Overview of Business Performance

Economic Environment

Global economy remains weak

The global economy grew somewhat more slowly in 2016 than in the previous year. The pace of growth in the United States was much slower, especially as a result of restrained investment activity. The economy in Europe also clouded somewhat, despite low interest rates. This was due particularly to the uncertainty surrounding the schedule and shape of the United Kingdom’s exit from the European Union. The Emerging Markets once again registered solid growth that was down only slightly against the previous year.

Economic Environment

 

 

Growth1 2015

 

Growth1 2016

2015 figures restated

1

Real GDP growth, source: IHS Global Insight

2

Including about 50 countries defined by Global Insight as Emerging Markets in line with the World Bank

As of February 2017

World

 

+2.8%

 

+2.5%

European Union

 

+2.2%

 

+1.9%

of which Germany

 

+1.5%

 

+1.8%

United States

 

+2.6%

 

+1.6%

Emerging Markets2

 

+4.0%

 

+3.8%

Currency development

Sales and EBITDA before special items of the Bayer Group in 2016 were impacted by negative currency effects of approximately €900 million (−1.9%) and about €15 million (−0.1%), respectively. Sales and EBITDA before special items of our Life Sciences This term describes Bayer’s activities in health care and agriculture and comprises the Bayer Group excluding its legally independent subsidiary Covestro. It refers to the businesses of the Pharmaceuticals, Consumer Health and Crop Science divisions and the Animal Health business unit. businesses included negative currency effects of around €750 million (−2.1%) and about €10 million (+0.1%), respectively.

Currency Development Life Sciences

 

 

2015

 

2016

 

Delta Fx effect on sales

 

Delta Fx effect on clean EBITDA

 

Of which delta Fx effect from hedging

 

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

Source: Bloomberg, annual average closing rates

CAD

 

1.42

 

1.47

 

(75)

 

(15)

 

37

CNY

 

6.97

 

7.36

 

(133)

 

26

 

80

GBP

 

0.73

 

0.82

 

(123)

 

10

 

54

JPY

 

134.28

 

120.06

 

228

 

43

 

(36)

RUB

 

67.23

 

73.79

 

(73)

 

(85)

 

(31)

USD

 

1.11

 

1.11

 

9

 

162

 

171

All currencies

 

 

 

 

 

(755)

 

8

 

329

While hedging transactions had a negative effect on earnings of €308 million in 2015, they made a positive contribution of €21 million in 2016. This represents a year-on-year increase of €329 million in the effect of hedging transactions on earnings. Sales, on the other hand, were impacted by conversion to currencies which appeared weaker. The margin for our Life Science businesses gained 0.6 percentage points from these opposing effects.