Financial Position

Equity and liabilities

• Equity ratio of 48.7%, compared with 41.7% in previous year
• Net debt declines to €15,506 million

Equity rose by €6,241 million year on year to €42,350 million. Retained earnings increased by €5,357 million to €42,056 million, mainly because income after taxes significantly exceeded dividend payments. Other comprehensive income amounted to minus €4,850 million, after minus €5,939 million in the previous year. The increase was primarily due to a positive effect in the translation adjustment following the deconsolidation of Wintershall, which more than offset the higher actuarial losses.

The equity ratio rose from 41.7% to 48.7%, mainly due to the book gain on the deconsolidation of the Wintershall companies.

Compared with the end of 2018, noncurrent liabilities increased by €878 million to €27,996 million. This was largely attributable to other liabilities. These rose by €973 million, mainly due to the inclusion of the lease liabilities recognized in connection with the initial application of IFRS 16.

In addition, provisions for pensions and similar obligations rose by €249 million, primarily as a result of significantly lower discount rates. Reclassifications to the disposal groups had an offsetting effect.

The €317 million decline in noncurrent financial indebtedness was mainly due to the reclassification of two eurobonds with an aggregate carrying amount of around €1.3 billion from noncurrent to current financial indebtedness. This was partly offset by the issue of a 10-year eurobond with a carrying amount of €247 million and two new euro-denominated loans taken out for a total of €650 million.

Current liabilities declined by €6,725 million to €16,604 million. This was mainly driven by the derecognition of the disposal group for the oil and gas business in the amount of €5,750 million in the second quarter of 2019. The reclassification of current and noncurrent liabilities to the disposal groups for the pigments and construction chemicals businesses had an offsetting effect.

Lower current financial indebtedness also contributed to the decline in current liabilities. The €2,147 million decrease in current financial indebtedness to €3,362 million was mainly due to the planned repayment of two eurobonds worth around €2 billion in total, as well as a reduction in U.S. dollar commercial paper. Offsetting effects included the above-mentioned reclassification of two bonds from noncurrent to current, as well as higher current liabilities to banks.

The €429 million increase in other liabilities is primarily attributable to the initial inclusion of lease liabilities in connection with the introduction of IFRS 16, as well as higher negative fair values of derivatives.

Current provisions declined by €314 million compared with the previous year, largely due to lower personnel provisions.

Tax liabilities rose by €61 million year on year to €756 million.

Net debt decreased by €2,691 million compared with December 31, 2018, to €15,506 million. This was mainly the result of the €2,464 million decline in financial indebtedness.