Financial Position

Equity and liabilities

• Equity ratio at 41.7%, compared with 44.1% in previous year
• Net debt rises by €6,712 million

Equity rose by €1,353 million year on year to €36,109 million. Retained earnings increased by €1,873 million to €36,699 million. Other comprehensive income declined by €657 million to minus €5,939 million. This was mainly due to actuarial losses on the plan assets for defined benefit plans due to the negative development of the capital markets. This contrasted with currency effects. The equity ratio decreased from 44.1% to 41.7%, mainly as a result of the increase in total assets.

Compared with the end of 2017, noncurrent liabilities decreased by €2,014 million to €27,118 million. This was primarily due to the intrayear reclassification of noncurrent liabilities to the disposal groups, almost exclusively for the oil and gas business. By contrast, the transaction with Bayer increased noncurrent liabilities by €636 million in 2018.

Provisions for pensions and similar obligations rose by €1,141 million. This was largely driven by the remeasurement of plan assets. The reclassification of provisions to the disposal groups had an offsetting effect.

The €203 million decline in noncurrent financial indebtedness was mainly attributable to lower liabilities to credit institutions, which accounted for €190 million of this decrease. The carrying amounts of bonds and other liabilities to the capital market were slightly below the prior-year level as of December 31, 2018. Two eurobonds with an aggregate carrying amount of €2,002 million were reclassified to current financial indebtedness in 2018. By contrast, bonds were issued in pounds sterling, euros, U.S. dollars, Australian dollars and Japanese yen with terms of between four and 30 years and an aggregate carrying amount of €1,866 million as of the year-end. The intrayear reclassification of liabilities to credit institutions with a carrying amount of €499 million to the disposal group for the oil and gas business was partly offset by long-term loans taken out from banks.

Noncurrent other provisions declined by €1,618 million, deferred tax liabilities by €944 million and noncurrent other liabilities by €390 million. In each case, this was mainly due to reclassifications to the disposal group for the oil and gas business.

Current liabilities rose by €8,449 million to €23,329 million, primarily as a result of reclassifications to the disposal groups. The liabilities of disposal groups amounted to €5,753 million as of December 31, 2018. Current liabilities assumed in connection with the transaction with Bayer during the year amounted to €282 million as of the year-end.

Higher current financial indebtedness (+€3,012 million) and trade accounts payable (+€151 million) also contributed to the increase in current liabilities.

The rise in current financial indebtedness was largely due to the issue of U.S. dollar commercial paper with a carrying amount of around €2,549 million as of December 31, 2018. The reclassification of bonds to current financial indebtedness mentioned above contrasted with the scheduled repayment of three eurobonds with an aggregate carrying amount of €1,773 million.

Current tax liabilities declined by €424 million and current other liabilities by €66 million, in both cases primarily as a result of the reclassification to the disposal group for the oil and gas business. Within current liabilities, the main offsetting effect came from higher advances on orders. At €3,252 million as of December 31, 2018, current provisions were slightly above the prior-year level.

Overall, financial indebtedness grew by €2,809 million to €20,841 million. Together with the decline in cash and cash equivalents, particularly in connection with the purchase price payment for the acquisition of significant businesses from Bayer, this increased net debt by €6,712 million compared with December 31, 2017, to €18,197 million. Net debt 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.