Discontinued operations (including Specialty Chemicals)

Discontinued operations and held for sale

The results and cash flows from discontinued operations in 2018, as well as 2017, and the assets and liabilities held for sale at September 30, 2018, and December 31, 2017, almost completely relate to the Specialty Chemicals business.

The Specialty Chemicals business consists of the former Specialty Chemicals business area and certain other assets and liabilities and income and expenses which are directly attributed to the Specialty Chemicals business from the Other activities. As from December 22, 2017, the Specialty Chemicals business is classified as held for sale and discontinued operations, therefore the consolidated statement of income for 2017 has been represented to show the results of the Specialty Chemicals business as discontinued operations. The sale of the Specialty Chemicals business closed on October 1, 2018; hence in this Q3 report the business is still included as held for sale.

Revenue

Revenue of discontinued operations consists of revenue of Specialty Chemicals and eliminations of intercompany revenue.

Adjusted operating income

In Q3 2018, adjusted operating income was € 221 million (2017: €158 million).

  • In Specialty Chemicals, adjusted operating income was lower, as strong pricing and productivity improvements, were more than offset by adjustments to environmental provisions, other one-off items and adverse currencies.
  • Held for sale effects/other mainly relates to the impact of ceasing depreciation and amortization, partly offset by the related impact on inventory valuation following IFRS 5 assets held for sale accounting. Total impact in Q3 2018 was €80 million.

Operating income

In Q3 2018, operating income was was up 67% at €206 million (2017: €123 million). In Q3 2018, operating income was negatively impacted by identified items totaling €15 million (2017: €35 million negative) relating to the implementation of the new strategy to create two focused high-performing businesses.

Summary of financial outcomes discontinued operations

Third quarter

 

January-September

2017 1

2018

∆%

in € millions

2017 1

2018

∆%

1

Represented to present the Specialty Chemicals business as discontinued operations

1,205

1,281

6%

Revenue

3,741

3,791

1%

158

221

40%

Adjusted operating income

494

681

38%

123

206

67%

Operating income

469

644

37%

13.1

17.3

 

ROS%

13.2

18.0

 

10.2

16.1

 

OPI margin%

12.5

17.0

 

 

 

 

 

 

 

 

 

 

 

Average invested capital

3,667

3,614

 

 

 

 

ROI%

15.8

22.3

 

 

 

 

 

 

 

 

77

185

 

Capital expenditures

241

276

 

259

185

 

Net cash from operating activities

464

433

 

 

 

 

 

 

 

 

96

153

 

Profit for the period

346

460

 

 

 

 

Number of employees

9,900

9,900

 

Profit and loss discontinued operations

Third quarter

 

January-September

2017 1

2018

in € millions

2017 1

2018

1

Represented to present the Specialty Chemicals business as discontinued operations

1,205

1,281

Revenues

3,741

3,791

(1,083)

(1,077)

Expenses

(3,279)

(3,164)

122

204

Profit before tax

462

627

(26)

(51)

Income tax

(116)

(167)

96

153

Profit for the period

346

460

Adjusted operating income of discontinued operations

Third quarter

 

January-September

2017 1

2018

∆%

in € millions

2017 1

2018

∆%

1

Represented to present the Specialty Chemicals business as discontinued operations

2

2017 figures include allocations from Other activities

156

145

(7%)

Specialty Chemicals 2

488

470

(4%)

2

76

 

Held for sale effects/other

6

211

 

158

221

40%

Total

494

681

38%

Operating income of discontinued operations

Third quarter

 

January-September

2017 1

2018

∆%

in € millions

2017 1

2018

∆%

1

Represented to present the Specialty Chemicals business as discontinued operations

2

2017 figures include allocations from Other activities

156

145

(7%)

Specialty Chemicals 2

506

470

(7%)

(33)

61

 

Held for sale effects/other

(37)

174

 

123

206

67%

Total

469

644

37%

Assets and liabilities held for sale

in € millions

December 31, 2017

September 30, 2018

Intangible assets

787

799

Property, plant and equipment

2,266

2,490

Financial non-current assets

205

202

Inventories

503

533

Receivables

840

984

Assets held for sale

4,601

5,008

Non-current liabilities

765

787

Short-term borrowings

341

227

Current payables

1,090

1,113

Liabilities held for sale

2,196

2,127

Cash flows from discontinued operations

Third quarter

 

January-September

2017

2018

in € millions

2017

2018

259

179

Net cash from operating activities

464

427

(76)

(117)

Net cash from investing activities

(237)

(277)

(3)

(28)

Net cash from financing activities

(9)

(116)

180

34

Cash flows from discontinued operations

218

34