5 – Other operating income and expenses

Income from foreign currency and hedging transactions improved by €28 million in the second quarter of 2016, from minus €59 million to minus €31 million, and by €162 million in the first half of 2016, from minus €149 million to plus €13 million. This was largely driven by valuation effects from forward contracts for emissions certificates.

Countering this, miscellaneous other expenses arose from negative effects in connection with the valuation of emissions certificates. In the first half of 2015, miscellaneous other expenses had contained the bonus paid to employees on the occasion of BASF’s 150th anniversary.

Income from the translation of financial statements in foreign currencies was higher year-on-year. In the second quarter of 2016, this increase was €34 million, from minus €39 million in the previous second quarter to minus €5 million. In the first half of 2016, the increase was €35 million, from minus €5 million in the previous first half to plus €30 million. Primarily driving this development were effects from the translation of companies outside the eurozone that use the euro as their functional currency.

The rise in gains on the disposal of fixed assets and divestitures was largely attributable to disposal gains from the sale of the polyolefin catalysts business to W. R. Grace & Co., Columbia, Maryland. Income furthermore arose from the sale of BASF’s OLED intellectual property assets to UDC Ireland Limited, Dublin, Ireland. In the second quarter of the previous year, gains on the disposal of fixed assets and divestitures had pertained to the sale of the global textile chemicals business to Archroma Textiles S.à r.l., Luxembourg. In addition, the first half of 2015 had included disposal gains from the divestiture of the white expandable polystyrene (EPS) business to Alpek S.A.B. de C.V., Monterrey, Mexico.

Miscellaneous income declined in the second quarter of 2016 and the first half of 2016, mainly due to the previous year’s insurance refunds arising from a plant outage at the Ellba C.V. joint operation in Moerdijk, Netherlands. Lower income in the second quarter of 2016 as compared with the prior second quarter was also the result of price compensation from the Argentinian government for gas producers, which was introduced in connection with the New Gas Price Scheme (NGPS) in response to the lower, partly locally regulated gas prices.

Expenses from the valuation of long-term incentive (LTI) options rose because of adjustments to provisions for the LTI program; while the previous second quarter had contained income from the release of provisions, the second quarter of 2016 included expenses from additions to provisions. Expenses arose in the first half of both years from the valuation of LTI options.

In the second quarter of 2016, amortization, depreciation and impairments of intangible assets and property, plant and equipment particularly included impairments in the Functional Materials & Solutions segment.