Management Report & Annexes | Report on Economic Position

16.5 Liquidity and Capital Expenditures of the Bayer Group

Bayer Group Summary Statements of Cash Flows[Table 3.16.5]
2012 2013
€ million € million
Gross cash flow* 4,556 5,832
Changes in working capital/other non-cash items (26) (661)
Net cash provided by (used in) operating activities (net cash flow) 4,530 5,171
Net cash provided by (used in) investing activities (814) (2,581)
Net cash provided by (used in) financing activities (3,783) (2,535)
Change in cash and cash equivalents due to business activities (67) 55
Cash and cash equivalents at beginning of period 1,771 1,698
Change due to exchange rate movements and to changes in scope of consolidation (6) (91)
Cash and cash equivalents at end of period 1,698 1,662

2012 figures restated

* Gross cash flow = income after income taxes, plus income taxes, plus financial result, minus income taxes paid or accrued, plus depreciation, amortization and impairment losses, minus impairment loss reversals, plus/minus changes in pension provisions, minus gains/plus losses on retirements of noncurrent assets, minus gains from the remeasurement of already held assets in step acquisitions. The change in pension provisions includes the elimination of non-cash components of EBIT. It also contains benefit payments during the year.

Operating cash flow

Gross cash flow climbed by 28.0% year on year in 2013 to €5,832 million, mainly on account of the ­increase in EBIT. While HealthCare and CropScience recorded a business-related increase in cash tied up in working capital, MaterialScience was able to release cash thanks to successful working capital management. Cash flow was impacted by higher charges related to legal claims. Income tax payments were lower at €1,281 million (2012: €1,667 million). Net cash flow of the Group rose by 14.2% to €5,171 million.

Investing cash flow

Net cash outflow for investing activities in 2013 amounted to €2,581 million. Cash outflows for property, plant and equipment and intangible assets were 11.8% higher at €2,157 million and included €809 million (2012: €720 million) at HealthCare, €538 million (2012: €376 million) at CropScience and €559 million (2012: €621 million) at MaterialScience. The €1,082 million (2012: €466 million) in outflows for acquisitions mainly related to the acquisition of Conceptus, Inc., United States, and Steigerwald Arzneimittelwerk GmbH, Germany. The cash inflows in 2013 comprised €79 million (2012: €178 million) pertaining to divestitures, mainly income from the sale of the global powder polyester resins business and revenue-based payments received in connection with the sale of the hematological oncology portfolio to Genzyme Corp., United States. Interest and dividends totaling €125 million (2012: €104 million) were also received along with income of €301 million (2012: €1,069 million) from noncurrent and current financial assets.

The principal strategically relevant capital expenditures for property, plant and equipment in the ­operating segments during the past two years are listed in the following table:

Capital Expenditures for Property, Plant and Equipment[Table 3.16.6]
Segment Description
Capital Expenditures 2013
Pharmaceuticals Consolidation of a number of administrative and business operations in Whippany, New Jersey, U.S.A.
Expansion of Xarelto™ production capacities in Wuppertal and Leverkusen, Germany
Expansion of production capacities for biologics in Wuppertal, Germany
Consumer Health
CropScience Capacity expansion and process modifications for the production of fungicides in Germany, Switzerland and the U.S.A. and for related formulation units in France
Expansion of manufacturing capacities for herbicidal active ingredients in Germany and the U.S.A.
Establishment of breeding stations for wheat in Europe, North America and Asia/Pacific, for soybeans in North America and Latin America, and for other crops and trait development
MaterialScience Doubling of production capacities for polycarbonates in Shanghai, China
  Expansion of production capacities for MDI (diphenylmethane diisocyanate) in Shanghai, China
  Construction of a world-scale production complex for TDI (toluene diisocyanate) based on gas-phase phosgenation technology in Dormagen, Germany
  Completion of a multi-purpose facility for the aliphatic isocyanates HDI (hexamethylene diisocyanate) and IPDI (isophorone diisocyanate) in Leverkusen, Germany
Capital Expenditures 2012
Pharmaceuticals Consolidation of a number of administrative and business operations in Whippany, New Jersey, U.S.A.
Establishment of a pilot facility for the production of biomolecules for clinical trials in Wuppertal, Germany
Production facilities for the formulation and packaging of hormonal solids in Weimar, Germany
Expansion of Xarelto™ production capacities in Wuppertal and Leverkusen, Germany
Consumer Health Expansion of production and packaging capacities for effervescents in Cimanggis, Jakarta, Indonesia
CropScience Capacity expansions and process modifications for the production of fungicides in Germany and Switzerland
Establishment of wheat breeding stations in Europe, North America and Australia
Construction of a greenhouse in Research Triangle Park, North Carolina, U.S.A.
MaterialScience Construction of a world-scale production complex for TDI (toluene diisocyanate) based on gas-phase phosgenation technology in Dormagen, Germany
  Construction of a multi-purpose facility for the aliphatic isocyanates HDI (hexamethylene diisocyanate) and IPDI (isophorone diisocyanate) in Leverkusen, Germany
  Completion of a polyurethanes systems house in Qingdao, China

Financing cash flow

Net cash outflow for financing activities in 2013 amounted to €2,535 million, including net loan repayments of €619 million (2012: €1,946 million). The increased use of current financial instruments led to a higher debt turnover ratio.

Net interest payments were 27.8% lower at €338 million (2012: €468 million). The cash outflow for ­“dividend payments and withholding tax on dividends” amounted to €1,574 million (2012: €1,366 million).

Liquid assets and net financial debt

Net Financial Debt[Table 3.16.7]
Dec. 31, 2012 Dec. 31, 2013
€ million € million
Bonds and notes/promissory notes 5,528 4,520
of which hybrid bond 1,364 1,344
Liabilities to banks 2,841 2,302
Liabilities under finance leases 542 382
Liabilities from derivatives 304 310
Other financial liabilities 310 1,516
Positive fair values of hedges of recorded transactions (456) (504)
Financial liabilities 9,069 8,526
Cash and cash equivalents (1,698) (1,662)
Current financial assets (349) (133)
Net financial debt 7,022 6,731
2012 figures restated

Net financial debt of the Bayer Group as of December 31, 2013 was lower than on December 31, 2012, at €6.7 billion. Cash inflows from operating activities were partly offset by outflows for dividends and acquisitions. As of December 31, 2013, the Group had cash and cash equivalents of €1.7 billion (2012: €1.7 billion). Financial liabilities at the end of the reporting period amounted to €8.5 billion (2012: €9.1 billion), with the subordinated hybrid bond issued in July 2005 reflected at €1.3 billion. Net financial debt should be viewed against the fact that Moody’s and Standard & Poor’s treat 75% and 50%, respectively, of the hybrid bond as equity. Unlike conventional borrowings, the hybrid bond thus only has a limited effect on the Group’s rating-specific debt indicators. Our noncurrent financial liabilities declined in 2013 from €7.0 billion to €5.6 billion, while current financial liabilities rose from €2.6 billion to €3.4 billion.

Last updated: March 3, 2014  Copyright © Bayer AG
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