Financial position

Equity and liabilities

• Equity ratio at 44.1%, compared with 42.6% in previous year
• Higher financial indebtedness in preparation for planned acquisitions

Equity rose by €2,188 million year-on-year to €34,756 million. Retained earnings increased by €3,311 million to €34,826 million. Other comprehensive income declined by €1,268 million to minus €5,282 million. This decrease was mainly due to currency effects, primarily as a result of the weaker U.S. dollar. The remeasurement of defined benefit plans in particular had an offsetting effect. The equity ratio was 44.1% (2016: 42.6%).

Compared with the end of 2016, noncurrent liabilities grew by €521 million to €29,132 million. This was primarily attributable to noncurrent financial indebtedness, which increased by €2,990 million. New bonds in EUR, USD, NOK and GBP were issued in 2017 with an aggregate carrying amount of €4,852 million at the year-end and maturities of between two and 20 years; they serve general company purposes and to finance the planned acquisitions of significant parts of the seed and non-selective herbicide businesses from Bayer and the global polyamide business from Solvay. These also included bonds with nondilutive warrants due in 2023 with a carrying amount of €664 million. Upon exercise, the warrants will be cash-settled only; no new shares will be issued, nor will existing shares of BASF SE be serviced. As a hedge, BASF has purchased corresponding call options. Three eurobonds due in 2018 with an aggregate carrying amount of €1,773 million were reclassified to current financial indebtedness. Noncurrent liabilities to banks rose by €170 million, mainly as a result of loans taken out with the European Investment Bank and the Kreditanstalt für Wiederaufbau, a German government development bank. The partial transfer of the financing for gas transportation activities to a newly established equity-accounted company had an offsetting effect. Provisions for pensions and similar obligations decreased by €1,916 million, mainly as a result of the positive performance of plan assets. Noncurrent other provisions declined by €189 million. The €586 million decrease in deferred tax liabilities was largely due to the reduction in the U.S. corporate tax rate from 35% to 21%, which accounted for €653 million of this figure. Noncurrent other liabilities rose by €222 million.

Current liabilities declined by €437 million to €14,880 million. This was primarily attributable to the €1,270 million decrease in current financial indebtedness, mostly from the scheduled repayment of four bonds in EUR and GBP with an aggregate carrying amount of €1,359 million, as well as the the complete scaling back of our U.S. dollar commercial paper program, which accounted for €1,033 million. Current liabilities to banks declined by €646 million; this mainly related to loans in Brazil. The reclassification of the above bonds increased current financial indebtedness accordingly. Current tax liabilities declined by €169 million. Trade accounts payable rose by €361 million, current provisions by €427 million and current other liabilities by €214 million.

Overall, financial indebtedness grew by €1,720 million to €18,032 million. Net debt declined by €2,916 million to €11,485 million. This is calculated by subtracting marketable securities and cash and cash equivalents from current and noncurrent financial indebtedness. This balance-related indicator provides information on effective indebtedness.