Note 7: Financing income and expenses
In € millions |
2017 |
2018 |
Financing income |
23 |
16 |
Financing expenses |
(90) |
(92) |
Net interest on net debt |
(67) |
(76) |
|
|
|
Other interest |
|
|
Financing expenses related to post-retirement benefits |
(7) |
10 |
Interest on provisions |
(16) |
(3) |
Other items |
12 |
17 |
Net other financing charges |
(11) |
24 |
Total financing income and expenses |
(78) |
(52) |
Net financing expenses for the year were €52 million (2017: €78 million). Significant variances are:
- Net interest on net debt increased by €9 million to €76 million (2017: €67 million), mainly due to lower return on investments
- Financing expenses related to post-retirement benefits changed from a charge of €7 million in 2017 to an income of €10 million due to improved funding positions
- Interest charges on provisions came down from €16 million in 2017 to €3 million due to changes in discount rates
- Other items include a net benefit on tax settlements of €20 million in 2018, partially offset by lower foreign currency hedging results
The average interest rate used for capitalized interest was 2.2% (2017: 2.6%) and amounted to nil (2017: €2 million).
The average interest rate on total debt was 2.6% (2017: 3.1%).
Net debt
Defined as long-term borrowings plus short-term borrowings less cash and cash equivalents and short-term investments.