17 – Inventories

Accounting policies

Inventories are measured at acquisition cost or cost of conversion based on the weighted average method. If the market price or the fair value of the sales products, which are based on the net realizable values, is lower, then the sales products are written down to this lower value. The net realizable value is the estimated price in the ordinary course of business less the estimated costs of completion and the estimated selling costs.

In addition to direct costs, cost of conversion includes an appropriate allocation of production overhead costs based on normal utilization rates of the production plants, provided that they are related to the production process. Pensions, social services and voluntary social benefits are also included, as well as allocations for administrative costs, provided they relate to the production. Borrowing costs are not included in cost of conversion.

Inventories may be written down if the prices for the sales products decline, or in cases of a high rate of days sales of inventory (DSI). Write-downs on inventories are reversed if the reasons for them no longer apply.

The exception made by IAS 2 for traders is applied to the measurement of precious metals. Accordingly, inventories held exclusively for trading purposes are measured at fair value less costs to sell and recognized in the precious metal trading item (carrying amount as of December 31, 2019: €977 million; as of December 31, 2018: €780 million) under miscellaneous current assets. All changes in value are immediately recognized in the statement of income.

Inventories (Million €)


December 31, 2019

December 31, 2018

Raw materials and factory supplies



Work in progress, finished goods and merchandise



Advance payments and services in progress






Work in progress, finished goods and merchandise are combined into one item due to production conditions in the chemical industry. Services in progress mainly relate to services not invoiced as of the balance sheet date.

Cost of sales included inventories recognized as an expense amounting to €29,643 million in 2019, and €30,176 million in 2018. The amount of €1,122 million was recognized in profit or loss for the discontinued construction chemicals business in 2019, and €1,109 million in 2018.

Write-downs on inventory were recognized in the amount of €111 million in 2019 and in the amount of €73 million in 2018.

Of total inventories, €1,240 million was measured at net realizable value in 2019 and €1,120 million in 2018.