Bayer ranked among the best
equities in the DAX index in 2005, with a performance* of
54 percent on the year. The stock closed the year at EUR 35.29,
its highest year-end price since 2000. The dividend of EUR 0.95
per share for 2005 to be proposed to the Annual Stockholders’
Meeting represents a 73 percent increase from the previous
year.
A very good year on the stock market
2005 was a very good year for equity investors. On December
30, 2005, the German stock index DAX closed up 27.1 percent
at 5,408 points. Until May, the DAX moved mainly sideways against
a background of uncertainty caused by rising oil prices and
other factors. The turning point came in May when the German
government announced an early parliamentary election. In the
weeks that followed, the DAX showed a marked upward trend, temporarily
dampened by the terrorist attacks in London in July. On September
7 the DAX reached 5,000 points for the first time since May
2002. The EURO STOXX 50, which contains the 50 leading blue
chips in the euro zone, including Bayer, ended the year up 24.3
percent.
Bayer stock clearly outperformed the DAX in 2005
Bayer stock significantly outperformed the DAX index in 2005,
ending the year up 50.5 percent at EUR 35.29, the highest
year-end price since 2000. Including the 2004 dividend of
EUR 0.55 per share paid in 2005, our stock achieved a performance
of 53.7 percent. Market capitalization (the number of shares
multiplied by the year-end price) was EUR 25.8 billion,
EUR 8.7 billion higher than the year before.
Having hit its low for the year in January (closing price
on January 12, 2005: EUR 22.11), the price of Bayer stock
advanced more or less steadily throughout 2005. In the early
part of the year the improvement was mainly driven by the
spin-off of LANXESS. The first quarter’s results were
very well received by the capital market, bolstering the upward
trend, with further support coming from the release of positive
data on the clinical trials for our cancer drug Nexavar®.
The alliance with Johnson & Johnson for our Factor Xa
inhibitor, along with very strong third-quarter figures, provided
a further sharp boost to the share price toward the end of
the year.
High demand for innovative hybrid bond
To finance its activities, Bayer issues bonds under rule 144a
in the U.S. and under a European Medium Term Notes (EMTN)
program. The larger bond issues of Bayer AG under the EMTN
program are listed in major bond indices in light of their
high issuance volume and liquidity.
| Bayer Stock Data |
|
2004 |
2005 |
| |
|
|
|
| Dividend |
EUR |
0.55 |
0.95 |
| Earnings per share |
EUR |
0.94 |
2.19 |
| Gross cash flow per share |
EUR |
3.95 |
4.76 |
| Equity per share |
EUR |
14.98 |
15.28 |
| |
|
|
|
| Year-end price* |
EUR |
23.45** |
35.29 |
| High for the year* |
EUR |
23.92** |
35.92 |
| Low for the year* |
EUR |
18.33** |
22.11 |
| |
|
|
|
| Shares issued as of year end |
million |
730.34 |
730.34 |
| Average daily share turnover on German stock
exchanges |
million |
3.9 |
4.1 |
| Market capitalization at year end |
EUR billion |
17.1 |
25.8 |
| |
|
|
|
| Total dividend payment |
EUR million |
402 |
694 |
| Price/earnings ratio |
|
24.9 |
16.1 |
| Price/cash flow ratio |
|
5.9 |
7.4 |
| Dividend yield |
% |
2.3 |
2.7 |
* XETRA closing prices; Source: Bloomberg
** 2004 prices adjusted for the spin-off of LANXESS |
Last year the Bayer Group once again offered bond investors
attractive investment opportunities, including an innovative
hybrid bond. This subordinated bond has a 100-year term, and
Bayer has a quarterly call option at par after ten years. In
addition the bond contains certain coupon deferral mechanisms.
In return, investors were offered a high nominal interest rate
of 5 percent p.a. This hybrid bond is treated as debt for accounting
purposes but is regarded mainly as equity by the rating agencies
and thus improves the Group’s debt coverage ratios. Demand
for the bond was so high that an issuance volume of EUR 1.3
billion was placed at the lowest new issue spread achieved to
date for any corporate hybrid bond.
| Bayer
Stock Highs and Lows in 2005 |
2005 |
| Prices
in EUR |
 |
For the successful structuring and placement of this hybrid
bond, Bayer received awards for the best corporate bond issue
of 2005 from both the International Financing Review (ifr)
and the financial journal EuroWeek.
Bayer’s high credit standing
maintained
Both Standard & Poor’s and Moody’s confirmed
the company’s high creditworthiness on several occasions
last year, upholding their previous ratings.
| |
Long-term
rating |
Short-term
rating |
Outlook |
Since |
| Moody’s |
A3 |
P-2 |
stable |
June 2003 |
| S&P |
A |
A-1 |
stable |
July 2004 |
Dividend
raised to EUR 0.95
The Board of Management and the Supervisory Board will propose
to the Annual Stockholders’ Meeting that a dividend of
EUR 0.95 per share be paid for fiscal 2005 – up EUR 0.40,
or 73 percent, from the previous year. The dividend yield calculated
on the year-end price of the stock is 2.7 percent.
| Dividends
Paid 1995-2005 |
 |
This substantial increase in the dividend is intended to
ensure that our stockholders benefit appropriately from our
very pleasing results for 2005 and expresses our confidence
in the future development of the enterprise.
Dialogue
with the capital market stepped up further
In 2005 our investor relations activities continued to focus
on providing timely and reliable information to financial
analysts, institutional investors, rating agencies and private
investors.
We addressed analysts and institutional investors and responded
to their questions at more than 40 roadshows and investor
conferences in the financial centers of Europe, North America
and Asia. Principal topics included the status of the development
candidates in our pharmaceutical pipeline, Bayer’s role
in the bidding for the Boots OTC business, our assessment
of the chemicals cycle and trends on the global agrochemicals
market.
| Prices
of Bayer Stock |
2005 |
| Index
(100 = closing price on Dec. 30, 2004) |
 |
We also organized two special conferences in 2005 to give
analysts and investors even deeper insight into the Bayer
Group’s business activities.
The first of these was held at the European headquarters
of Bayer CropScience in Lyon, France, in September, and provided
detailed information on all aspects of that subgroup’s
business. Then in December, we invited investors to a research
and development conference in London to explain the entire
spectrum of research taking place in the Bayer Group. Both
events were broadcasted live on the Internet, and on-demand
versions remain available on our website.
Moreover, we held a total of seven telephone conference calls,
which were also streamed live over the Internet, to provide
additional background to our quarterly results and key events
at Bayer.
Buoyant demand for Bayer stock
Bayer shares are listed on all stock exchanges in Germany,
on the New York Stock Exchange, and also in Spain, Japan,
the U.K. and Switzerland. In the United States, Bayer stock
is traded in the form of American Depositary Receipts (ADRs).
In early 2006 we delisted our stock in Italy, Luxembourg,
the Netherlands, Belgium and France, largely because of low
trading volumes in these markets.
The average daily trading volume in Bayer stock on the German
stock exchanges was about 4.1 million shares (2004: 3.9 million).
There were some 37.3 million ADRs outstanding at the end of
December 2005, with each ADR representing one share.
*growth in share price plus reinvested dividend |
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