Future Perspectives

Economic outlook

We expect global economic growth to slow in 2008 compared to the previous year, particularly as a result of the economic weakness in the United States. We anticipate that growth in the other industrialized countries and the emerging economies will remain relatively stable at a lower level. It remains difficult to predict the extent to which the U.S. subprime crisis and the turbulence on the international financial markets will affect the global economy.

We continue to expect solid growth in our health care markets, especially for pharmaceuticals. This year our business with crop protection and seed products is likely to benefit from high demand for food, energy and feed crops. We do not foresee any major impairments to growth in the markets relevant for our MaterialScience business, except in the United States.

Bayer Group sales and earnings forecast

The start to 2008 exceeded our expectations, strengthening our confidence for the year as a whole. We continue to target about 5 percent currency-adjusted growth in Bayer Group sales, an increase in EBITDA before special items and a further improvement in the underlying EBITDA margin.

We confirm our target margin for 2009 and continue to aim for an improvement in the Group’s underlying EBITDA margin to over 22 percent.

We remain confident about the performance of our HealthCare business, and are targeting a market or above-market rate of currency-adjusted sales growth in all divisions in 2008. Following the negative ruling in the United States regarding our Yasmin® patent (see Risk Report), we have made a minor adjustment to our HealthCare guidance. We now aim to improve our EBITDA margin before special items toward 27 percent (previously: approximately 27 percent). There is no change to our target margin of approximately 28 percent for 2009.

Our CropScience business shared in the positive performance of the world’s agricultural markets in the first quarter of 2008. We now believe that we will exceed our forecast of 5 percent currency-adjusted sales growth. Our goal is to improve the EBITDA margin before special items for the full year to about 24 percent (previously: more than 23 percent). We plan to further increase our profitability by 2009 and continue to target an EBITDA margin before special items of around 25 percent in a normal market environment.

Our MaterialScience business turned in a pleasingly robust performance in the first quarter. Its development over the remainder of the year is difficult to forecast due to the considerable uncertainty regarding the business environment and the movement of raw material prices. Against this background, we expect second-quarter EBITDA before special items at MaterialScience to be close to the level of the first quarter. For the year as a whole, we continue to expect that we can achieve a good, value-creating earnings level, though without matching the 2007 figure.