15 – Property, Plant and Equipment

Machinery and technical equipment contained oil and gas deposits, including related wells, production facilities and further infrastructure, which were depreciated according to the unit of production method. The following table presents the development of property, plant and equipment including these assets until the oil and gas business was transferred to the disposal group.

Additions to property, plant and equipment arising from investment projects amounted to €3,615 million in 2018. Investments were made at the following sites in particular: Ludwigshafen, Germany; Antwerp, Belgium; Shanghai, China; Geismar, Louisiana; and Freeport, Texas. Material investments included the acetylene plant currently under construction as well as plants for the production of catalysts in Ludwigshafen, Germany. In addition, additions included renovations to the steam cracker and the construction of a new propane tank in Antwerp, Belgium. Other investments included the construction of oil and gas facilities and wells in Europe and South America.

Government grants for funding investment measures reduced asset additions by €26 million.

Acquisitions led to an increase in property, plant and equipment in the amount of €1,425 million, primarily from the acquisition of significant parts of Bayer’s seed and non-selective herbicide businesses and its vegetable seed business.

In 2018, impairments of €52 million and reversals of impairments of €1 million were included in accumulated depreciation. The impairments were primarily attributable to construction in progress resulting from discontinued investment projects in North America.

Disposals of property, plant and equipment included the sale of production plants for oleochemical surfactants in Mexico and the production site for styrene butadiene-based paper dispersions in Pischelsdorf, Austria.

Transfers related mainly to the reclassification of operation-ready assets from construction in progress to other asset categories.

Currency effects raised property, plant and equipment by €277 million and resulted mainly from the appreciation of the U.S. dollar against the euro.

Additions to property, plant and equipment arising from investment projects amounted to €4,020 million in 2017. Material investments refer to the acetylene plant currently under construction as well as plants for the production of catalysts in Ludwigshafen, Germany. Additions also included the construction of an aroma ingredients complex in Kuantan, Malaysia, and the modification of production plants for plasticizers in Pasadena, Texas, which have already partly started up. Material investments were also made for the construction of oil and gas facilities and wells in Europe and South America. Furthermore, investments were made at the following sites in particular: Ludwigshafen, Germany; Antwerp, Belgium; Shanghai, China; Freeport, Texas; Geismar, Louisiana; and Port Arthur, Texas.

Government grants for funding investment measures reduced asset additions by €9 million.

Acquisitions led to an increase in property, plant and equipment in the amount of €8 million, primarily from the acquisition of GRUPO Thermotek in Monterrey, Mexico.

In 2017, impairments of €262 million were included in accumulated depreciation. These pertained largely to machinery and technical equipment and resulted primarily from the full impairment of a production plant in the Chemicals segment due to overcapacities. The recoverable amount equaled value in use, and the weighted average cost of capital rate before taxes was 10.27%.

Depreciation also included impairments in the former Oil & Gas segment, which were more than offset by reversals of impairments in the same segment. These primarily concerned construction in progress. Overall, reversals of impairments in additions to accumulated depreciation amounted to €182 million.

Disposals of property, plant and equipment were largely attributable to the sale of the bleaching clay and mineral absorbents businesses; the production site for electrolytes in Suzhou, China; the inorganic specialties business; and the leather chemicals business.

Transfers pertained mainly to the transfer of confirmed oil and gas deposits in the Maria field in Norway from intangible assets to machinery and technical equipment.

Currency effects reduced property, plant and equipment by €1,663 million and arose mainly from the depreciation of the U.S. dollar against the euro.