas, more Latin America and APAC that will come on the second part of the year.
But I would say that considering all the innovation that we are bringing to the market, all the 500 seed deployments that we are putting in the market this year, I'm confident that this price for value that we are putting in the market, we're going to be able to implement and execute for the full year.
All right. Thanks, Rodrigo. So Michael, to your question on glyphosate cases. Yeah, as of February 1, we have about 138,000 cases. The case count increases very, very slowly. You will have probably seen that advertising activity has come down substantially. And with the 138,000 in mind, we have settled 107,000, which also includes the cases that are not eligible, because they don't meet the criteria. So there's a remainder of roughly 30,000, so not a big difference compared to the number before.
And just to make sure that everybody understands what the dynamic on the 30,000 is, we decided to not entertain any further settlement discussions for the time being as we wait for the recommendation of the Solicitor General and then how the SCOTUS review further unfolds. So there's no settlement activity at this point in time.
Thank you.
Thank you, Michael.
The next question is from the line of Sachin Jain from Bank of America. Please go ahead.
Hi there. Sachin Jain, Bank of America. I've got two follow-up questions, if I may, both fairly straightforward, I think. First, on Kerendia, obviously, pointing to a strong launch. Stefan, do you think you'd be a top 15 product in 2022 or any color you can give on sales structure for this year?
And then secondly, in your introductory comment cited the Factor XI Phase III decision by midyear, I just had a couple of clarification questions around this, if I may. Firstly, given you've got multiple assets, could you progress more than one? You mentioned potential differentiation on achieving efficacy without bleeding. Do you have any data in-house that supports that as yet? And then you mentioned potential of this to be best-in-class. Why do you think that's the case? Thank you.
Okay. Thank you, Sachin. That's a long two questions. So Kerendia, unfortunately, I have a shorter answer. So it's a little early to tell you more for this year. We're very confident with the uptake. A lot is – obviously, holding is – standing in the balance of increased access and really giving everyone an opportunity beyond our programs that support patients to actually be fully reimbursed by payers. So this is an ongoing effort and will very much shape our sales curve for this year. But besides that, we're very optimistic about Kerendia. Whether it makes it into the top 15 this year or next year remains to be seen for the time being.
On Factor XI, so I don't know if I caught all of the gist of your question, but let me try to – if I heard you right, first one was whether we're looking into progressing multiple Factor XI opportunities during the year because we have three different medicines that are currently in Phase II. So this is still something that we're discussing because we're very happy with what we're seeing, especially on our oral program. So obviously, we're only going to be launching a Phase III into the injectables, if the profile of our oral cannot reach certain patients that would also benefit from an injectable. So – but we're very pleased with what we're seeing.
You know that I can't give you much more before we publish this at a scientific meeting, which is foreseen in the – at the American College of Cardiology that's upcoming. And we've obviously taken a look at some of what our competitors have shown. And so we have our data on file, and that makes us quite optimistic across the different indications that we intend to pursue and what we've seen so far. So I think we have a strong contender, which speaks to the experience of our organization in developing anticoagulants. I mean, let's not forget that we designed those programs that made Xarelto what it is today.
Thank you very much.
Thanks, Sachin.
The next question is from the line of James Quigley from Morgan Stanley. Please go ahead.
Hello and thanks for taking my questions. Just one on the guidance, one on the pharma margins. So on the guidance, when I work through on a divisional basis, it makes the group margin looked a little bit conservative. So we're working through on the divisions, that suggests around – about a 26.5% margin [ph] – was it a (00:50:47) 26% margin for the group. Is that taking a little bit of conservatism? Or is there something that I'm missing when doing that calculation?
And on the pharma margin, about 50 basis points or so increase in 2022 as you continue to invest for growth. But how long are you – how far or how long are you with that investment? Should we expect the margin to start to slowly increase from here? Or is a lot of the costs already in the base, giving potential from 2023 onwards to show greater [ph] gross (00:51:27) margin expansion? Thanks.
Yeah, James, this is Wolfgang. Let me do the group one and then Stefan will do the pharma one. You're right. I mean, we're talking about rounding here. I mean we said €12 billion EBITDA and €46 billion. If you do the exact math, it's €26.1 billion. We had around €26 billion, so it could be a little bit less, could be a little bit right. And if you would go exactly to the midpoint of everything, and that appears to be the math that you have just done, you would be above the €26.1 billion. So we'll find out at the end of the year whether it was conservative or not. But at this point, we believe it's around 26%.
Thanks. On the pharma margin, so first of all, I know that you probably know this, but there are a lot of moving parts here in terms of our full year accounting of launch investments plus also a shift of resources towards R&D. Just be reminded of some of the acquisitions that we did that need to be all digested inside of our R&D line. So despite of all of this, with some of the savings programs that we have and tightening our belt, we're getting to the 32% guidance. This is what we had also given in our midterm guidance, and we stand by that.
Mr. Quigley, have you finished your question?
Yes. Thank you.
The next question is from the line of Tony Jones from Redburn. Please go ahead.
Good afternoon everybody. Thanks for taking my questions. I've got two, both for Wolfgang, I think. Could you quantify the EBITDA impacts from supply chain disruption and cost inflation last year? And maybe give any indication where you think that will be recurring at a similar level in this current year. And then the higher reconciliation charge, the €500 million to €600 million, is that a recurring new level? Or is that just a one-off higher charge in the current year? Thank you.
Yeah. Thanks a lot. So on the EBITDA margin for last year, you will recall, there were several effects. One was the catch-up on STI and one was currency. One was indeed the investments that Stefan just mentioned into growth in R&D. And then there were inflationary trends. We have not spelled them out, and I don't think we will spell them out. But I can tell you, if I look at – I gave you the little example on ocean freight, I mean, active ingredients and energy would be other elements.
But I can probably give you this much in a division like Crop Science with high [ph] COGS (00:54:32). We're talking several hundred million euros. So it's quite substantial. And of course, Rodrigo, just as Stefan, just as Heiko, will do their utmost to see what they can factor into the pricing and offset with other efficiencies. That's very clear.
As it relates to the supply chain issues we had last year, you will probably see by our growth numbers that they have not held us back super significantly. But in the Crop Science case, I think that's probably the most prominent. We could have sold significantly more had we not had the Ida effect in Luling.
Reconciliation, we're at €488 million last year. And as a reminder for everybody, that's kind of the central cost that we don't really have an appropriate key to allocate to the divisions. It's a bit volatile, because there are also STI and LTI normalizations in there. But the fact that we are a little bit up in 2022 stems from two main reasons.
Number one, we are starting the upgrade of our ERP systems. And this is a very general work, so it's not specific to a division. So we put it in reconciliation. The second thing is you can imagine that the company of our size pays quite a bit in insurance premiums. And we have seen that market much like every other company going up in prices quite significantly. And that would be the second one. So for now, again, there are a couple of moving parts in there. I would hope that we would keep it lower than that going forward. But right now, we'll be with 2022, and we'll update you on the time after that in due course. I hope that answers...
Thank you. That's very helpful. Yeah, thank you.
Welcome.
Thank you, Tony.
Next question is from the line of Richard Vosser from JPMorgan. Please go ahead.
Hi. Thanks for taking my questions. Just a question on those inflationary cost pressures. Obviously, we can see energy prices going up in the geopolitical uncertainty. So just could you just talk about what access you have to long-term contracts, how long they are; and how you have thought about this or – and the changes to those in your guidance?
Second question, just come back to those glyphosate numbers in terms of the case increases, obviously, a very low case increase. Is that in line with the expectations you have for provisioning? And do you continue to see the case volume going down? So just some thoughts about that provisioning and just give us some idea there. Thanks very much. [audio gap]
(00:57:32-00:57:39) this is actually very difficult to answer in general. But we have a number of long-term contracts. Actually something that is coming in very handy when you look at that massive inflation that we see and cost pressure on the energy supplies. The fact that by now, we have long-term contracts for roughly 25% of our energy builds in renewables helped substantially to kind of curb the cost increases.
Secondly, if we talk about, generally, about our energy footprint and with that, that significant cost increase that you see a lot of other people talk about, at our end, we are not that energy intense a business anymore. And overall, our energy costs here, which includes [ph] SEM (00:58:32) and a few other things already, it's about €0.5 billion.
So on a €44 billion, €46 billion top line, we will see increases, of course, but we assume that we will be able to absorb. And as Rodrigo and Heiko have already talked about, we are also in a strong position when it comes to pricing due to the inflationary tendencies that we see all over the place, and we will roll that over very aggressively.
Now, there are other areas where, let's say, the task at hand is different. Even with higher costs that is coming to us, the name of the game is securing supply. So Rodrigo talked about it earlier. We see ultra-stretched supply chains, with very, very high risk of default. And that is what we are managing in order to make sure that we can produce and supply, which is currently the focus, and that's what our procurement organization is working on.
The second thing, on the case increases, well, we've just closed the books. The books have been audited. And the provisions have passed the test of being appropriate. So there's no significant move one way or the other that would inform our view on the appropriateness or non-appropriateness for this argument of the status of our provisions. So we are very preserved for the set of futures, but also the current that have entered our [indiscernible] (01:00:19), so no change.
Thanks, Werner.
Thank you, Richard.
The next question is from the line of Sebastian Bray from Berenberg. Please go ahead.
Hello and thank you for taking my questions. I would have two, please. The first is just on the driving forces behind the guidance within Crop Sciences. And I'm particularly thinking about what has happened since Monsanto was bought. Am I right in saying that negative FX effects have removed roughly €1 billion of EBITDA in euro terms since late 2018 from Crop Sciences?
And to the earlier points about the competitive dynamic in soybean, if we were to return to an FX environment that were similar to 2018, does all of this come back, or some been sacrificed to drive market share gains? My second question is on working capital. Can you just give a reminder of what typically you carry as a percentage of sales growth for Crop Sciences and Pharma, is it about 20% to 25%? Thank you.
All right. Sebastian, the first piece is going to be answered by Rodrigo and then Wolfgang will take your second question on working capital.
So let me address the first piece. So I think that we are taking advantage of our full portfolio to the market. We just announced recently our pipeline review when we advanced like 500 seed deployments, but at the same time, more than 300 product registration on crop protection. That's why I mentioned about – when we think about crop protection, we have a price increase similar to what we have in corn seeds and traits around 6% to 7% as an average globally. There are places that we have in double-digit price and some other regions different. But we are taking full advantage of our entire portfolio to drive the growth that we are seeing this year. I think that's one piece.
On soybeans here. So let me divide the soybean discussion here. So one is in South America, in Brazil, we just launched Intacta 2 Xtend with 800,000 acres. We are seeing to an increase to a 6 million thousand (sic) [6 million] (01:02:38) acres. We have a 5% price increase. So we are seeing great dynamics again in Brazil.
In US, it's more a competitive market, and we're going to be competing in the market as we had last year. I think that the launch of XtendFlex with 16 million acres was very important for us. We defend our number one position on the weed control in North America. We're going to continue to do that for this year.
So overall, when I think about the growth that we have for 2022, I think we are taking advantage of our full portfolio. We are maximizing the opportunities where we see the opportunity and minimizing the risk that we were talking before. So that's a little bit of my overview on the Crop Science. I hope that answer your question.
And now, Sebastian, I'll go into the working capital thing, and I'll do it more from a corporate perspective. First of all, we're quite pleased with what all the teams have done last year. Our free cash flow was significantly better than what we had forecasted.
For the total company, the working capital to sales ratio came somewhere from 37% to like 34%. I think it's important when you look at this for crop in particular, that you also take the prepays in consideration, because your traditional receivables, inventory and payables won't do the trick because we always have very significant prepays there. And if you take that into consideration, it's around the corporate average. I hope that helps you with your question, Sebastian.
Yes, indeed. Thank you for taking my question.
You're welcome.
Thank you, Sebastian.
The next question is from the line of Jo Walton from Credit Suisse. Please go ahead.
Thank you. Two questions. Firstly, I wonder if you could tell us a little bit more about the impact of your business in Russia and Ukraine. If the situation stays as it is, and it's obviously very difficult to get things in and out of Ukraine and Russia with sanctions, could you just give us some sense of what the impact could be on your business?
And on a Pharma question, Eylea is obviously doing extremely well. And you're telling us that part of this is the launch of the prefilled syringes. We've recently had the two-year data in from faricimab. I wonder if you could tell us how you feel Eylea, particularly perhaps the 8-milligram Eylea would compete with that two-year data on faricimab? And therefore, how long we can expect to see Eylea continue to grow ignoring anything to do with patent expiries? Many thanks. [audio gap]
(01:05:17-01:05:30)
Hello, Mr. Maier. Can you hear us? [audio gap]
(01:05:35) and catering to the most – let's say, the most fundamental needs all of us have and that is access to food, and access to your health and health supplies. So with that, currently, there are no limitations when it comes to sanctions. We, of course, will be subjected to the mandate of politics. And we will adhere and cater to those. But as we speak, I think all of the sanctions are designed to hit those in power and to protect those who suffer from the situation most. And this is actually the civil population. And our products are the ones that we have to continue to make available to these people because a lot of them are kind of on our medicines. And they need to have access to it and they'll go out of our way in order to provide it.
Secondly, the overall situation in Ukraine and Russia, of course, continues to change by the hour. We have strong crisis management resources and teams that report to the board on the topic when it comes to supply, when it comes to ensuring that we have logistics. And transport is one of the bigger challenges right now. And then first things first. First things are that we take care of our own people in these countries. And there are some very, very basic needs people have right now. One is access to safe housing between shelter that we are organizing and providing also, with a lot of private initiatives of our people on the ground.
And secondly, as you've seen the pictures in the news, that people can't get a hold of cash. We are providing our people in Ukraine with advanced cash payments so that they get by with, let's say, the most urgent needs that they have locally. And the rest of it, we have to play it by the hour really.
Hi Jo, Stefan here. So thanks for your question on Eylea. Glad to see that you're following this closely and especially our very, very positive growth momentum that we're seeing. So yeah, we're following up on – obviously, also on what's happening in terms of clinical data from faricimab, I think this looks good, and they're catching up to us.
I mean, we're already at the given doses have a four-month dosing interval and with our treatment treat and extend. So they're catching up to that now with what they have. I think we're always one step ahead up to now. So in terms of growth, that's indeed a topic we will have to address in terms of also peak sales that we can achieve with Eylea moving forward, because we're impressed by how solid Eylea is. And so, I would think that we can expect continued growth in the coming years, only impeded by loss of exclusivity that will occur around 2025.
The next question is from the line of Marcus Friedrichs (sic) [Falko Friedrichs]. Please go ahead.
Hello. It's Falko Friedrichs from Deutsche Bank and thanks for taking my questions. I also have two, please. The first one is going back to your Crop Science guidance. So taking the 7% organic growth that you're pointing out, you mentioned it several times on this call that the majority of this should be price. So is it fair for us to assume that the split is roughly 5% price and 2% volume in 2022? And if that is correct, I still don't fully understand why the volume growth shouldn't be bigger this year. And that's my first question.
And then the second one is on pharma. You mentioned that the volume growth for Xarelto should largely offset the VBP impact. So, is it a fair assumption to assume low-single-digit growth for the drug in 2022? Thank you.
So let me address first the question here on that. Yeah, you fair to say that you reinforce the point that I made, yeah, the main driver of our growth is pricing that we see that. Some of the volume gain that we have in corn that I mentioned, especially in gaining market share and also the expansion of fungicides. You also have some of the downside including on the plan in terms of the cost increase and some other elements of that equation. But overall, I would say that the far majority of that price – of the growth that we have for 2023 is pricing. Half of that coming from the herbicide line and half of that coming from, mainly all the other crop protection products and the corn, that's right. That's right.
Yeah. Thank you for your question. On Xarelto, Marcus (sic) [Falko], I think it's important that I give you more color on this one. So we did manage to compensate in 2021, the price decreases by increased volumes. For 2022, given that we have a full year of VBP impact in China, this is going to be much, much harder. So what we do expect, given the importance of China that for this year, we may be facing a slight decrease even in Xarelto in 2022. We're obviously following this closely, because Europe continues to be strong, but we're now seeing first impact, especially through China. So 2022 is a tough year for us.
Okay. And a brief follow-up for Rodrigo, if I may. Does your guidance assume that you're winning market share in corn, but losing market share in soy in 2022?
No, we are gaining market share in corn. We are not assuming that in soybean. I think that we are not considering a significant expansion in soybean. That's fair to say. When we think about the volumes that we plan and especially for North America different from what I mentioned about South America, right?
So we always talk about soybean, I want to split that equation. In South America, we are seeing a significant expansion of the Intacta 2 Xtend platform. We're seeing great momentum and we're going to continue to seeing momentum. On the US market, we are a more competitive environment that we are not planning a significant expansion on the plans.
Okay. Thank you.
Thank you, Rodrigo.
Ladies and gentlemen, we kindly ask you for your understanding that we have to close this call now due to time contracts. Excuse me, Mr. Maier, please continue with any other points you wish to raise.
Right. Thank you so much, Nairobi. Much appreciated, and thanks to all for your time today and the attention. Greatly appreciate it. And this closes our call for today. Stay safe, and we talk soon. Thank you so much.
Ladies and gentlemen, this concludes the full year and fourth quarter 2021 investor and analyst conference call of Bayer AG. Thank you for participating. You may now disconnect.