Earning power further strengthened in the first quarter

Bayer: excellent start to 2008

Sales up 2.4 percent to €8.5 billion

EBITDA before special items up 9.8 percent to €2.2 billion

EBIT before special items up 8.9 percent to €1.5 billion

Net income €0.8 billion

Full-year guidance for CropScience raised

Positive Group forecast for 2008 confirmed

Overview of Sales, Earnings and Financial Position

First quarter of 2008
The Bayer Group posted excellent first-quarter results, carrying over the previous year’s positive trend into 2008. Sales increased by 2.4 percent to €8,536 million (Q1 2007: €8,335 million). This corresponds to a 6.9 percent improvement when adjusted to reflect currency and portfolio effects. The main contributions to this improvement came from CropScience (+14.8 percent) and HealthCare (+8.6 percent). MaterialScience held steady at the prior-year level (+0.6 percent).

Sales by Market

EBITDA Before Special Items

EBITDA before special items rose by 9.8 percent in the first quarter to €2,185 million (Q1 2007: €1,990 million) despite adverse shifts in currency parities. HealthCare posted a 10.8 percent improvement to €1,050 million (Q1 2007: €948 million), while underlying ebitda of CropScience climbed by 22.1 percent to €713 million (Q1 2007: €584 million). Earnings of MaterialScience were flat, with EBITDA before special items coming in at €407 million (Q1 2007: €409 million). Group EBITDA amounted to €2,055 million, up 15.8 percent year on year.

EBIT before special items advanced by 8.9 percent in the first quarter of 2008 to €1,497 million (Q1 2007: €1,375 million). Special charges totaled €154 million (Q1 2007: €200 million), including €100 million (Q1 2007: €139 million) related to the acquisition of Schering AG, Germany, and €54 million (Q1 2007: €39 million) arising from the cost structure program at CropScience. EBIT climbed by 14.3 percent to €1,343 million (Q1 2007: €1,175 million).

After a non-operating result of minus €275 million (Q1 2007: minus €218 million), income before income taxes came in at €1,068 million (Q1 2007: €957 million). The non-operating result contained net interest expense of €189 million (Q1 2007: €156 million). This increase was due mainly to the early redemption of a U.S. bond. After tax expense of €306 million (Q1 2007: €301 million), income from continuing operations rose to €762 million (Q1 2007: €656 million). Net income for the first quarter of 2008, at €762 million, corresponded to the income from continuing operations. The net income of €2,809 million for the prior-year period included income of €2,154 million from discontinued operations, largely comprising the proceeds of the divestiture of our Diagnostics business. Earnings per share came to €0.96 (Q1 2007: €3.44). Core earnings per share improved to €1.44 (Q1 2007: €1.26). Details of how core earnings per share are calculated are given on Bayer-Stock.

Gross Cash Flow

Net Cash Flow

Gross cash flow moved ahead by 17.0 percent year on year in the first quarter of 2008, to €1,651 million (Q1 2007: €1,411 million). Despite an increase in cash tied up in working capital, net cash flow rose by 40.8 percent to €528 million. Net debt was €12.1 billion as of March 31, 2008, compared with €12.2 billion on December 31, 2007. The Group’s net pension obligations – the difference between pension provisions and plan assets – declined by €0.9 billion compared with the end of 2007, to €4.1 billion. The decrease was mainly due to higher long-term interest rates on the capital market.