Liquidity and Capital Expenditures of the Bayer Group

Bayer Group Summary Statements of Cash Flows

 

 

2015

 

2016

 

Change

 

 

€ million

 

€ million

 

%

2015 figures restated

Net cash provided by (used in) operating activities, continuing operations

 

6,836

 

8,259

 

+20.8

Net cash provided by (used in) operating activities, discontinued operations

 

54

 

830

 

.

Net cash provided by (used in) operating activities (total)

 

6,890

 

9,089

 

+31.9

Net cash provided by (used in) investing activities (total)

 

(2,762)

 

(8,729)

 

.

Net cash provided by (used in) financing activities (total)

 

(3,974)

 

(350)

 

+91.2

Change in cash and cash equivalents due to business activities

 

154

 

10

 

−93.5

Cash and cash equivalents at beginning of period

 

1,853

 

1,859

 

+0.3

Change due to exchange rate movements and to changes in scope of consolidation

 

(148)

 

30

 

.

Cash and cash equivalents at end of period

 

1,859

 

1,899

 

+2.2

Net cash provided by operating activities

The net cash provided by operating activities (total) rose by 31.9% to €9,089 million due to a significant improvement in EBIT, a sharp decrease in additional cash tied up in Working capital is the difference between short-term current assets and short-term liabilities; it is calculated by deducting short-term liabilities from current assets (excluding cash and cash equivalents). In the statement of cash flows, the change in working capital is one of the variables used to assess a company’s financial health. The objective of working capital management is to reduce working capital by minimizing the “financing gap” caused by the time lapse between the disbursement of funds (= payment for necessary raw materials) and the receipt of funds for the finished product. , and the cash inflow from the sale of the Diabetes Care business. The net cash provided by operating activities in Continuing operations Sales and earnings reporting for continuing operations pertains only to business operations that are expected to remain in the company’s portfolio for the foreseeable future; opposite of discontinued operations. increased by 20.8% to €8,259 million.

Cash Inflows from Operating Activities (Total)

€ million

Cash Inflows from Operating Activities (Total) (bar chart)Cash Inflows from Operating Activities (Total) (bar chart)

Net cash used in investing activities

The net cash outflow for investing activities in 2016 amounted to €8,729 million. Cash outflows for property, plant and equipment and intangible assets were 2.4% higher at €2,578 million (2015: €2,517 million) and included €835 million (2015: €777 million) at Pharmaceuticals, €215 million (2015: €148 million) at Consumer Health, €757 million (2015: €721 million) at Crop Science, €37 million (2015: €41 million) at Animal Health and €415 million (2015: €508 million) at Covestro. Cash outflows for noncurrent and current financial assets, especially for the short-term investment of the cash inflows from the mandatory convertible notes, amounted to €6,335 million (2015: €370 million). Inflows from interest and dividends totaled €89 million (2015: €106 million).

Net cash provided by (used in) financing activities

In 2016 there was a net cash outflow of €350 million for financing activities, including net loan repayments of €730 million (2015: €2,929 million). Net interest payments were 21.8% higher at €794 million (2015: €652 million). The cash outflow for dividends amounted to €2,126 million (2015: €1,869 million). The net cash inflow from the issuance of the mandatory convertible notes amounted to €3,952 million, reported as a €3,300 million capital contribution and a €652 million borrowing. In 2015, the stock market flotation of Covestro resulted in a cash inflow of €1,490 million.

Liquid assets and net financial debt

Net Financial Debt1

 

 

Dec. 31, 2015

 

Dec. 31, 2016

 

Change

 

 

€ million

 

€ million

 

%

1

Net financial debt is not defined in the International Financial Reporting Standards and is calculated as shown in this table.

2

Classified as debt according to IFRS

3

These include the market values of interest-rate and currency hedges of recorded transactions.

4

These include short-term loans and receivables with maturities between 3 and 12 months outstanding from banks and other companies as well as available-for-sale financial assets that were recorded as current on initial recognition.

Bonds and notes / promissory notes

 

15,547

 

15,991

 

+2.9

of which hybrid bonds2

 

4,525

 

4,529

 

+0.1

Liabilities to banks

 

2,779

 

1,837

 

−33.9

Liabilities under finance leases

 

474

 

436

 

−8.0

Liabilities from derivatives3

 

753

 

587

 

−22.0

Other financial liabilities

 

369

 

730

 

+97.8

Receivables from derivatives3

 

(350)

 

(313)

 

−10.6

Financial liabilities

 

19,572

 

19,268

 

−1.6

Cash and cash equivalents

 

(1,859)

 

(1,899)

 

+2.2

Current financial assets4

 

(264)

 

(5,591)

 

.

Net financial debt

 

17,449

 

11,778

 

−32.5

In 2016, net financial debt of the Bayer Group decreased by €5,671 million. Cash inflows from operating activities and the issuance of the mandatory convertible notes were set against cash outflows for dividends and negative currency effects.

Net financial debt includes three subordinated hybrid bonds with a total volume of €4,529 million, 50% of which is treated as equity by Moody’s and S & P Global Ratings. The hybrid bonds thus have a more limited effect on the Group’s rating-specific debt indicators than senior debt.

On November 22, 2016, Bayer issued €4,000 million in mandatory convertible notes. After deducting transaction costs and recognition of deferred taxes, €3,491 million was allocated to capital reserves and €652 million to other financial liabilities.