Bayer Polymers Segment Well-Equipped for Future Growth, Targets 15 Percent Return On Sales by 2004; Company Offers Customers Solutions Through Investment and Technology.

Business Editors

NEW YORK--(BUSINESS WIRE)--August 2, 2001

With less than eight weeks remaining before Bayer lists its shares on the New York Stock Exchange on September 26, Werner Spinner, Member of the Board of Management of Bayer AG, said today that the goal of its polymers segment is to maintain its leading position and expand market share through customer focus.

"We place a high priority on our role as an innovative and dependable ally, able to develop solutions to meet the specific challenges of our customers," Spinner said. "We develop these solutions together with our customers," he added. Spinner, together with the heads of Bayer's U.S. polymers businesses, outlined new concepts for environmentally sound, technologically advanced new products that meet both modern expectations and sustainability demands. In addition to product applications, Bayer management highlighted polymer segment investment strategies.

Bayer's polymers segment accounts for almost 40 percent of Bayer's overall sales and had sales of more than $10 billion in 2000, a 27 percent increase over the previous year. First quarter 2001 sales for Bayer's polymers were 17 percent higher than for the same period last year. While sales are up, return on sales of polymer products is down to 8 percent for the first quarter of 2001, due primarily to increases in raw materials and energy costs.

"We see the current cooling-off of the world economic climate as only a temporary phenomenon. We will therefore continue our restructuring programs to maintain sustained expansion and generate lasting success," Mr. Spinner said.

This year, Bayer plans to invest $1.6 billion globally in its polymers segment. Of this total, $1.3 billion dollars will be assigned to new production facilities, the lion's share going into expansion of polycarbonate capacities. The United States continues to hold a key position. With a U.S. market share of already more than 30 percent in the polymers market, the company aims to invest another $250 million in the polymers segment on top of a recent expansion program which totaled $2 billion between 1996 and 2000.

"Polymers are and will remain a core business for Bayer," Mr. Spinner said, "We will continue to build on our market leadership in the field of high-grade polymers. To this end we will eliminate capacity bottlenecks and exploit every opportunity for regional growth, while at the same time analyzing and optimizing our portfolio and our cost structures." Despite the current economic difficulties Bayer is sticking to its forecast to achieve a return on sales of 15 percent by 2004 in this segment.

Bayer aims to achieve that goal through above-average growth in all its businesses. "Recent investments in TDI (toluene diisocyanate), MDI (diphenylmethane diisocyanate) and Polyols make Bayer a stronger supplier of polyurethanes today. We are the world's leading supplier of polyurethane raw materials," said Lawrence D. Stern, Executive Vice President, Bayer Corporation and President, Polyurethanes - NAFTA. "By helping our customers succeed, we propel our own success. Investments in facilities, new technologies and new products will ensure we meet the demands of our customers. And by reducing costs and focusing our R&D portfolio, we are reducing the margin recovery needed to ensure re-investment economics," added Mr. Stern.

Bayer is a leader in engineering thermoplastics as well. Nicholas T. Cullen Jr., Executive Vice President, Bayer Corporation and President, Plastics Division, explained how the Bayer Plastics business is uniquely structured to meet the challenges of the rapidly changing marketplace.

"Strategic market issues such as globalization, increasing competition and advancing technology drive Bayer's core competencies of a global manufacturing and marketing infrastructure, a broad product portfolio in engineering thermoplastics, operating efficiencies, technology leadership and e-business strengths," Mr. Cullen said. Bayer's strategy is to maintain the leadership role of its broad polymer and polymer-related businesses -- polyurethanes, engineering thermoplastics, coatings and colorants, rubber and polymer additives. This extensive family of products allows Bayer to meet a wide range of customer needs.

Speaking about Bayer's coatings and colorants business, Dr. John L. Williams, Executive Vice President, Bayer Corporation and President, Coatings and Colorants Division, noted, "We have everything under one roof. We offer high quality raw materials and additives for coatings and adhesives in combination with extensive scientific and technical expertise and customized service packages for our customers." Bayer's coatings and colorants business saw global growth of around 12 percent in 2000 with sales of nearly $2 billion. One-quarter of those sales were in North America.

Dr. Heinz Heumueller, Executive Vice President, Bayer Corporation and President, Industrial Chemicals Division, explained that Bayer polymer additive products help to make plastics safer and more supple, long-lasting and lightweight, attractive and elastic.

"Because we are one of the world's largest polymer manufacturers, we go beyond merely supplying additives to providing our customers with specific solutions to their additive needs. We are able to draw expert knowledge from across all of our polymer business groups and within our extensive research facilities," Dr. Heumueller said.

Dr. Gunter Hilken, Executive Vice President, Bayer Corporation and President, Fibers, Additives and Rubber - NAFTA, said: "We are the largest supplier of synthetic rubber worldwide and continue to grow at a faster rate than the global rubber industry as a whole." Stressing the importance of synthetic rubber as a strategic and vital material, Dr. Hilken commented on the company's long-term commitment to the industry through capital investments in facilities and a focus on R&D. "These investments have resulted in several new and exciting rubber products for use in a variety of tire, automotive and industrial applications," he added.

In addition to investment in the key areas of technology, manufacturing and applications development, Bayer is investing heavily in its e-commerce initiatives. An early embracer of e-business, Bayer's initiatives include forming industry e-business consortia and BayerONE, Bayer's own e-business portal. BayerONE was developed to give customers a single access point to Bayer. Customers are able to place and track orders efficiently, quickly and cost-effectively. BayerONE has been available to North American polymers business customers since early-2000. Its global release will coincide with K2001, the international plastics fair to be held in Dusseldorf, Germany in October 2001. Currently, more than 300 of Bayer's largest customers are using BayerONE to do business with the company.

Bayer's investments in polymers -- in technology, new products, capacity improvements or the new economy -- have always been made and will continue to be made with an emphasis on the customer. Werner Spinner said, "Bayer will provide the channels that our customers and alliance partners expect from us - to allow them to optimize their own operations."

Presentations are available on the internet at www.bayerus.com. Additional information on Bayer's New York Stock Exchange listing is available at www.nyse.bayer.com.

Best known for its flagship product, Bayer Aspirin, Bayer Corporation produces a broad range of health care, life sciences and chemical products that help diagnose and treat diseases, purify water, preserve local landmarks, protect crops, advance automobile safety and durability and improve people's lives.

Headquartered in Pittsburgh, Bayer Corporation had sales of $10.1 billion in 2000 and employs 23,200 people. It is a member of the worldwide Bayer Group, a $29 billion international life sciences, polymers and specialty chemicals group based in Leverkusen, Germany. The Bayer Group (BAYG.DE) stock is a component of the DAX, and is listed on multiple foreign exchanges

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