regionalveranstaltung ost bayer cinibulak 20190828

Company Profile
Second Quarter of 2019
///////////
As of June 30, 2019

2
Die Bayer AG stellt sich vor!

Our Purpose: “Science for a better life”
Bayer is a life science company
and a global leader in health care
and nutrition. Our innovative
products support efforts to
overcome the major challenges
presented by a growing and aging
global population. Guided by our
corporate purpose “Bayer:
Science for a better life,” we help
to prevent, alleviate and treat
diseases. We are also making an
important contribution to
providing a reliable supply of
high-quality food, feed and
plant-based raw materials, while
at the same time promoting the
sustainable use of natural
resources. Our business activities
therefore also support the
attainment of the United
Nations Sustainable
Development Goals.
3

Our Business Areas
Crop Science
Pharmaceuticals
Consumer Health
Innovative chemical & biological
crop protection, seeds & traits,
digital technologies & services
Animal Health
Prescription products for cardiology,
women’s health care,
oncology, hematology, ophthalmology,
radiology and other areas
Non-prescription medicines in the
categories of dermatology, nutritional
supplements, pain, cardiovascular risk
prevention, digestive health, allergy,
cough & cold and other areas
4

Bayer Group Key Data
Full-year sales
€39.6 billion
Investment in
research
& development
€5.2 billion
Employees
115,498
Countries
90
As of December 31, 2018; employees as of June 30, 2019, in full-time equivalents
5

Bayer on track in operational business
Second Quarter of 2019
Group sales increase to €11.5 billion (Fx & portfolio adj.* +0.9%)
EBITDA before special items advances to €2.9 billion (+24.7%)
Crop Science sales decline (Fx & portfolio adj. and pro forma) in challenging environment;
substantial earnings growth due to acquired business
Pharmaceuticals posts higher sales and strong earnings growth
Consumer Health increases sales and earnings
Net income of €0.4 billion (–49.1%) held back by special items for restructuring and impairments
Core earnings per share €1.62 (+5.9%)
Group outlook confirmed yet ambitious
* Fx & portfolio adj. = currency- and portfolio-adjusted
6

Bayer Group Key Data
Second Quarter of 2019
€ million
Q2
2018
Q2
2019 Change %
H1
2018
H1
2019 Change %
Full Year
2018
Sales 9,481 11,485 +21.1 (+0.9*) 18,619 24,500 +31.6 (+2.4*) 39,586
EBITDA 2,031 2,486 +22.4 4,849 5,624 +16.0 10,266
EBITDA before special items 2,348 2,927 +24.7 5,244 7,115 +35.7 9,547
EBITDA margin before special items 24.8% 25.5% 28.2% 29.0% 24.1%
EBIT 1,346 926 –31.2 3,656 2,876 –21.3 3,914
EBIT before special items 1,708 1,785 +4.5 4,096 4,785 +16.8 6,480
Financial result (323) (477) –47.7 (193) (793) • (1,596)
Net income
(from continuing and discontinued operations)
Earnings per share (€)
(from continuing and discontinued operations)
Core earnings per share (€)
(from continuing operations)
Net cash provided by operating activities
(from continuing and discontinued operations)
794 404 –49.1 2,748 1,645 –40.1 1,695
0.87 0.41 –52.9 3.05 1.68 –44.9 1.80
1.53 1.62 +5.9 3.76 4.17 +10.9 5.94
2,240 1,600 –28.6 2,898 2,679 –7.6 7,917
Cash outflows for capital expenditures 459 458 –0.2 808 853 +5.6 2,593
Research and development expenses 1,267 1,351 +6.6 2,307 2,707 +17.3 5,246
Depreciation, amortization and impairments 685 1,560 +127.7 1,193 2,748 +130.3 6,352
Number of employees** at end of period (as of June 30, 2019) 124,055 115,498 –6.9 124,055 115,498 –6.9 116,998
7
2018 figures restated * Year-on-year change currency- and portfolio-adjusted
** Employees in full-time equivalents

Key Data Q2 2019
Group by Segments in € Million
Sales
EBITDA before special items
Other / Reconciliation
379
Animal
Health
454
–2.7%*
Consumer
Health
1,442
+2.1%*
3% 42%
4%
13%
11,485
38%
Crop Science
4,788
–3.1%*
1.600 1,600
1.400 1,400
1.200 1,200
1.000 1,000
800
600
400
200
1,075
1,500
270
124
Pharmaceuticals
4,422
+3.9%*
0
Crop
Science
+66.9%
Pharmaceuticals
+10.1%
Consumer
Health
+5.5%
Animal
Health
–3.1%
* Year-on-year change currency- and portfolio-adjusted
8

Credit, Collection &
Dispute
Management
///////////
August 2019

10
Die Einführung von SAP Financial Supply Chain
Management (FSCM) inklusive der Anwendung zur
Vereinfachung des Credit Managements

Starting point AR & Credit Management
Working Capital Initiative
2008
Initiative started with focus on WoC
Receivable had to contribute
2008-2019 Approach
Receivable Action Items and
Measures
Challenges 2011
Implementation Credit
Management 2013
Reduction of overdues
Harmonization of Payment Terms
Etablishment of Golden Rules
AH/CH/PH- no central credit mgmt.
No global community, no guideliness
No standard process or system
11 Legal Creidt Management
Scorceard 1.0 for 170k Customer
Increase of transparency (less ICS)
What next? 2017
Increase of community CS joined
Need: Automation/Standard in B2C
11

Four strategic pillars to enhance customer satisfaction and service efficiency
Customer Focus
Great Place to Work
Innovation
Value Realization
12

Order to Cash Organization
Definition
Order-to-Cash (O2C) refers to the process from registering established commercial agreements, credit
conditions, fulfilling a customer order and receiving payment including collection activities
Scope
Commercial
agreement
Customer
master data
management
Credit
management
Order
management
Order
fulfillment
Billing
Collections
and disputes
management
Accounts
receivables
management
Commercial
agreement
registration and
transfer
Setup customer
accounts
Customer risk
assessment
Manage
sales
orders
Initiate country
stock transfer
Issue
invoices
Manage
collections
Customer account
maint. and recon.
Commercial
agreement
monitoring and
care
Validate and
update customer
data
Credit limit
management
Manage
complaints
Initiate
local
delivery
Manage customer
rebates /
incentives
Manage disputes
Manage remittance
advice
Regular financial
statement monitoring
Manage
returns
Customer delivery
confirmation
(track and trace)
Manage customer
debit / credit
memos
Cash allocation
Credit
insurance
management
Value adjustments
Period end activities
incl. Audits
13

WHAT
…will change?
You will have:
Simplified customer credit
approach
Integrated workflows with email
approval
Higher automation and full Internal
transparency for credit and
collaterals
…are the benefits?
You will benefit from:
Automation and rule based credit
decision
Faster internal business alignment
and automatic internal
documentation
Improve customer experience via
faster decisions
…will stay the same?
Unchanged for you:
Local flexibility based to define
commercial policies on the
Global Guidance and Policy
Support of different business
strategies focusing at the same
time on customer needs
Provide credit limit assessment
& assess credit and business
risks

FSCM Big Bang – Credit Management
Transformation Overview & Scope
Overview
FSCM (Financial Supply Chain Management) – implemented in all PBC & P2R countries
FSCM is a solution to manage highly automated the order-to-cash cycle which involves evaluating the customer credit,
resolving billing disputes, collecting overdue accounts to ensure timely receipt of payments, as well as a healthy
operating cash flow.
Project scope: enhancement of existing FSCM Credit and Collateral Management Module
IT infrastructure
SAP FSCM
Credit Management
Enhancements
Process Level 1 Process Level 2 Main New Functionality
Credit Management
Customer risk
assessment
Credit limit
management
Risk Class Change Approval – requests and approvals in SAP
Integration of customer financials (semi-automatic)
Credit limit Request (CLR) and Risk Class Request (RCR)
functionality to approve or reject decisions
Documented Credit Decision (DCD) functionality to approve or
reject release of credit blocks
Improved Business Partner management using Global, Regional
and Local Responsibility Level
Credit integration of Collateral Management (Guarantees, Barter, ..)
15

20 Healthcare
Big Bang - Credit
Management Scope
25 Countries
18 Crop science
34 Healthcare
55 Legal
Entities
21 Crop science
Scope

FSCM Big Bang – Credit Management
Overview of training materials
Process Maps
1. Customer risk assessment – Link (myBPM)
2. Credit limit management – Link (myBPM)
Desktop procedures – make sure you are already logged in BEAM before accessing the below links
1. Customer risk assessment – Link (BEAM)
1.1 Business Partner Hierarchy View & Maintenance – Link (BEAM)
2. Credit limit management – Link (BEAM)
2.1 Collaterals – Link (BEAM)
Training materials
1. Overview Credit Management - Link
2. BP responsibility – Link
3. Risk Class Request – Link
4. Credit Limit Request – Link
5. Documented Credit Decision – Link
Draft – Detailed materials
1. Risk Class Request – Link
2. Credit Limit Request – Link
3. Collaterals – Link
Ask Videos
1. BP responsibility – Link
2. Risk Class Request – Link Video 1 / Link Video 2
3. Credit Limit Request – Link
4. Documented Credit Decision – Link
5. Collaterals & FD document – Link

FSCM Big Bang
Transformation Plan – focus on UAT (Regional – CS & HC together)
1 LATM - April 16 th – 20 th 2018
NA - April 23 rd – 27 th 2018 2
Country LE
Country LE
Brazil 1353
Colombia 1321
Mexico 168
1
5
4
EMEA 2 - May 22 th – May 25 th 2018
Country LE
Germany 32 Germany 2001
Germany 1230 Finland 2174
Germany 1341 Netherlands 1901
Germany 1546 Switzerland 1611
Germany 1582 UAE 1707
EMEA 1 - May 16 th – May 18 th 2018
Country LE
Belgium 1340
Belgium 159
France 190
France 193
France 1269
Germany 932
Germany 2030
Italy 185
Italy 948
Italy 1345
Ireland 184
Netherlands 188
Portugal 193
Portugal 1334
Spain 267
Spain 1254
Spain 2138
Turkey (HC) 92
Turkey (CS) 92
UK 203
UK 1315
5
LATM
Sao Paolo (Brazil)
4
UAT
EMEA 1
Loos (France)
3
Mumbai (India)
2
Canada 393
Canada 1318
Costa Rica 1914
US 353
US 1372
US 2083
APAC - May 7 th – May 11 th 2018
Country LE
Australia 157
Australia 1335
China 882
China 1391
China 1953
China 1954
China 1955
Korea 695
Korea 963
India 73
India 1332
Japan 94
Japan 134
Philippines 1508
3
18

Overview Credit Management Processes
Global view
Master Data Maintenance
Credit Profile
Global Financial Data
Credit Segment
Relationships
Credit Limit
Key Figures
Collaterals Management
Credit Check
Cockpit
Score
Risk Class
19

Global Credit Manager View – one click all information
Page 20

Master Data Maintenance - Credit Profile
• Clear view of
• Credit Check Account
• Customer Group
• Responsibility Levels (Local, Regional,
Global)
• Other information on “Credit Profile”:
• Risk-Automode
• Risk Class Change Documents

Master Data Maintenance - Credit Segment
• Replication from Master Data System
• Credit Segments (derived from activated company codes)
• Soft Block (derived from classification ‘Out of Business’)
• Defaulting when BP is created
• Credit Limit
• Soft Block
• Special Attention Types
• Other Information on “Credit Segment”:
• Credit Limit Automode
• Seasonal Credit Limit
• Growth Factor
• Block Reasons
• Check override
• Collaterals

Master Data Maintenance - Global Financial Data
• Create / Change / Delete Global Financial Data
• Two different Statement Types: Annual / Quarterly
• Maintenance
• Manual
• Excel Mass Upload (Report: /BAY0/FM_CR_UPL_FIN)
• Must be balanced
• Balance Sheet Information
• Income Statement
• Ratios
• Delta Y o Y (compare 1 st column with 2 nd )
• 3 Yr Trend (compare 1 st column with 3 rd column)
• Additional Data (all used for score calculation)
• Country Risk
• Outlook
• Starting Year
• 3rd Party Data

Score – Calculation and Snapshot
• If 3 rd Party Data” is not available, its
weight will be equally distributed
among these four parameters:
• Weighted Average Days Late (=ADD 12
Months Average)
• Delta WADL year over year (=ADD Delta 12-
24)
• Years in Business (=Starting year)
• Country Rating (=Bayer country rating)
• Score validity date is determined in dependence of credit
limit and risk class (BRF+ decision table).
• The Snapshot (which contains details of score calculation,
score history, financial statement information, ratios,
balance sheet analyses etc.) can be displayed via the
information button next to the score.
• Value -999 is displayed in Snapshot if the parameter is not
available.

Risk Class – Calculation and Automatic Mode
• Children inherit risk class value from
GU.
• Risk class can change
• if score value changes
• if a new risk class is manually requested and
approved (Risk Class Request).
• Only credit analyst or members of
credit analyst group assigned to that
BP are allowed to set flag
“Automatic Mode”.
• If “Automatic Mode” is flagged, a
risk class request (RCR) is created
and automatically approved.
• If “Automatic Mode” is not flagged, a
RCR is created and needs to be
processed manually.

Risk Class – Risk Class Request (RCR)
• Risk Class Requests can be created manually via the button in
the Business Partner (tab “Credit Profile”).
• The latest Risk Class Request can also be displayed via a
button in the BP (tab “Credit Profile”).
• If there are several credit analyst
groups with the same responsibility
level, the group of the segment with
the highest credit limit is assigned to
the RCR.
• Emails are not sent out during the risk
class approval process.

Credit Limit - Automatic Mode
• Only credit analyst or members of credit
analyst group assigned to that BP are
allowed to set flag “Automatic Mode”.
• If “Automatic Mode” is flagged, the
calculated limit does not result in a CLR
(=does not need to be approved).

Credit Limit - Credit Limit Request (CLR)
• If responsibility level is GLO or REG, limit can only be
manually requested on main segment. If it is LOC, the limit
can only manually be requested on credit segment level.
• Manual requests do always lead to the creation of a CLR.
• Requester must be credit analyst or member of credit
analyst group.
• Approver must be member of approver group (to be
maintained in BP master data relationships).
• Approver groups must be maintained in BRF+ table (in
dependence of responsibility level, credit segment,
requested limit and relative change).

Key Figures – ADD/ADP & High Balance
• ADD, ADP and High Balance key figures are consolidated on GU level and main segment level.
• All available credit segments of the children must have been created for the GU. If not, the consolidation
of these key figures fails.
• Key figures on tab “Payment Behaviour Key Figures” (e.g. “highest dunning level”, “oldest open item”)
are not consolidated.

Credit Check – Documented Credit Decisions (DCD)
• For each blocked order, a DCD is created.
• Approver of DCD must be member of approver group (to be maintained in BP master data relationships).
• Credit Analyst Groups must be maintained in BRF+ table (in dependence of credit segment, risk class, order
value).
• Approver groups must be maintained in BRF+ table (in dependence of credit segment, risk class and order
value).

Cockpit
• Transaction /BAY0/FM_CR_COCKPIT
• After having entered any selection criteria, the report has to be executed (F8) via the above
highlighted button.

Key learning
Credit
Changing concept of the customer hierarchies before the go live
Working with 6 key countries (US; FR; IN; IT; DE, KR) to create the blueprint
Documentation of the processes
Refresh traning before the go live
Longer Hypercare phase and FAQ creation
No Waterfall development -> agile methodology
Big Bang approch, right decission!
Downgrade the ICS controls to business process controls
Automation is key with a growing business
32

Next steps
Scorecard 2.0 for more automation and risk mitigation
33

Contact
Zahre Cinibulak
Global Process Owner Credit, Collections & Dispute Management
Phone:
Mobile:
e-mail:
+49 – 214 30-52087
+49 – 173 56-52487
Zahre.Cinibulak@bayer.com
34