9 – Other Operating Income and 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.

As in the previous year, revenue from miscellaneous other activities primarily included income from rentals, catering operations, cultural events and logistics services. In 2020, €24 million in revenue from finance leases was also included.

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. No income from the release of provisions for the long-term incentive (LTI) program was recognized in 2020. Only a minor 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.

At €62 million, gains on divestitures and the disposal of noncurrent assets were significantly below the figure in the previous year. They included primarily gains from the sale of fixed assets in the amount of €44 million. Income of €390 million was recognized in 2019 from the transfer of BASF’s paper and water chemicals business to the Solenis group and the sale of assets in the Agricultural Solutions segment in accordance with the conditions imposed by antitrust authorities in connection with the acquisition of the Bayer businesses. Furthermore, income of €421 million resulted in 2019 from real estate divestitures in several countries, mainly relating to 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 refunds in the amount of €151 million in 2020 and €232 million in 2019. This was due in both years to research project funding, government grants in multiple countries, regional business development subsidies in China and insurance refunds. Further income in 2020 resulted from gains in connection with the premature termination of a long-term supply agreement in North America in the amount of €103 million. Additional income resulted in 2019 from plan adjustments for pension benefits and similar obligations in the amount of €137 million as well as from a contractually agreed compensation payment in the amount of €46 million. Moreover, income in both years was related to gains from precious metal trading (2020: €304 million, 2019: €103 million), refunds of consumption taxes and a number of additional items.

In 2020, expenses from restructuring and integration measures in the amount of €651 million were attributable to restructuring activities to improve competitiveness in various operating divisions and in the Global Business Services unit and to site closures in Europe, North America and Asia Pacific. In 2019, these expenses 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 Pacific.

Expenses from integration measures amounted to €90 million in 2020 and related to the integration of Solvay’s global polyamide business. In 2019, these expenses amounted to €43 million 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.

Environmental protection and safety measures, costs of demolition and removal, and project costs not subject to mandatory capitalization were expensed if requirements for mandatory capitalization pursuant to IFRS were not met. Expenses for demolition, removal and project planning totaled €218 million in 2020 and €243 million in 2019. In both years, these mainly related to the Ludwigshafen site in Germany. Further expenses of €138 million in 2020 and €77 million in 2019 arose from the addition to environmental provisions. In both years, these concerned several discontinued sites in North America and, in 2020, additionally a site in Germany.

Depreciation, amortization and impairments of noncurrent assets and of the disposal group rose to €2,968 million in 2020. The increase was mainly due to impairments amounting to €2,368 million resulting from the economic effects of the coronavirus pandemic and affected all segments. In addition, impairments in the amount of €377 million arose due to restructuring in North America, Europe and Asia Pacific. 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.

Costs from other 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 programs amounted to €35 million in 2020 and €39 million in 2019.

In both years, losses from divestitures and the disposal of noncurrent assets were mainly in connection with the planned divestiture of the global pigments business.

In both years, other expenses included expenses for litigation, for REACH, for the provision of services, for warranties and for activities related to the BASF 4.0 project and for planning the new Verbund site in Guangdong, China. Additional other expenses resulted in 2020 from the coronavirus pandemic, especially due to BASF’s “Helping Hands” aid campaign.