Note 3: Operating income

Operating income increased 3 percent to €987 million, due to higher operating results and lower restructuring charges, offset by higher incidental items (€85 million adverse items in 2014 and €61 million favorable items in 2013). These related to an external fraud suffered by one of our subsidiaries in the US, provisions for legacy items and project costs related to a divestment. Restructuring charges in 2014 were €253 million (2013: 348 million). The majority of the restructuring charges related to Performance Coatings.

  • In Decorative Paints, operating income in 2013 included a gain of €198 million from the divestment of Building Adhesives. Excluding this effect, operating income improved. Restructuring charges were lower than the previous year. In addition, costs were down following the implementation of restructuring programs and strict cost control
  • In Performance Coatings, operating income increased 4 percent compared with 2013. Improved operational effectiveness more than compensated for increased restructuring charges. A major restructuring activity was the implementation of a new organizational structure with fewer management layers and clearer accountability
  • Specialty Chemicals increased profitability over the previous year, with significant savings from restructuring programs. Operating income in 2013 was affected by €121 million incidental charges

Average raw material costs were stable compared with 2013 exit prices. In some high growth markets, currency effects on imported raw materials have affected some businesses.

Revenue and cost by nature

 

 

 

 

 

In € millions

 

2013

 

2014

Revenue

 

14,590

 

14,296

Variable selling cost

 

(714)

 

(687)

Materials and energy

 

(6,959)

 

(6,777)

Amortization and depreciation

 

(616)

 

(618)

Employee benefits

 

(2,950)

 

(2,824)

Impairment

 

(139)

 

Other

 

(2,254)

 

(2,403)

Operating income

 

958

 

987

Certain costs per category

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

2014

In € millions

 

Employee benefits

 

Amor-
tization

 

Depre-
ciation

 

Inci-
dentals

 

Employee benefits

 

Amor-
tization

 

Depre-
ciation

 

Inci-
dentals

Cost of sales

 

(998)

 

(7)

 

(343)

 

 

(924)

 

(7)

 

(347)

 

Selling expenses

 

(943)

 

(94)

 

(75)

 

 

(986)

 

(90)

 

(70)

 

General and administrative expenses

 

(772)

 

(36)

 

(36)

 

(15)

 

(682)

 

(37)

 

(43)

 

Research and development expenses

 

(237)

 

(7)

 

(18)

 

 

(230)

 

(7)

 

(17)

 

Other operating income/(expenses)

 

 

 

 

76

 

(2)

 

 

 

(85)

Total

 

(2,950)

 

(144)

 

(472)

 

61

 

(2,824)

 

(141)

 

(477)

 

(85)