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Ladies and gentlemen,

As well as improving our operating performance in 2007, we successfully completed the portfolio adjustments initiated in the previous year. The divestiture of Bayer HealthCare's Diagnostics Division was accomplished in January, the sale of the H.C. Starck group closed in February and the divestment of Wolff Walsrode AG was completed in June.

2007 was also the first full year in which we consolidated the Schering business acquired in 2006. The value of the remaining shares held by minority stockholders, which amounts to some EUR 700 million, is reflected in liabilities in light of the squeeze-out resolution adopted in January 2007.

Before I look in more detail at our financial performance in 2007, I would like to comment briefly on our fourth quarter results.


(2008-1506e-1)

As Mr. Wenning has already mentioned, our business continued to develop well in the fourth quarter and sales were up from the prior-year period. They came in at over EUR 8 billion, giving a sales gain of about 5 percent on a currency and portfolio-adjusted basis.

All three subgroups reported double-digit growth in EBIT before special items and thus contributed to the increase of around 24 percent in Group EBIT.


(2008-1506e-2)

Nevertheless, net income was only EUR 67 million in the fourth quarter, well below the figure reported for the fourth quarter of 2006. This was mainly due to one-time effects, both in the non-operating result and in income taxes.

In the fourth quarter of 2006 the non-operating result contained one-time income of EUR 236 million from the sale of our interest in GE Bayer Silicones.

The income tax situation was similar: while the utilization of loss carryforwards resulted in exceptional tax income of EUR 203 million in the fourth quarter of 2006, the fourth quarter of 2007 was weighed down by deferred tax liabilities, although these were non-cash items. These deferred tax liabilities relate to future dividend payments within the Bayer Group in Germany to optimize our financing structures.


(2008-1506e-3)

I would now like to comment briefly on our full-year performance in 2007:

Group EBITDA before special items climbed 21 percent to EUR 6.8 billion.

Underlying EBIT was equally strong at EUR 4.3 billion, up 23 percent from the previous year.


(2008-1506e-4)

Special items resulted in a total charge of EUR 1.1 million last year, with the HealthCare subgroup accounting for EUR 928 million, CropScience for EUR 130 million and MaterialScience for EUR 75 million on a net basis.

Included here are EUR 683 million related to the acquisition and integration of Schering, EUR 172 million for restructuring within the Group and EUR 139 million for litigation. Also included is a EUR 152 million charge for the impairment of intangible assets following the negative outcome of a study on a high-dosage formulation of our pharmaceutical product Betaferon®. This was not foreseeable and is the main reason why special items were higher than planned.

We expect to report further special items in 2008, principally for the integration of Schering, which is proceeding on schedule. However, we assume that the EUR 1.1 billion incurred last year was the peak and that special items will be far lower in the future.

EBIT after special items was approximately EUR 3.2 billion, which was 14 percent above the previous year's level.


(2008-1506e-5)

The non-operating result declined to minus EUR 920 million compared with minus EUR 782 million in 2006. That was essentially due to the result of investments in affiliated companies because in 2006, as I already mentioned, this item included an exceptional gain of EUR 236 million from the divestiture of our interest in GE Bayer Silicones.

Net interest expense includes, in particular, financing costs for the acquisition of Schering. Net exchange gains on financial transactions made a positive contribution to the non-operating result.

Income before income taxes came to roughly EUR 2.2 billion.


(2008-1506e-6)

In 2007 we recorded net tax income of EUR 72 million, compared with tax expense of EUR 454 million in 2006. This positive swing mainly results from one-time tax income of EUR 912 million due to changes in the German corporation tax system.

The chief factor here is the revaluation of the deferred tax liabilities assessed when we acquired Schering, to reflect lower future tax rates. This is a purely accounting effect and had no impact on actual tax payments for 2007.

Income taxes paid or accrued in Germany in 2007 amounted to EUR 209 million.

Ladies and gentlemen,

Income from continuing operations was EUR 2.3 billion.

Including income of EUR 2.4 billion from the divestitures and after minority interest, Group net income was EUR 4.7 billion, giving earnings per share of EUR 5.84.


(2008-1506e-7)

To increase comparability with other companies, especially regarding the impact of major acquisitions, we began reporting core earnings per share in 2006. This is calculated by adjusting Group net income for acquisition-related amortization, asset write-downs, the special items already mentioned, earnings from discontinued operations and tax adjustments.

In this way, we arrive at core EPS of EUR 3.80 for 2007, compared with EUR 2.99 for 2006. That is an improvement of 27 percent, while we are proposing to raise the dividend by 35 percent to EUR 1.35 per share.


(2008-1506e-8)

Finally, I would like to comment briefly on some key balance sheet data. Total assets declined by EUR 4.5 billion from the previous year to EUR 51.4 billion at year-end 2007 as a result of divestments. In 2006 the entities that have since been divested were still included in the balance sheet at EUR 2.9 billion as assets held for sale.

Stockholders' equity was EUR 16.8 billion on December 31, 2007, about EUR 4 billion higher than at the end of the previous year. The Group net income of EUR 4.7 billion made a major contribution to this increase. Liabilities were down by EUR 8.5 billion to EUR 34.6 billion as of December 31, 2007, mainly due to the decrease in financial liabilities.

As a result, equity coverage of total assets increased significantly from 23 percent to 33 percent.


(2008-1506e-9)

Our gross cash flow improved by a substantial EUR 0.9 billion, or 22.3 percent, to EUR 4.8 billion. We thus clearly exceeded our cash flow hurdle of EUR 4 billion – that's the cash flow that has to be earned to cover our cost of capital and asset reproduction – by about EUR 750 million. We also raised net cash flow by 9 percent to EUR 4.3 billion, despite having more cash tied up in working capital.

As of December 31, 2007 the Bayer Group had cash and cash equivalents of EUR 2.5 billion.

We reduced our net debt by an impressive EUR 5.4 billion to EUR 12.2 billion in 2007, supported by our operating cash flow and by divestments. Net debt already includes an amount of around EUR 700 million earmarked for effecting the squeeze-out of the Schering minority stockholders.

Ladies and gentlemen,

- Last year we achieved or exceeded all our main operational and financial targets.
- We successfully completed the divestment program initiated in 2006 and greatly reduced net debt. We are confident of further reducing debt this year and achieving our goal of an A rating by 2009.
- We also raised equity coverage of total assets substantially to 33 percent.
- Finally, we are proposing a clear increase of 35 percent in the dividend.

That shows our confidence that our business will continue to develop well, supported by our sound financial structure, and that we will continue to create value through growth and high earning power in the future.


Thank you!



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.