20. Other Comprehensive Income
Accounting policies
The expenses and income shown in other comprehensive income are divided into two categories: Items that will be recognized in the income statement in the future (known as “recycling”) and items that will not be reclassified to the income statement in the future. The first category includes gains and losses from currency translation, the measurement of certain securities classified as debt instruments, and changes in the fair value of derivatives held to hedge future cash flows. Items that will not be reclassified to the income statement at a future date include effects from the remeasurement of defined benefit plans.
Remeasurement of defined benefit plans
Changes in the value of defined benefit plans led to an increase in other comprehensive income of €2,586 million in 2022 and €2,709 million in the previous year (after taxes in both years). Of that, €83 million was attributable to investments accounted for using the equity method in 2022 (2021: €44 million). Deferred taxes amounted to –€1,256 million in 2022 and to –€811 million in 2021.
Because of the disposal of the pigments business on June 30, 2021, the amount of €48 million for the remeasurement of defined benefit plans, plus an additional €6 million resulting from the disposal of the operational companies held by Solenis UK International Ltd., London, United Kingdom, which had been accounted for using the equity method until that date, was reclassified, in equity, from other comprehensive income to retained earnings in 2021. Moreover, deferred taxes in the amount of –€18 million arising from an adjustment in connection with the introduction of IAS 19 were offset against retained earnings in equity.
Currency translation
Differences resulting from currency translation increased equity in 2022 by a total of €1,135 million and by €2,205 million in the previous year. This included deferred taxes in the amount of –€7 million in 2022 (2021: –€19 million). Equity-accounted investments accounted for €583 million (2021: €697 million). In 2022, the difference resulted mainly from the appreciation of the U.S. dollar and the Brazilian real and, in 2021, mainly from the appreciation of the U.S. dollar and the Chinese renminbi relative to the euro.
With the deconsolidation of the Russian shareholdings held by Wintershall Dea AG, Kassel/Hamburg, Germany, total differences arising from currency translation of €868 million were reclassified as earnings to the income statement.
As a result of divestitures and other changes in the scope of consolidation, €52 million after taxes was reclassified to the income statement in 2021.
Cash flow hedges
Changes in the fair value of derivatives designated in hedging relationships (cash flow hedges) adjusted for deferred taxes in the amount of –€8 million (2021: –€10 million) reduced equity by a total of €33 million (2021: €329 million). In 2022, €37 million (2021: –€381 million) was attributable to the hedging of future cash flows at shareholdings accounted for using the equity method.