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]
  Full Year 2013 Full Year 2014
  € million € million
Gross cash flow1 5,832 6,820
Changes in working capital/other non-cash items (661) (1,010)
Net cash provided by (used in) operating activities (net cash flow) 5,171 5,810
Net cash provided by (used in) investing activities (2,581) (15,539)
Net cash provided by (used in) financing activities (2,535) 9,736
Change in cash and cash equivalents due to business activities 55 7
Cash and cash equivalents at beginning of period 1,698 1,662
Change due to exchange rate movements and to changes in scope of consolidation (91) 184
Cash and cash equivalents at end of period 1,662 1,853
1 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 16.9% in 2014 to €6,820 million (2013: €5,832 million), mainly because of the improvement in ebit. Net cash flow moved ahead by 12.4% to €5,810 million (2013: €5,171 million), after a business-related increase in cash tied up in working capital and €778 million in deferred income from the one-time payment received in connection with the sGC collaboration with Merck & Co., Inc., United States. Income taxes paid in 2014 amounted to €1,835 million (2013: €1,281 million).

Investing cash flow

Net cash outflow for investing activities in 2014 amounted to €15,539 million. Cash outflows for property, plant and equipment and intangible assets were 10% higher at €2,371 million (2013: €2,157 million) and included €832 million (2013: €809 million) at HealthCare, €686 million (2013: €538 million) at CropScience and €605 million (2013: €559 million) at MaterialScience. The €13,545 million (2013: €1,082 million) in outflows for acquisitions mainly related to the purchases of the consumer care businesses of Merck & Co., Inc., United States, and Algeta asa, Norway. Cash outflows from noncurrent and current financial assets amounted to €177 million (2013: inflow of €301 million). Inflows from interest and dividends totaled €107 million (2013: €125 million).

The principal strategic capital expenditures for property, plant and equipment in the operating segments within 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 2014
Pharmaceuticals Expansion of XareltoTM production capacities in Wuppertal and Leverkusen, Germany
Expansion of production capacities for new rFactor VIII therapies in Wuppertal, Germany
Expansion of R&D laboratory capacities in Wuppertal, Germany
Modernization of research facilities in Berlin, Germany
Expansion of production capacities in Beijing, China
Expansion of Quality Control Biologics in Berkeley, California, United States
Consumer Health
CropScience Completion of capacity expansion for fungicides in Germany and Switzerland
Completion of capacity expansion for herbicides in Germany
Establishment of breeding stations for various plant species worldwide
MaterialScience Doubling of production capacities for polycarbonates in Shanghai, China
  Doubling of production capacities for hexamethylene diisocyanate (HDI) in Shanghai, China
  Completion of capacity expansion for diphenylmethane diisocyanate (MDI) in Shanghai, China
  Construction of a world-scale production complex for toluene diisocyanate (TDI) based on gas-phase phosgenation technology in Dormagen, Germany
Capital Expenditures 2013
Pharmaceuticals Consolidation of multiple administrative and business operations in Whippany, New Jersey, United States
Expansion of XareltoTM 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 United States and for related formulating units in France
Expansion of manufacturing capacities for herbicidal active ingredients in Germany and the United States
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 diphenylmethane diisocyanate (MDI) in Shanghai, China
  Construction of a world-scale production complex for toluene diisocyanate (TDI) based on gas-phase phosgenation technology in Dormagen, Germany
  Completion of a multi-purpose facility for aliphatic isocyanates – hexamethylene diisocyanate (HDI) and isophorone diisocyanate (IPDI) – in Leverkusen, Germany

Financing cash flow

Net cash inflow for financing activities in 2014 amounted to €9,736 million, including net borrowings of €11,838 million (2013: net loan repayments of €619 million). Net interest payments were 7% higher at €362 million (2013: €338 million). The cash outflow for dividends amounted to €1,739 million (2013: €1,574 million).

Liquid assets and net financial debt

Net Financial Debt   [Table 3.16.7]
  Dec. 31, 2013 Dec. 31, 2014
  € million € million
Bonds and notes/promissory notes 4,520 14,964
of which hybrid bonds1 1,344 4,552
Liabilities to banks 2,302 3,835
Liabilities under finance leases 382 441
Liabilities from derivatives 310 642
Other financial liabilities 1,516 1,976
Positive fair values of hedges of recorded transactions (504) (258)
Financial liabilities 8,526 21,600
Cash and cash equivalents (1,662) (1,853)
Current financial assets (133) (135)
Net financial debt 6,731 19,612
1 classified as debt according to IFRS

Net financial debt of the Bayer Group increased in 2014 to €19.6 billion, mainly as a result of cash outflows for acquisitions. As of December 31, 2014, the Group had cash and cash equivalents of €1.9 billion (2013: €1.7 billion). Financial liabilities at the end of the reporting period amounted to €21.6 billion (2013: €8.5 billion), with three subordinated hybrid bonds reflected at €4.6 billion overall. 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 issued in July 2005 with a nominal volume of €1.3 billion as equity. Moody’s and Standard & Poor’s treat 50% of the hybrid bonds issued in July 2014 with nominal volumes of €1.75 billion and €1.5 billion, respectively, as equity. The hybrid bonds thus have a more limited effect on the Group’s rating-specific debt indicators than conventional borrowings. Our noncurrent financial liabilities increased in 2014 from €5.6 billion to €18.5 billion, while current financial liabilities remained unchanged at €3.4 billion.

Last updated: February 26, 2015  Copyright © Bayer AG
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