Credit Suisse First Boston Ag Innovation Conference London, February 15, 2005 Prof. Dr. Friedrich Berschauer Chairman of the Board of Mangement Bayer CropScience Forward Looking Statements This presentation contains forward-looking statements based on current assumptions and forecasts made by Bayer CropScience AG management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the Bayer CropScience AG or our parent company, Bayer AG, and the estimates given here. These factors include those discussed in Bayer AG's public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including Bayer AG's Form 20-F). Neither Bayer AG nor Bayer CropScience AG assumes any liability whatsoever to update these forward-looking statements or to conform them to future events or developments. CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 2 1
Global Market Environment 2004 Americas: Favorable Growing Conditions & increased Planting in North America Robust Farm Economy driven by higher Acreages in Key Crops & Asian Rust in Latin America Europe: Overall Recovery from Drought in 2003 High Channel Inventory in Key Markets France and Germany Benefiting from widespread Rainfall for Winter Cereals Asia/Pacific: Competitive Pressure in North East Asia Rainfall affected Rice, Cotton and Cereal Harvest in China and North East Asia Strong Insecticide Season in Australia CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 3 Commodity Price Development of Key Crops In US-$ / ton 350 Canola 300 250 200 150 100 Soybean Rice Wheat Corn 50 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2000 2001 2002 2003 2004 Cotton In US-Cents / lb Source: FAO, January 2005 CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 4 2
Bayer CropScience Key Figures Q1-Q3 2004 (in Million) Sales Jan-Sep 2003 4,353 Jan-Sep 2004 4,498 YOY +3.3% YOY Fx adj. 1 +7.4% EBITDA 932 978 +4.9% EBITDA-Margin 21.4% 21.7% Depreciation & Amortization 578 536-7.3% EBIT 354 442 +24.9% EBIT-Margin 8.1% 9.8% Special items (40) (29) EBIT underlying 394 471 +19.5% 1 exchange rate adjusted CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 5 Significant Growth from new Active Ingredients (Launched in key countries since 2000 - in million, figures rounded) 520 500 474 Iodosulfuron (73) 400 300 341 +39% Mesosulfuron (48) Foramsulfuron (56) Thiacloprid (30) Prothioconazole (24) 200 Clothianidin (24) Others (71) 100 Trifloxystrobin (148) Jan-Dec 2003 Jan-Sep 2003 Jan-Sep 2004 CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 6 3
Strategic Priorities Manage Innovation Crop Protection Capitalize on Best in Class Portfolio Environmental Science Expand Specialty Business BioScience Develop Next Generation Biotech Solutions CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 7 Manage Innovation Identify new active ingredients State of the art technology New modes of action Favorable environmental profile Optimize existing Portfolio New formulations / mixtures Improved application technology Proximity innovation in specialty business Partnership Approach Seek active dialogue with stakeholders Enhance acceptability of science CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 8 4
Continuous Innovation drives Future Growth 2002 2003 2004 2005 2006 Methoxyfenozide Spirodiclofen Fluoxastrobin Spiromesifen Ketoenole #3 Mesosulfuron Clothianidin Prothioconazole Ethiprole Herbicides plus Safener Foramsulfuron Picobenzamid Herbicides Insecticides Fungicides Seed Treatment CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 9 Product Focus: Prothioconazole & Fluoxastrobin Prothioconazole More than an azole Latest development in triazoles, leading to the new chemical class of triazolinthiones Extremely broad-spectrum Rapid uptake, rain stable, long-lasting control Launch schedule: 2004 in D 2005* in UK, IRL, A, CZ 2006* in F Curative and protective properties For cereals, oilseed rape, peanuts, dry beans and other crops Yield effects in the same league as a strobilurine Offer the best solution for each problem by tailor made products (foliar application & seed treatment) Cornerstone for mixing partner strategies with other specific and broad spectrum fungicides *expected CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 10 5
Product Focus: Prothioconazole & Fluoxastrobin Fluoxastrobin More than a strobilurin Latest strobilurin suited for foliar & seed treatment application Truly leaf systemic & broad-spectrum Even distribution, rapid uptake and long-lasting control Launch schedule: 2005 in UK, IRL, D 2006* in F Excellent curative and protective properties For cereals, potatoes, vegetables, peanuts and other crops Outstanding yield-increasing effects Start to finish disease control in combination with Prothioconazole *expected CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 11 Anticipated Peak Sales Prothioconazole & Fluoxastrobin: > 300 million Product Diversification with Tebuconazole Sales in Million 350 300 250 200 150 100 50 Soybeans Potato Turf Other Flowers & Ornamentals Coffee Oil Seed Rape Banana Grapes Pome / Stone Fruit Vegetables Peanuts Cereals Seed Treatment 0 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 12 6
Asian Soybean Rust in South & North America USA: First detection in early November 2004 in Louisiana Since then, detection in a number of states Soya Area Grown: ~ 30 Mio ha. Brazil: Season 2002/2003 Soya area grown: Rust treated hectares: Market value*: ~ 18 Mio ha. ~ 13 Mio ha. ~ US$ 140 Mio. Season 2003/2004 Soya area grown: Rust treated hectares: Market value*: ~ 21 Mio ha. ~ 30 Mio ha. ~ US$ 400 Mio. Paraguay: First detection in 2000/01; Further spread to Brazil and Argentina in 2001/2002 Argentina: First occurrence end of season 2003/2004 Soya area grown: ~ 14 Mio ha. * Estimation Bayer CropScience, September 2004 CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 13 Portfolio Approach in Soybean Fungicides Main stages of development Disease & Solution Powdery Mildew Asian Rust (preventive) Asian Rust (curative) LSD * * Late season diseases CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 14 7
Regional Focus: Latin America Forecast Agrochemicals World Market 2004 (Growth 2004/2003): In US$ 31.8 bn (+12.1%) / in 25.8 bn (+2.7%) Europe North America* in US$ +8.5% in -0.6% 27.0% 24.6% in US$ +7.4% in -1.6% Latin America in US$ +22.2% in +11.9% 18.3% 4.0% 26.0% Tamecis** * including Mexico in US$ +10.3% ** TAMECIS: Turkey, Africa, Middle East, Commonwealth of Independent States in +1.0% Source: Cropnosis estimates, November 18, 2004 Exchange rates 1 = 1.131 US$ in 2003; 1.244 US$ in 2004 CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 15 Asia/Pacific in US$ +14.4% in +4.8% Brazil drives Bayer CropScience Business in Latin America* 36 % 64 % Bayer CropScience Latin America Sales (Jan.-Sept. 2004 vs. 2003) Total: 637 million in US$ + 46 % in + 32 % Latin America: Recovery from economic crisis in key markets in the region Strong economic growth in export markets US and China Higher acreages and yields in the region, especially for soybeans Increasing use of modern crop protection products Brazil: Largest fungicide market worldwide Second largest crop protection market, also for Bayer CropScience Accounts for 9 % of our global sales** Continued professionalization of Brazilian farm industry * excl. Mexico / ** based on Jan.-Sept. Sales 2004 CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 16 8
Bayer CropScience Brazil Business Development (Crop Protection Sales / Jan.-Sept. 2004, Country of Destination) Number One in conventional Agrochemicals market 391 Mio (+ 57%) Seed Treatment 36 Mio (+ 41%) Nº 1 in Brazil Fungicides 153 Mio (+ 110%) Nº 1 in Brazil Insecticides 117 Mio (+ 36%) Nº 1 in Brazil Jan.-Sept. 2004 Herbicides 84 Mio (+ 50%) Nº 5 in Brazil CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 17 Evolution of cultivated Areas in Brazil (in million hectares*) 30 25 20 Soybeans Maize Sugarcane Cotton CAGR 1998-2010: 5.9 % 15 CAGR 1998-2010: 1.9 % 10 CAGR 1998-2010: 3.2 % 5 CAGR 1998-2010: 5.6 % 0 1998 1999 2000 2001 2002 2003 2004 2005 2010 Forecast Forecast Source: CONAB / Bayer CropScience estimates * Indications in harvesting year CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 18 9
Grow Brazilian Business through Portfolio Expansion and Innovations Four new products developed in Brazil expected to be launched in 2005 Evidence active ingredient: Imidacloprid Insecticide for the control of termites and leafhoppers in sugarcane Connect active ingredients: Imidacloprid + ß-Cyfluthrin Highly efficient Insecticide against bugs in soybeans Oberon active ingredient: Spiromesifen Insecticide against eggs, nymphs & adults of whiteflies and mites in beans & tomatoes Nativo active ingredients: Tebuconazole & Trifloxystrobin Effective control of most important fungal diseases in wheat & soybeans* Launch of ~ 20 products, mixtures and formulations planned in next 4-5 years * Launch of Nativo for use in soybeans expected in 2006 CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 19 Strategic Priorities Manage Innovation Crop Protection Capitalize on Best in Class Portfolio Environmental Science Expand Specialty Business BioScience Develop Next Generation Biotech Solutions CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 20 10
Strengthen a sustainable global Leadership Position 26% Long-term aspiration 25% 2006 Commitment EBITDA-margin Reinforce our leading role in Crop Protection & Environmental Science Develop Plant Biotechnology business Grow business through new product launches Further enhance our strong position in Latin America Finalize achievement of our synergy targets Foster a focused and result driven organization Continue above market growth Become the industry benchmark in terms of profitability CSFB Ag Innovation Conference February 15, 2005 Friedrich Berschauer Slide 21 Your partner for growth 11