Net sales of the Bayer Group increased by 17.6 percent, or EUR 4,105 million, from the previous year to EUR 27,383 million. In local currencies and adjusted for portfolio effects, sales rose by 7.5 percent.

The cost of goods sold increased by 21.0 percent to EUR 15.0 billion, mainly as a result of the growth in business but also due to higher raw material costs. The ratio of the cost of goods sold to total net sales was 54.9 percent, compared with 53.4 percent in the previous year. To support our growth strategy we increased selling expenses, mainly at HealthCare and MaterialScience, by 9.0 percent overall to EUR 5.7 billion. Reasons for the increase in the negative balance of other operating income and expenses included expenses related to settlements of antitrust proceedings in the polymers field, and legal and defense costs for product liability suits in HealthCare. These charges were partially offset by gains from changes to our pension systems in the United States and Germany.

EBIT in 2005 amounted to EUR 2,812 million. Before net special charges of EUR 488 million (2004: EUR 242 million), EBIT climbed by 55.9 percent to EUR 3,300 million.

The non-operating result improved by EUR 40 million to minus EUR 613 million. Net expense from investments in affiliated companies declined significantly, while net interest expense rose, due particularly to the acquisition-related increase in net debt at the beginning of the year.

Income taxes for continuing operations in 2005 came to EUR 641 million (2004: EUR 473 million). While the higher tax expense was due to the improvement in earnings, the effective tax rate declined to 29.1 percent, from 38.7 percent in the prior year.

Including the result of discontinued operations, Group net income in 2005 improved by EUR 912 million to EUR 1,597 million.