8 – Other Operating Income / Other Operating Expenses

Income from the adjustment and release of provisions recognized in other operating expenses was largely related to risks from lawsuits and damage claims, closures and restructuring measures, employee obligations, and various other individual items as part of the normal course of business. Provisions were reversed or adjusted if, based on the circumstances on the balance sheet date, utilization was no longer expected, or expected to a lesser extent.

Revenue from miscellaneous activities primarily included income from rentals, catering operations, cultural events and logistics services.

Income from foreign currency and hedging transactions as well as from the measurement of LTI options pertained to the foreign currency translation of receivables and payables as well as of currency derivatives and other hedging transactions. Of material significance to the decline was income arising from the release of provisions for the long-term incentive (LTI) program in the amount of €262 million in the previous year, while only a low amount was released in 2019.

Income from the translation of financial statements in foreign currencies included gains from the translation of companies’ financial statements whose local currency is different from the functional currency.

Gains on divestitures and the disposal of noncurrent assets amounting to €390 million in 2019 related mainly to earnings from the transfer of BASF’s paper and water chemicals business to the Solenis group and the sale of businesses in the Agricultural Solutions segment in accordance with the conditions imposed by antitrust authorities in connection with the acquisition of the Bayer businesses. In 2018, this line item included earnings in the amount of €21 million for the sale of the Austrian production site for styrene butadiene-based paper dispersions in Pischelsdorf. Furthermore, income of €421 million resulted from real estate divestitures in several countries in 2019 (2018: €14 million). Of material significance here was the sale of a building complex in Switzerland in the amount of €400 million.

Income from the reversal of valuation allowances for business- related receivables resulted both from the reversal of impairments for settled customer receivables for which impairments had been recorded previously as well as from adjusted expectations regarding default on individual customer receivables.

Other income included government grants and government assistance from several countries amounting to €27 million in 2019 and €43 million in 2018. These were primarily due to grants for research projects, regional business development subsidies in China and electricity price compensation in the 2019 fiscal year.

Further income resulted from refunds and compensation payments in the amount of €232 million in 2019 and €569 million in 2018. In 2019, these included insurance refunds in the amount of €44 million for damage at the citral plant in Ludwigshafen, Germany, in 2017, for which insurance refunds were also made in 2018, and earnings from a contractually agreed compensation payment in the amount of €46 million. Insurance refunds in the previous year also related to income for fire damages at the North Harbor in Ludwigshafen, Germany. Additional income resulted in 2019 from plan adjustments for pension benefits and similar obligations in the amount of €137 million. Moreover, income in both years was related to gains from precious metal trading, refunds of consumption taxes and a number of additional items.

In 2019, expenses from restructuring and integration measures in the amount of €481 million were mainly attributable to the implementation of the new BASF strategy and, to a lesser extent, to site closures in North America and Asia. In 2018, expenses resulting from site closures in North America amounted to €13 million and from outsourcing computer centers in the amount of €11 million as well as from restructuring measures in the Care Chemicals division in the amount of €20 million. In 2018, expenses also arose from global restructuring measures in the Coatings division in the amount of €17 million and in the Catalysts division in the amount of €16 million due primarily to the restructuring of the global emissions catalysts business and the restructuring of the licensed battery materials business.

Expenses from integration measures amounted to €43 million in 2019 and related to the integration of significant parts of Bayer’s seed and non-selective herbicide business as well as its vegetable seeds business, which were acquired in 2018. These expenses totaled €99 million in the previous year. In both years, expenses also arose in connection with the preparation of the acquisition of Solvay’s global polyamide business.

Environmental protection and safety measures, costs of demolition and removal, and project costs were expensed if they were not subject to mandatory capitalization pursuant to IFRS. Expenses for demolition, removal and project planning totaled €243 million in 2019 and €245 million in 2018. In both years, these mainly related to the Ludwigshafen site in Germany. Further expenses of €77 million in 2019 and €97 million in 2018 arose from the addition to environmental provisions. In both years, these concerned several discontinued sites in North America.

Depreciation, amortization and impairments of noncurrent assets amounting to €426 million in 2019 related primarily to the impairment of project costs for a planned methane-based propylene production plant on the U.S. Gulf Coast, as well as to the optimization of production sites within the Nutrition & Health division in Europe. In 2018, amortization, depreciation and impairments of noncurrent assets amounted to €72 million. The impairments resulted primarily from discontinued investment projects.

Costs from miscellaneous revenue-generating activities relate to the items presented in other operating income.

Expenses from foreign currency and hedging transactions as well as from the measurement of LTI options related to foreign currency translation of receivables and payables as well as changes in the fair value of currency derivatives and other hedging transactions. Expenses resulting from the measurement of LTI options amounted to €39 million in 2019. Higher currency hedging costs also arose in 2019 due to a changed position with respect to the U.S. dollar after the acquisition of Bayer’s seed and non-selective herbicide business.

Losses from divestitures and the disposal of noncurrent assets resulted in 2019 in connection with the planned divestiture of the global pigments business. Expenses totaling €26 million in 2018 were related to the merger of the paper and water chemicals business with Solenis.

In both years, other expenses included expenses for litigation, for REACH, for the provision of services, for activities related to the BASF 4.0 project and for planning the new Verbund site in Guangdong, China.