Bayer AG - Stockholders' Newsletter Third Quarter 2007

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Management Report

Performance by Region

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Bayer’s global sales expanded in the third quarter of 2007 by €334 million to €7,793 million. Adjusted for currency and portfolio effects, this corresponds to an increase of 7.0 percent.

The largest increases in absolute terms were recorded in Europe, where third-quarter sales rose by €182 million to €3,377 million (+5.7 percent). Europe thus accounted for 43.3 percent of Group sales, with all subgroups posting a year-on-year improvement. Adjusted for currency and portfolio changes, business grew by 6.3 percent, mainly as a result of increases in the Pharmaceuticals, Crop Protection and Consumer Health segments. Sales in Germany rose to €1,190 million (portfolio-adjusted: +2.1 percent).

Sales in North America declined by €74 million to €1,889 million in the third quarter of 2007. When adjusted for currency and portfolio changes, business grew by 1.6 percent. The Crop Protection and Consumer Health segments, in particular, reported sales gains, while the Environmental Science, BioScience segment and the Systems segment recorded a decrease in sales in North America.

In Asia/Pacific business grew by 6.5 percent in the third quarter of 2007, or by 10.4 percent on a currency- and portfolio-adjusted basis. This was mainly due to double-digit sales growth in our HealthCare and MaterialScience businesses.

Currency-adjusted sales in the Latin America/Africa/Middle East region climbed by 15.7 percent in the third quarter, or by 14.4 percent when adjusted for currency and portfolio changes. High prices for agricultural commodities and the general improvement in the market situation in Brazil led to particularly gratifying growth in CropScience sales in both the Crop Protection and the Environmental Science, BioScience segments (+25.1 percent and +25.2 respectively when adjusted for currency changes). We also generated significantly higher sales in the HealthCare (+11.6 percent currency-adjusted) and MaterialScience (+13.7 percent currency-adjusted) subgroups.