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Ladies and gentlemen,

On behalf of the Board of Management, I too would like to welcome you to Leverkusen today. I'm pleased to report to you on what was Bayer's most successful year to date:


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- For the first time in our history, we had sales of more than EUR 32 billion.
- Our operating performance exceeded both the previous year's record levels and the earnings targets we had set for 2007.
- Group net income came in at EUR 4.7 billion, boosted by the proceeds from the completed divestitures.
- Gross cash flow advanced by 22 percent to EUR 4.8 billion.
- And we considerably reduced our net debt.
- We propose to raise the dividend by 35 percent to EUR 1.35.

First, let's take a look at our business performance in 2007: Group sales rose by 12 percent to EUR 32.4 billion. Adjusted for currency and portfolio effects, business expanded by 6 percent, with all three subgroups contributing to this growth.


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In the Europe region, we boosted sales by 13 percent to EUR 14.4 billion, due partly to the full-year inclusion of the Schering business. Sales in Germany advanced by 6 percent to EUR 4.8 billion.

I would like to stress that growth was again particularly strong in Greater China, where we had sales of EUR 1.8 billion and business expanded by a currency-adjusted 30 percent from the previous year.

The pleasing growth in Group sales led to a further considerable improvement in underlying earnings.

First, Group EBITDA before special items advanced by a substantial 21 percent to EUR 6.8 billion. The underlying EBITDA margin was 20.9 percent, ahead of our guidance for the year.

And second, EBIT before special items jumped by 23 percent to a record EUR 4.3 billion.

However, earnings in 2007 were diminished by a number of special items totaling minus EUR 1.1 billion on aggregate. The acquisition and integration of Schering accounted for a large proportion of these items – nearly EUR 700 million in fact – and Mr. Kühn will explain the various factors in detail later on.

We improved EBIT by 14 percent to EUR 3.15 billion.

Ladies and gentlemen,

We are pleased that we were able to carry over our positive performance of the first nine months into the fourth quarter. Sales totaled EUR 8 billion, representing a year-on-year increase of 4.6 percent on a currency- and portfolio-adjusted basis. I would like to stress that all three subgroups contributed to the improvement in our performance.

EBITDA before special items was up by 13 percent to EUR 1.4 billion, while EBIT before special items increased by 24 percent to EUR 774 million. We have now posted year-on-year improvements in underlying earnings in 20 consecutive quarters.


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Our positive business performance has also been mirrored in the stock price, which has shown a strong upward trend.

In 2007 alone, Bayer stock achieved a performance of 57 percent including the dividend, and by year end our market capitalization had risen by more than EUR 16 billion to over EUR 47 billion.

This is the biggest absolute gain our stock has ever achieved in a single year.
Long-term investors achieved an average annual performance of approximately 30 percent between 2003 and 2007. In the same period, the DAX rose by an average of about 23 percent a year.

Ladies and gentlemen,

Now let's take a look at our three subgroups. Please bear in mind here that product growth rates are always currency-adjusted to enhance comparability.


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Bayer HealthCare grew sales in 2007 by 26 percent to EUR 14.8 billion. This included the acquired business of Schering on a full-year basis for the first time. Currency- and portfolio-adjusted sales rose by 7.3 percent. This increase was due to the positive sales performance of both segments: As expected, Pharmaceuticals expanded in line with the market, while in Consumer Health all divisions actually grew faster than the market.

Global sales of the Pharmaceuticals segment climbed by 37 percent to EUR 10.3 billion. Currency- and portfolio-adjusted business expanded by 5.7 percent.

The oral contraceptives Yasmin®, YAZ® and Yasminelle® saw sales climb by 37 percent pro forma last year. Sales of this product family passed the EUR 1 billion mark.

Sales of the multiple sclerosis treatment Betaferon also exceeded EUR 1 billion for the first time, with business up 7 percent pro forma.

Sales of the intra-uterine system Mirena® expanded by 25 percent pro forma to EUR 361 million, due especially to strong growth in the United States.

Our cancer drug Nexavar® developed particularly well. Sales of this product more than doubled in only the second year after its introduction, to EUR 270 million.

Ladies and gentlemen,

In Europe and the United States we market Nexavar® for the treatment of kidney and liver cancer. At the beginning of this year, our product was also approved in Japan for kidney cancer. However, we are also investigating the therapeutic potential of Nexavar® in other types of cancer.

Ten days ago we published current results of a Phase III study. In this study Nexavar® did not prove effective in patients with non-small-cell lung cancer when used in conjunction with a certain chemotherapy, compared with the chemotherapy alone.

However, this does not cast any doubt on the proven clinical benefit for patients suffering from liver cancer and advanced kidney cancer. We are currently considering how to proceed regarding the development program for the lung cancer indication.

In our Consumer Health segment, sales advanced by 6.9 percent to EUR 4.5 billion.
Currency- and portfolio-adjusted sales grew by 10.3 percent. Seven out of our ten best-selling products posted double-digit growth rates.

Among the top products of the Consumer Care Division, the strongest gains were registered by our Berocca® vitamin tablet with 17 percent, our antifungal Canesten® with 15 percent, the analgesic Aleve® with 14 percent, and the One-A-Day® line of vitamin products, also with a 14 percent increase.

Sales of the Diabetes Care Division grew by a particularly strong, currency-adjusted 18 percent, thanks mainly to the outstanding performance of our Ascensia® Contour® blood glucose monitoring system. Sales of the Ascensia® product family expanded by a remarkable 24 percent.

Business in the Animal Health Division increased primarily due to the positive performance of the Advantage® range of flea and tick control products, sales of which rose by 21 percent.

We also further improved the subgroup's operating result thanks to the very good business performance, the full-year inclusion of Schering and the synergies already realized from the integration. EBITDA before special items jumped by 45 percent, or approximately EUR 1.2 billion, to EUR 3.8 billion. The underlying EBITDA margin of Bayer HealthCare came in at 25.6 percent, thus exceeding our earnings expectations for 2007.


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Ladies and gentlemen,

Bayer CropScience had sales of EUR 5.8 billion in 2007. Currency- and portfolio-adjusted business expanded by 5.6 percent.

In the Crop Protection segment - in other words our conventional crop protection business - currency- and portfolio-adjusted sales moved forward by 6.3 percent to EUR 4.8 billion.

Overall the crop protection business benefited from the positive business conditions on the world's agricultural markets, particularly the higher prices for agricultural commodities, increased cultivation of crops for the production of biofuels, and an improved market environment in Latin America.

Our young and innovative products turned in a particularly pleasing performance. Sales of our active substances introduced to core markets since 2000 rose by one third compared to 2006, reaching nearly EUR 1.4 billion. Significant contributions here came from our seed treatment Poncho®, sales of which almost doubled, from our fungicide Flint®, which saw sales grow by 37 percent, and from our cereal herbicide Atlantis® and the cereal fungicide Proline®.

In the Environmental Science,BioScience segment, sales came to more than EUR 1 billion, with the currency- and portfolio-adjusted increase amounting to 2.6 percent.

While BioScience saw business expand by 14 percent on a currency- and portfolio-adjusted basis, sales of Environmental Science receded. Here, business with products for professional users was hampered by generic competition and by unfavorable weather conditions in North America.

EBITDA before special items of the subgroup was up by 10 percent year on year to EUR 1.3 billion. This was due in part to higher volume sales and cost savings, which more than offset the lower margins caused by negative currency effects. The underlying EBITDA margin came to 22.7 percent, thus exceeding our expectations.


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The Bayer MaterialScience subgroup continued its positive sales performance in 2007, expanding business by 6.2 percent on a currency- and portfolio adjusted basis, to EUR 10.4 billion. This sales growth was mainly the result of higher volumes in both segments. We were also able to raise selling prices slightly overall.

Sales in our Systems segment climbed by 5.5 percent on a currency- and portfolio-adjusted basis, to EUR 7.4 billion, thanks to growth in volumes and higher selling prices. Both business units in the segment - Polyurethanes and the business with raw materials for coatings, adhesives and sealants - achieved sales growth in Asia and Europe.

Our Materials segment had sales of EUR 3 billion in 2007, thus improving on the previous year's figure by 8 percent on a currency- and portfolio-adjusted basis, thanks to a considerable increase in volumes, especially in Asia.

EBITDA before special items of the Bayer MaterialScience subgroup amounted to
EUR 1.6 billion, only 4 percent below the very high level of 2006. The considerable increases in petrochemical raw material and energy costs and negative currency effects were largely offset by higher volumes and selling price increases. The subgroup achieved an underlying EBITDA margin of 15.4 percent, and thus the good, value-creating earnings level we were aiming for.


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Ladies and gentlemen,

Now let's take a look at our financial data: Gross cash flow rose by 22 percent to EUR 4.8 billion, thanks to the gratifying expansion of business and the full-year inclusion of Schering. Net cash flow advanced by 9 percent to EUR 4.3 billion.

We substantially reduced our net debt, from EUR 17.5 billion at the end of 2006 to EUR 12.2 billion at the end of last year. Contributory factors here were the purchase price payments received for the diagnostics business, H.C. Starck and Wolff Walsrode, and the improvement in operating cash flow.

Including the EUR 2.4 billion in earnings from discontinued operations, Group net income climbed to EUR 4.7 billion. As a result, earnings per share increased from EUR 2.22 to EUR 5.84.

Since 2006 we have also published core earnings per share to facilitate performance comparison. Our core EPS rose from EUR 2.99 in the previous year to EUR 3.80 in 2007.

This key indicator also forms the basis for our dividend policy, which is to pay out between 30 and 40 percent of core earnings per share. Together with the Supervisory Board, we are proposing to raise the dividend per share for fiscal 2007 by 35 percent to EUR 1.35. This is 36 percent of our core earnings per share, and gives a payout in excess of EUR 1 billion.

And our employees around the world - more than 100,000 people - will benefit again this year from the gratifying trend. After all, our success would not have been possible without their commitment and their hard work. We will be paying out approximately EUR 490 million to our employees under the Group-wide incentive program. Our payscale employees in Germany alone will receive an amount equivalent to more than one month's salary.

In addition to this substantial variable income, however, our employees have also seen their fixed incomes increase. The rise in total remuneration in recent years has outpaced inflation.

In addition, our employees have benefited from stock participation programs for a number of years.

In this way we are continuing our policy of enabling our employees to participate adequately in our capital growth and the development of our company. The efforts of recent years have therefore paid off for our employees. And we can certainly say that they have participated in the upswing at our company. That too, ladies and gentlemen, is an expression of our social responsibility.


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Now let's take a look back at a few strategic highlights of the past year. I will only mention them briefly, as we have already reported on them in detail:

- At HealthCare we are more than satisfied with the rapid progress of the Schering integration.
- The Phase III study programs for our antithrombosis drug rivaroxaban, which we plan to market under the trade name Xarelto®, have shown very pleasing results, and we have already submitted the first marketing authorization application in the European Union.
- We acquired the Citracal® product range in order to strengthen our Consumer Care business in the area of calcium dietary supplements.
- At Bayer CropScience, too, we have made considerable strategic progress.
- Here we are forging ahead with the expansion of our BioScience business in particular. With the acquisition of U.S.-based Stoneville, which is this subgroup's largest corporate purchase since the acquisition of Aventis CropScience, we have significantly expanded our position in the cotton seed market and are now the world's second-leading supplier.
- At Bayer MaterialScience we have continued to expand our polyurethane systems house business in the growth regions of central and eastern Europe and Asia.
- In addition, we are underlining our commitment in one of the world's most important growth regions with the continuing expansion of our integrated production site at Caojing, China.
- We have also initiated a new cost structure program at MaterialScience. These measures are expected to be largely completed by 2009 and will then result in annual savings of EUR 300 million.

Ladies and gentlemen,

I would like to go into a little more detail about a topic that played a particularly prominent role in 2007. I am referring to the alarming reports of imminent climate changes and the related issue of efficient energy supply.

This spurred us to launch a new, Group-wide climate program last fall that includes ambitious CO₂ emissions reduction targets. We are one of the first companies to do this. The program is designed to intensify our already successful efforts in the field of environmental and climate protection.

Allow me to focus on three aspects of our extensive climate program with which we have made good progress in recent months.

- Together with our partners, we have developed a concept for a zero emissions building that we call the "Eco Commercial Building."

In this project we are integrating various technologies and materials, with insulating materials from Bayer MaterialScience playing a particularly important part. Our concept can be applied globally - in other words, we can adapt it to any of the Earth's climate zones.

We plan to construct the first such building by the end of 2009 in India, and we will break ground on this project this spring.

- A further central aspect is renewable energies such as biofuels.

At the beginning of this year, Bayer CropScience formed an alliance with Daimler and Archer Daniels Midland Company. Together with these partners, we plan to conduct research into the possible applications for the oil-containing plant jatropha in the biodiesel industry.

- And third, we have developed the Bayer Climate Check, a new steering tool for energy-efficient and climate-friendly production.

Using the Bayer Climate Check, we are able for the first time to evaluate not just production facilities themselves, but also the raw materials and energies they require and the logistics chain all the way to the factory gate. Initial inquiries from the market have confirmed we are on the right track with our plans to offer this innovation to other companies as well in the future.

Ladies and gentlemen,

these are important contributions to the climate debate, which will remain with us for the long-term and will offer attractive business opportunities for our company.


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Now let's take a look at the current business year.

In 2008 we expect the global economy to continue expanding, with regional variations. We believe the strongest growth will occur in Asia and Latin America. In Europe we anticipate that economic expansion will remain robust. Uncertainty surrounds the economic trend in the United States and its possible impact on the global economy. Exchange rates also remain unpredictable.

Our planning is based on an exchange rate of US$ 1.45 to the euro.

In this environment we aim to continue growing the business in 2008 and anticipate that we can raise Bayer Group sales by about 5 percent this year on a currency-adjusted basis. This would mean a slight nominal increase over 2007.

We also plan to further improve both EBITDA before exceptional items and our operating margin in 2008.

The strong start to this year confirms our assessment.


We anticipate a gratifying earnings trend for HealthCare and CropScience, while MaterialScience expects a more difficult market environment this year.

We forecast special charges of approximately EUR 650 million, of which between EUR 400 million and EUR 450 million will be cash items. These charges will result primarily from the integration of Schering and from ongoing restructuring projects at CropScience and MaterialScience. We are budgeting for cash expenses of approximately EUR 200 million in 2008 and EUR 50 million in 2009 for the Schering integration.

To safeguard long-term growth, we plan to spend EUR 1.7 billion on property, plant and equipment in 2008. We expect to increase our research and development spending to EUR 2.8 billion. This is once again the largest R&D budget of any company in our industry in Germany.

We can confirm that we still plan to achieve an underlying EBITDA margin of over 22 percent for the Group in 2009.


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Bayer HealthCare is targeting a market or above-market rate of currency-adjusted sales growth in all divisions in 2008, along with an improvement in the underlying EBITDA margin to approximately 27 percent. We confirm our goal of reaching an underlying EBITDA margin of around 28 percent for HealthCare in 2009.

We expect a generally positive market environment for CropScience in 2008 and aim to raise sales by approximately 5 percent on a currency-adjusted basis. Our goal is to improve the underlying EBITDA margin to more than 23 percent. We plan to further increase our profitability by 2009 and continue to target an underlying EBITDA margin of around 25 percent for CropScience in a normal market environment.

Bayer MaterialScience is planning to achieve good volume growth once again in 2008. Due to the uncertain business environment and highly volatile raw material prices, it is currently not possible to make a firm prediction concerning earnings for the full year. We expect to achieve a good, value-creating earnings level, though without matching the 2007 figure. For the first quarter of 2008 we believe underlying EBITDA of Bayer MaterialScience will remain practically level with the fourth quarter of 2007. We continue to believe that in the future, under favorable economic conditions, we can post an underlying EBITDA margin of more than 18 percent. Our cost structure program is designed to help achieve this objective.

Ladies and gentlemen,

Let me sum up:
- 2007 was another very successful year for Bayer from both an operational and a strategic perspective.
- This year we aim to further increase our earning power.
- We believe the Group is on a successful path in view of the innovative and growth potential in our portfolio.

And that's why we're looking to the future with confidence.

Thank you very much.



Forward-Looking Statements
This release may contain forward-looking statements based on current assumptions and forecasts made by Bayer Group or subgroup 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 company and the estimates given here. These factors include those discussed in Bayer's public reports which are available on the Bayer website at www.bayer.com. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.