RNS Number:9110R
Bayer AG
11 November 2003

Bayer AG

Interim Report for the First Three Quarters



Sales and EBIT in line with expectations



Sales up 4.6 percent before portfolio and currency effects
Net debt reduced to Euro6.9 billion
Levitra(R) successfully launched in the United States



Group sales in the third quarter of 2003 declined by 8.4 percent to Euro6,834
million in what continued to be a difficult business environment. The decrease
was mainly due to adverse currency parities and several divestitures. Before
portfolio and currency effects, sales grew by 4.6 percent, buoyed primarily by
the Pharmaceuticals and Biological Products, and Polyurethanes, Coatings and
Fibers segments.

Third-quarter EBIT amounted to Euro21 million. The Euro858 million figure for the same
period of 2002 contained Euro909 million in proceeds from the sale of Haarmann &
Reimer. Before special items, EBIT improved by Euro36 million, or 52.9 percent, to
Euro104 million, largely thanks to higher earnings in HealthCare.

EBIT for the first three quarters of 2003 was Euro1,550 million, compared to Euro1,950
million in the same period of 2002. Before special items, EBIT in the first nine
months improved by Euro474 million, or 53.4 percent, to Euro1,361 million. Through
strict capital discipline, net debt was reduced by Euro828 million in the third
quarter to Euro6,930 million; during the first nine months, therefore, net debt was
brought down by Euro1,931 million using the operating cash flow and proceeds from
divestitures.

We do not anticipate a sustained economic recovery before the end of the year.
Earnings in HealthCare will be hampered by high launch costs for Levitra(R). In
CropScience we expect full-year EBIT to be slightly below the figure for the
first three quarters due to seasonal factors. Earnings in Polymers and Chemicals
are not expected to improve in the near term.

In connection with the comprehensive strategic realignment of our portfolio, we
will review the valuation of all relevant assets in the fourth quarter; this may
lead to a charge against fourth-quarter earnings. However, such a charge would
not impair our ability to pay a dividend for the year.

We expect EBIT before these special items to increase by a double-digit
percentage from the previous year as forecast.


Performance by Business Area


Our business activities are grouped together in the HealthCare, CropScience,
Polymers and Chemicals business areas, comprising the following reporting
segments:


Business Area            Segments
HealthCare               Pharmaceuticals, Biological Products;
                         Consumer Care, Diagnostics;
                         Animal Health
CropScience              CropScience
Polymers                 Plastics, Rubber;
                         Polyurethanes, Coatings, Fibers
Chemicals                Chemicals


HealthCare

Disregarding portfolio changes, the HealthCare subgroup turned in a pleasing
performance in the third quarter. Despite unfavorable exchange rates and the
sale of the household insecticides business, year-on-year sales were steady at
Euro2,259 million. In local currencies and before portfolio changes, sales rose by
10.9 percent. EBIT improved by Euro88 million to Euro216 million.

Even after negative currency effects, business of the Pharmaceuticals and
Biological Products segment expanded by 8.4 percent in the third quarter of 2003
to Euro1,210 million. The sales increase in local currencies amounted to 16.5
percent. This segment thus continued the positive trend of the second quarter,
with both the Pharmaceuticals and Biological Products divisions contributing to
the increase. Positive developments included the increase in market share for
the Factor VIII drug Kogenate(R) and the very successful launch of Levitra(R) in
the United States in September 2003. Levitra(R), our new medicine to treat
erectile dysfunction, had already captured an approximately 14 percent share of
new prescriptions in the United States by the 43rd calendar week of the year.
The product is now registered in nearly 60 countries. Levitra(R) is on the
market in the United States, Europe, numerous South American countries, New
Zealand and Australia. The patent disputes with Pfizer are ongoing.


EBIT increased to Euro40 million in the third quarter. This growth in earnings
resulted mainly from the optimization of production processes in Biological
Products, the cost-structure programs in Pharmaceuticals and the favorable
business trend. The special items largely comprised restructuring charges.

The U.S. Food and Drug Administration approved the once-daily formulation Cipro
(R) XR to treat complicated urinary tract infections. We have also taken an
important step in the field of cancer research: a Raf kinase inhibitor that is
being developed jointly with U.S.-based Onyx Pharmaceuticals Inc. has reached
Phase III clinical testing for the treatment of advanced renal cell carcinoma.

As part of our ongoing portfolio management, we plan to divest the plasma
business of the Biological Products Division. These activities are shown under
discontinuing operations. The Kogenate(R) business is not affected by this
decision.

Following the first two successfully concluded Baycol(R) trials in Texas and
Mississippi in March and April of this year, the number of rhabdomyolysis cases
resolved by settlement increased substantially. As of November 6, 2003, 1,811
cases had been settled for payments totaling US$ 659 million. Moreover, Bayer is
in settlement negotiations with several hundred further plaintiffs. Bayer
remains willing to settle those cases in which plaintiffs suffered serious
side-effects due to our product. As of November 6, 2003, 11,459 cases remain
pending. Where facts have been developed in the course of the litigation it so
far appears that the vast majority of plaintiffs did not suffer serious
side-effects.

Should the U.S. plaintiffs in the Baycol(R) litigation or in the
phenylpropanolamine (PPA) product liability litigation substantially prevail
despite the existing meritorious defenses, it is possible that Bayer could face
payments that exceed its insurance coverage. The same is true should an
unexpectedly sharp increase in settlement cases occur in the Baycol(R)
litigation. PPA, which was widely used as an active ingredient in appetite
suppressants and cough-and-cold medications by many manufacturers, was
voluntarily replaced by Bayer and other producers in the U.S. in 2000 after a
recommendation by the U.S. Food and Drug Administration.


The Consumer Care and Diagnostics segment continued to develop well in the third
quarter. Despite the divestment of the household insecticides business and the
strength of the euro, reported sales moved back by only 10.1 percent to Euro845
million. In local currencies and before portfolio effects, sales climbed by 5.3
percent, with the Consumer Care and Diagnostics divisions expanding by 3.3 and
7.2 percent, respectively. The U.S. business drove growth of the Consumer Care
Division, which was mainly due to the very positive performance of the One-A-Day
(R) Weight Smart vitamin line introduced at the beginning of the year. Also
making pleasing gains was the analgesic Aleve(R), which grew faster than the
U.S. market for non-prescription pain relievers. Both the Professional Testing
and Self-Testing units of the Diagnostics Division posted good growth year on
year. In the Self-Testing business, the improvement over the preceding quarters
was chiefly attributable to new product launches in the Ascensia(R) line in a
number of countries. We expect these newly launched blood glucose measurement
systems to further improve our position in the self-testing market. In
Professional Testing all product groups performed encouragingly, with the ADVIA
(R) product line fairing especially well. Our position should again be
strengthened by the launches of the ADVIA(R) IMS800i laboratory diagnostics
system and the BNP heart failure assay for the ADVIA(R) Centaur system.

EBIT improved by 20.9 percent compared to the third quarter of 2002, to Euro133
million, helped by special items and particularly the enhanced performance of
the Professional Testing unit.

The Animal Health segment was also hampered by negative currency effects.
Third-quarter sales fell by 8.5 percent in euros but remained steady in local
currencies.

EBIT dropped by 15.7 percent to Euro43 million, largely because of unfavorable
currency parities and heightened competition in the United States. These effects
were only partly offset by strict cost management.


CropScience

The third quarter saw a year-on-year fall of 14.3 percent, or Euro188 million, in
CropScience sales to Euro1,125 million. In local currencies and adjusted for the
absence of the products divested to comply with antitrust conditions, sales rose
by 3.5 percent. Products containing our most important active ingredient,
imidacloprid, continued to enjoy strong sales, as in the first half of the year
- particularly our seed treatment product Gaucho(R), which made further gains in
the important U.S., German and Italian markets. Business in Europe was impaired
by sustained drought conditions that led to lower demand for fungicides. Sales
increased significantly in North America due to heavy demand for fungicides and
insecticides. In the third quarter we obtained registration there for our new
insecticides Poncho(R) and Calypso(R). Business in South America was impacted by
negative currency and portfolio effects. Sales in the first three quarters
increased by 33.4 percent, or Euro1,091 million, to Euro4,353 million as a result of
the Aventis CropScience acquisition.

EBIT improved to minus Euro134 million in the third quarter despite the sales
decline and restructuring charges, margins for the former Aventis CropScience
products having been impaired in the same period last year by factors related to
the acquisition. EBIT for the first nine months improved from minus Euro53 million
to Euro342 million, while EBITDA rose to Euro920 million, compared to Euro299 million in
the first three quarters of 2002. This yields an EBITDA margin of 21.1 percent,
compared to 9.2 percent a year ago.

The integration of Aventis CropScience has continued successfully in 2003 and is
now at an advanced stage.


Polymers

Sales of Polymers declined by 5.4 percent in the third quarter, to Euro2,456
million, mainly due to adverse currency effects. EBIT was sharply down, at minus
Euro11 million.

Business in the Plastics and Rubber segment decreased by 10.9 percent to Euro1,170
million, largely because of the weakness of the U.S. dollar. In local currencies
and adjusted to reflect the divestment of PolymerLatex, sales fell by 3.1
percent, hampered as before by the absence of an economic recovery in Europe.
Despite the overall trend, however, there was encouraging growth in
polycarbonate sales in the Greater China region as important customers such as
the automotive and electronics industries continued their expansion in the Far
East.

The main reasons for the significant decline in EBIT, to minus Euro50 million, were
sustained pressure on prices - partly because Asian competitors were able to
exploit their currency advantages - and high raw material costs. Special items
diminished earnings by Euro23 million, with the closure of a production line for
butadiene rubber (BR) at the site in Marl, Germany, accounting for Euro12 million.
Our acquisition of the remaining shares of Makroform GmbH on July 15, 2003
strengthens our position as a leading supplier of polycarbonate sheet.

Sales of the Polyurethanes, Coatings and Fibers segment remained steady year on
year at Euro1,286 million. Business was up by 6.0 percent in local currencies. The
MDI business continued to expand, with high capacity utilization and sales up
12.0 percent in the third quarter. Despite a squeeze on prices, the TDI business
rebounded from its low level of the second quarter to grow 7.2 percent
year-on-year in the third quarter. The drop in sales of coatings materials was
largely currency-related.

EBIT improved to Euro39 million in the third quarter, largely thanks to the
strength of the MDI business. For this segment, too, competitive pressure from
outside Europe was a negative factor. EBIT contains Euro9 million in special items,
including a Euro7 million charge for the closure of the polyether site at
Institute, West Virginia, United States.


Chemicals

Chemicals sales fell by 24.1 percent in the third quarter of 2003, to Euro839
million. Adjusted for portfolio changes and measured in local currencies,
business remained nearly steady, with sales gains for Industrial Chemicals and
H.C. Starck in particular.

With margins impaired by unfavorable currency parities, EBIT from continuing
operations declined by Euro24 million to Euro13 million.

To further optimize our portfolio, we sold Walothen GmbH to the Wihuri group of
Finland effective November 1, 2003.


Performance by Region

There was still no tangible improvement in the economic situation of the euro
zone in the third quarter of 2003. Investment and private consumption remained
weak, while the continuing strength of the euro made it more difficult for many
export-oriented companies to offer competitive prices. Against this background,
sales of our European companies decreased by 10.5 percent to Euro3,065 million.
This decline and the lower margins, particularly on export business, caused EBIT
to fall to minus Euro151 million.

The U.S. economy received strong stimulus from the government's economic policy,
with GDP growing surprisingly fast since the beginning of the year. Although
sales of our North American companies dipped by 1.7 percent in euros, business
was up by 8.9 percent in local currencies. As in the preceding quarters, the
increase in HealthCare earnings led to a significant improvement in EBIT, to Euro92
million.

An economic uptrend was also apparent in most of the Asia/Pacific countries.
Third-quarter sales of our companies in that region grew by 4.5 percent in local
currencies and declined by 5.6 percent in euros. Our business in China remains
the growth driver in this region. EBIT for the Asia/Pacific region increased by
Euro14 million to Euro43 million.

The economy appears to be stabilizing this year in most parts of our Latin
America/Africa/Middle East region. The substantial decline in the sales of our
companies in this region, which fell by 21.9 percent to Euro610 million, was
primarily due to the sale of the household insecticides business and factors
relating to CropScience. EBIT also declined significantly, to Euro86 million.


Liquidity and Capital Resources


The consolidated financial statements for the first three quarters of 2003 have
been prepared as for the year 2002 according to the rules of the International
Accounting Standards Board (IASB), London. Reference should be made as
appropriate to the notes to the 2002 statements.

Gross cash flow decreased by Euro70 million, or 11.5 percent, in the third quarter
of 2003, chiefly as a result of higher income tax payments. Net cash flow, at
Euro1,193 million, was down Euro204 million but still at a high level. A significant
component of the operating cash flow was a Euro558 million decline in accounts
receivable during the third quarter, resulting mainly from seasonal effects in
the CropScience business area and strict receivables management. Net cash flow
in the first three quarters amounted to Euro2,323 million, after disbursements of
Euro231 million made following a settlement reached with U.S. authorities in the
context of an investigation into pharmaceutical product prices. A cash outflow
of Euro51 million pertained to the discontinuing plasma operations. (In 2002, a
Euro102 million cash outflow pertained to the plasma operations, and a Euro100 million
inflow to Haarmann & Reimer).

Net cash used in investing activities came to Euro272 million in the third quarter.
Here, cash outflows of Euro454 million for capital expenditures were partially
offset by Euro164 million in inflows from asset sales and divestments. Interest and
other financial receipts amounted to Euro18 million. Net cash used in investing
activities in the third quarter of the previous year included disbursements in
connection with the acquisition of Aventis CropScience. In the first three
quarters, investing activities provided net cash of Euro677 million, with a Euro15
million outflow pertaining to discontinuing operations. (In 2002, a Euro9 million
cash outflow pertained to the plasma operations, and a Euro69 million outflow to
Haarmann & Reimer).

Financing activities resulted in a net cash outflow of Euro469 million in the third
quarter, including primarily Euro384 million in loan repayments and Euro91 million in
interest paid after taxes. Net cash of Euro1,571 million was used in financing
activities in the first nine months, with a cash inflow of Euro66 million
pertaining to discontinuing operations. (In 2002, a Euro109 million cash inflow
pertained to the plasma operations, and a Euro1 million outflow to Haarmann &
Reimer).

Cash and cash equivalents increased from the third quarter of 2002 by Euro1,462
million to Euro2,171 million. Including marketable securities and other
instruments, the Group had liquid assets of Euro2,203 million on September 30,
2003.


Earnings Performance



Reported EBIT declined by Euro837 million in the third quarter of 2003, to Euro21
million, though before special items EBIT increased by 52.9 percent to Euro104
million. Special items for the third quarter mainly comprised restructuring
charges. Earnings for the same period of 2002 contained proceeds of Euro909 million
from the sale of the Haarmann & Reimer group.

The non-operating result improved by Euro30 million to minus Euro211 million, largely
because of a Euro39 million reduction in net interest expense, to Euro93 million.

The Bayer Group reported a pre-tax loss of Euro190 million for the quarter. After
accounting for tax income of Euro74 million and minority interests, a net loss of
Euro123 million was recorded. Net income for the first three quarters amounted to
Euro591 million.

We terminated our research agreement with Millennium Pharmaceuticals on October
31, 2003, as planned, and sold our interest in this biotech company in the
fourth quarter. The divestiture proceeds of more than US$ 300 million will be
used to further reduce net debt.



Asset and CApital STructure



Total assets decreased by Euro1.9 billion compared with the beginning of 2003, to
Euro39.7 billion.

Intangible assets shrank by Euro0.9 billion to Euro8.0 billion. Property, plant and
equipment decreased by Euro1.1 billion, with Euro0.9 billion in capital expenditures
offset by Euro1.3 billion in depreciation and amortization and Euro0.3 billion in
retirements. Negative currency effects diminished property, plant and equipment
by Euro0.4 billion.

The total of inventories and receivables dropped by Euro1.3 billion, or 7.9
percent, to Euro14.8 billion, with inventories up 0.5 percent, to Euro6.4 billion, but
trade accounts receivable down by 4.3 percent, to Euro5.3 billion. Other
receivables declined by 25.2 percent to Euro3.2 billion, as the assets earmarked
for divestment and since divested in connection with the Aventis CropScience
acquisition were still included in this item at the end of 2002. Liquid assets
grew by Euro1.4 billion to Euro2.2 billion, particularly due to the operating cash
flow. Total current assets increased by Euro0.1 billion compared with December 31,
2002, to Euro17.0 billion.

Stockholders' equity declined by Euro0.6 billion to Euro14.7 billion. A Euro0.6 billion
allocation out of net income was offset by the Euro0.6 billion dividend payment for
2002 along with a further Euro0.6 billion reduction, resulting mainly from currency
translations, which was not recognized in net income.

Equity coverage of total assets rose by 0.2 percentage points compared to the
end of 2002, to 37.0 percent.

Liabilities fell by Euro0.9 billion to Euro22.5 billion, chiefly due to a decline in
trade accounts payable and to the disbursements made following the settlement
reached with U.S. authorities in the context of an investigation into
pharmaceutical product prices. Gross financial liabilities dropped by Euro0.5
billion, to Euro9.1 billion.

Net debt declined by Euro1.9 billion in the first three quarters, to Euro6.9 billion.



Capital Expenditures



As in the previous quarters, we again spent considerably less for intangible
assets, property, plant and equipment in the third quarter of 2003 than in the
corresponding period last year. Capital expenditures were down by 37.2 percent,
to Euro384 million. Total capital spending in the first nine months of 2003 fell by
27.2 percent to Euro1,184 million. At 57.2 percent of our Euro2,069 million scheduled
depreciation and amortization, the level of capital expenditures was in line
with our planning. Europe accounted for capital spending of Euro778 million, 60.4
percent of which went for our sites in Germany.


Employees



On September 30, 2003, the Bayer Group had 117,300 employees, 5,300 fewer than
at the start of the year. Headcount was reduced by 2,200 in Europe, 1,100 in
North America, 1,400 in Asia/Pacific and 600 in Latin America/Africa/Middle
East.

Personnel expenses were down by 11.8 percent in the third quarter, to Euro1,940
million, and by 4.3 percent in the first three quarters as a whole, to Euro5,898
million.

Bayer Group Highlights                                                                                              
  Euro million                                3rd Quarter                               First Three Quarters          
                                      2002             2003            Change                 2002      2003    Change
  Net sales                          7,459            6,834            - 8.4%               22,196    21,446    - 3.4%
  of which discontinuing               362              159                                  1,155       452          
  operations                                                                                                          
  Change in sales                                                                                                     
  Volume                              + 6%             + 5%                                     0%      + 4%          
  Price                               - 1%               0%                                   - 3%      + 1%          
  Currency                            - 8%             - 6%                                   - 4%      - 9%          
  Portfolio changes                  + 11%             - 7%                                   + 4%      + 1%          
 
 EBITDA1                            1,639              753           - 54.1%                4,161     3,635   - 12.6%
 
  Operating result (EBIT)              858               21           - 97.6%                1,950     1,550   - 20.5%
  of which discontinuing               875             (19)                                    889      (42)          
  operations                                                                                                          
  of which special items               790             (83)                                  1,063       189          
  Return on sales                    11.5%             0.3%                                   8.8%      7.2%          
  Net income (loss)                    656            (123)                 *                1,472       591   - 59.9%
  Earnings per share                  0.90           (0.17)                                   2.02      0.81          
  (Euro)                                                                                                              

  Gross cash flow2                     611              541           - 11.5%                2,206     3,032   + 37.4%

  Net cash flow3                     1,397            1,193           - 14.6%                2,730     2,323   - 14.9%

  Capital expenditures                 611              384           - 37.2%                1,627     1,184   - 27.2%

  Depreciation and                     781              732            - 6.3%                2,211     2,085    - 5.7%
  amortization                                                                                                        

  Number of employees                                                                      123,500   117,300    - 5.0%
  (as of September 30)                                                                                                
  Personnel expenses                 2,200            1,940           - 11.8%                6,166     5,898    - 4.3%

  2002 figures restated                                                                                               

  1 EBITDA = operating result (EBIT) plus depreciation and                                                            
  amortization                                                                                                        

  2 Gross cash flow = operating result (EBIT) plus depreciation and amortization, less gains on retirements of        
  noncurrent assets,                                                                                                  
  less income taxes, and adjusted for changes in long-term provisions                                                 

  3 Net cash flow = cash flow from operating activities                                                               
  according to IAS 7                                                                                                  

  Balance Sheet                                                                                                  
  Structure                                                                                                           
 
 (Euro) million                 Sept. 30, 2002   Sept. 30, 2003     Dec. 31, 2002                                         
  Noncurrent assets                 25,337           21,666            23,513                                         
  Current assets                    17,884           17,031            16,890                                         
  Deferred taxes and                 1,262            1,048             1,289                                         
  deferred charges                                                                                                    
  Stockholders' equity              16,131           14,713            15,335                                         
  Minority stockholders'               152              137               120                                         
  interest                                                                                                            
  Liabilities                       24,979           22,461            23,320                                         
  Deferred taxes and                 3,221            2,434             2,917                                         
  deferred income                                                                                                     
  Total assets                      44,483           39,745            41,692                                         

  Bayer Group Consolidated Statements of Changes in Stockholders' Equity (Summary)                                    

  Euro million               Capital stock    Retained         Net               Currency             Miscel-   Total   
                           and reserves     earnings         income            translation          laneous           
                                                                               adjustment           items             
  December 31, 2001        4,812            9,841            965               759                  545       16,922  
  Dividend payment                                           (657)                                            (657)   
  Allocation to retained                    286              (308)                                            (22)    
  earnings                                                                                                            
  Exchange differences                                                         (1,043)                        (1,043) 
  Other changes in                                                                                  (541)     (541)   
  stockholders' equity                                                                                                
  Net income                                                 1,472                                            1,472   
  September 30, 2002       4,812            10,127           1,472             (284)                4         16,131  
  December 31, 2002        4,812            10,076           1,060             (593)                (20)      15,335  
  Dividend payment                                           (657)                                            (657)   
  Allocation to retained                    403              (403)                                            0       
  earnings                                                                                                            
  Exchange differences                                                         (675)                          (675)   
  Other changes in                                                                                  119       119     
  stockholders' equity                                                                                                
  Net income                                                 591                                              591     

  September 30, 2003       4,812            10,479           591               (1,268)              99        14,713  

  Bayer Group Consolidated Balance Sheets (Summary)                                                                   
  Euro million               Sept. 30,        Sept. 30,        Dec. 31,                                                 
                           2002             2003             2002                                                     
  Assets                                                                                                              
  Noncurrent assets                                                                                                   
  Intangible assets        10,512           8,010            8,879                                                    
  Property, plant and      12,704           11,387           12,436                                                   
  equipment                                                                                                           
  Investments              2,121            2,269            2,198                                                    
                           25,337           21,666           23,513                                                   
  Current assets                                                                                                      
  Inventories              6,706            6,375            6,342                                                    
  Receivables and other                                                                                               
  assets                                                                                                              
  Trade acounts            6,134            5,302            5,542                                                    
  receivable                                                                                                          
  Other receivables and    4,308            3,151            4,210                                                    
  other assets                                                                                                        
                           10,442           8,453            9,752                                                    
  Liquid assets            736              2,203            796                                                      
                           17,884           17,031           16,890                                                   
  Deferred taxes           915              618              967                                                      
  Deferred charges         347              430              322                                                      
                           44,483           39,745           41,692                                                   
  of which discontinuing   902              815              853                                                      
  operations                                                                                                          

  Stockholders' Equity and Liabilities                                                                                
                                                                                                                      
  Stockholders' equity                                                                                                
  Capital stock and        4,812            4,812            4,812                                                    
  reserves                                                                                                            
  Retained earnings        10,127           10,479           10,076                                                   
  Net income               1,472            591              1,060                                                    
  Other comprehensive                                                                                                 
  income                                                                                                              
  Currency translation     (284)            (1,268)          (593)                                                    
  adjustment                                                                                                          
  Miscellaneous items      4                99               (20)                                                     
                           16,131           14,713           15,335                                                   

  Minority stockholders'   152              137              120                                                      
  interest                                                                                                            
  Liabilities                                                                                                         
  Long-term liabilities                                                                                               
  Long-term financial      7,268            6,960            7,318                                                    
  liabilities                                                                                                         
  Miscellaneous            108              80               92                                                       
  long-term liabilities                                                                                               
  Provisions for           4,946            5,112            4,925                                                    
  pensions and other                                                                                                  
  post-employment                                                                                                     
  benefits                                                                                                            
  Other long-term          1,298            1,277            1,215                                                    
  provisions                                                                                                          
                           13,620           13,429           13,550                                                   
  Short-term liabilities                                                                                              
  Short-term financial     5,272            2,656            2,841                                                    
  liabilities                                                                                                         
  Trade accounts payable   2,285            1,749            2,534                                                    
  Miscellaneous            2,101            2,100            2,138                                                    
  short-term liabilities   1,701            2,527            2,257                                                      
  Short-term provisions   11,359            9,032            9,770                                                    
                          24,979           22,461           23,320                                                   

  of which discontinuing   90               98               81                                                       
  operations                                                                                                          

  Deferred taxes           2,803            1,867            2,453                                                    
  Deferred income          418              567              464                                                      
                           44,483           39,745           41,692                                                   

  The statements for the first three                                                                                  
  quarters are unaudited.                                                                                             

  Bayer Group Consolidated Statements of Income (Summary)                                                             

    Euro million             3rd Quarter                       First Three Quarters                                     
                          2002               2003             2002              2003                                   
  Net sales                7,459            6,834            22,196            21,446                                 
  of which discontinuing   362              159              1,155             452                                    
  operations                                                                                                          
  Cost of goods sold       (4,524)          (4,199)          (13,108)          (12,329)                               
  Gross profit             2,935            2,635            9,088             9,117                                  

  Selling expenses         (1,757)          (1,497)          (5,048)           (4,688)                                
  Research and             (640)            (639)            (1,842)           (1,766)                                
  development expenses                                                                                                
  General administration   (391)            (427)            (1,063)           (1,197)                                
  expenses                                                                                                            
  Other operating income   1,048            225              1,786             942                                    
  Other operating          (337)            (276)            (971)             (858)                                  
  expenses                                                                                                            
  Operating result (EBIT)  858              21               1,950             1,550                                  
  of which discontinuing   875              (19)             889               (42)                                   
  operations                                                                                                          
  Non-operating result     (241)            (211)            (354)             (559)                                  
  Income (loss) before     617              (190)            1,596             991                                    
  income taxes                                                                                                        
  Income taxes             44               74               (115)             (385)                                  
  Income (loss) after      661              (116)            1,481             606                                    
  taxes                                                                                                               
  Minority stockholders'   (5)              (7)              (9)               (15)                                   
  interest                                                                                                            
  Net income (loss)        656              (123)            1,472             591                                    
  Earnings per share       0.90             (0.17)           2.02              0.81                                   
  (Euro)                                                                                                              

  Bayer Group Summary Cash Flow Statements                                                                            
 
  Euro million              3rd Quarter                       First Three Quarter                                      
                           2002             2003             2002              2003                                   
  Gross cash flow*         611              541              2,206             3,032                                  
  Changes in working       786              652              524               (709)                                  
  capital                                                                                                             
  Net cash provided by     1,397            1,193            2,730             2,323                                  
  operating activities                                                                                                
  Net cash provided by     (2,729)          (272)            (7,135)           677                                    
  (used in) investing                                                                                                 
  activities                                                                                                          
  Net cash provided by     1,190            (469)            4,394             (1,571)                                
  (used in) financing                                                                                                 
  activities                                                                                                          
  Changes in cash and      (142)            452              (11)              1,429                                  
  cash equivalents due                                                                                                
  to business activities                                                                                              
  Cash and cash            840              1,728            719               767                                    
  equivalents at                                                                                                      
  beginning of period                                                                                                 
  Change due to exchange   11               (9)              1                 (25)                                   
  rate movementsand to                                                                                                
  changes in scope of                                                                                                 
  consolidation                                                                                                       
  Cash and cash            709              2,171            709               2,171                                  
  equivalents at end of                                                                                               
  third quarter                                                                                                       
  Marketable securities    27               32               27                32                                     
  and other instruments                                                                                               
  Liquid assets as per     736              2,203            736               2,203                                  
  balance sheets                                                                                                      
  * for definition see                                                                                                
  Bayer Group Highlights                                                                                              
 

                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

QRTGGMMMNMRGFZG