Note 3: Operating income

increased 59 percent to €1,573 million, reflecting the positive effects of process optimization, lower costs, favorable currency developments and the impact of incidental items.

  • In Decorative Paints, operating income increased 39 percent as a result of the new operating model and lower costs
  • In Performance Coatings, operating income increased 45 percent due to performance improvement initiatives, including management delayering and currencies
  • In Specialty Chemicals, increased 20 percent, with significant savings from continuous improvement programs and incidental items
  • Operating income in other activities was, apart from incidental items, adversely impacted by insurance costs and higher pension costs due to changes in discount rates and de-risking of pension liabilities. Corporate costs were higher due to planned functional transformation projects and favorable items in 2014 related to the sale of assets

Raw material prices were lower, although in certain regions foreign currency effects adversely impacted raw material costs in local currencies.

For the full-year operating income was positively impacted by €111 million incidental items. In Specialty Chemicals the book profit, net of related costs, of €31 million with respect to the divestment of the Paper Chemicals business was reported as incidental items. Operating income in other activities was impacted by incidental items, including a recovery related to the 2014 fraud case (€42 million) and several adjustments to provisions, mainly for post-retirement benefits and legacy items.

In 2014 operating income was impacted by adverse incidental items (€85 million) related to the external fraud suffered by one of our susidiaries in the US, provisions for legacy items and project costs related to a divestment.

Costs by nature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

2015

In € millions

 

Employee benefits

 

Amor-
tization

 

Depre-
ciation

 

Purchases
and other
costs

 

Total

 

Employee benefits

 

Amor-
tization

 

Depre-
ciation

 

Purchases
and other
costs

 

Total

Cost of sales

 

(926)

 

(7)

 

(347)

 

(7,396)

 

(8,676)

 

(1,004)

 

(7)

 

(361)

 

(7,412)

 

(8,784)

Selling expenses

 

(986)

 

(90)

 

(70)

 

(1,766)

 

(2,912)

 

(1,022)

 

(97)

 

(74)

 

(1,828)

 

(3,021)

General and administrative expenses

 

(682)

 

(37)

 

(43)

 

(511)

 

(1,273)

 

(564)

 

(28)

 

(35)

 

(618)

 

(1,245)

Research and development expenses

 

(230)

 

(7)

 

(17)

 

(109)

 

(363)

 

(230)

 

(7)

 

(17)

 

(93)

 

(347)

Incidentals

 

 

 

 

(85)

 

(85)

 

92

 

 

 

19

 

111

Total

 

(2,824)

 

(141)

 

(477)

 

(9,867)

 

(13,309)

 

(2,728)

 

(139)

 

(487)

 

(9,932)

 

(13,286)

Operating income

Operating income is defined in accordance with IFRS and includes the relevant incidental items.

Operating income

Operating income is defined in accordance with IFRS and includes the relevant incidental items.