Note 5: Operating income
In 2019, operating income was up 39% at €841 million (2018: €605 million). Price/mix effects, cost savings and lower identified items more than offset raw material inflation and lower volumes. Operating income as a percentage of revenue (OPI margin) improved to 9.1% (2018: 6.5%). Operating income included €150 million (2018: €193 million) negative impact from identified items, related to €204 million transformation costs to create a focused high-performing Paints and Coatings business (including €66 million non-cash impairments), partly offset by a gain on disposal of €54 million following asset network optimization.
In 2018, operating income decreased 27% to €605 million (2017: €825 million). Adverse currencies, higher raw material costs, lower volumes and higher identified items were partly compensated by positive price/mix effects. OPI margin decreased to 6.5% (2017: 8.6%). Operating income included €193 million (2017: €80 million) negative impact from identified items, mainly related to €130 million transformation costs to create a focused high performing Paints and Coatings business and an one-off non-cash pension cost (€57 million) based on an UK legal precedent set in October 2018 for the Guaranteed Minimum Pensions (GMP) equalization regulations.
In € millions |
Employee benefits |
Amortization |
Depreciation |
Depreciation right-of-use assets |
Purchases and other costs |
Total |
|---|---|---|---|---|---|---|
Cost of sales |
(536) |
– |
(136) |
(12) |
(4,625) |
(5,309) |
Selling expenses |
(858) |
(54) |
(21) |
(65) |
(1,181) |
(2,179) |
General and administrative expenses |
(305) |
(10) |
(20) |
(27) |
(325) |
(687) |
Research and development expenses |
(176) |
(3) |
(11) |
(1) |
(64) |
(255) |
Other results |
– |
– |
– |
– |
(5) |
(5) |
Total |
(1,875) |
(67) |
(188) |
(105) |
(6,200) |
(8,435) |
In € millions |
Employee benefits |
Amortization |
Depreciation |
Purchases and other costs |
Total |
|---|---|---|---|---|---|
Cost of sales |
(505) |
(2) |
(117) |
(4,705) |
(5,329) |
Selling expenses |
(883) |
(46) |
(22) |
(1,231) |
(2,182) |
General and administrative expenses |
(396) |
(8) |
(30) |
(438) |
(872) |
Research and development expenses |
(192) |
(2) |
(12) |
(58) |
(264) |
Other results |
– |
– |
– |
(4) |
(4) |
Total |
(1,976) |
(58) |
(181) |
(6,436) |
(8,651) |
This is income excluding net financing expenses, results from associates and joint ventures, income tax and profit from discontinued operations. Operating income includes the share of non-controlling interests. Operating income includes identified items to the extent these relate to lines included in operating income.
Identified items are special charges and benefits, results on acquisitions and divestments, major restructuring and impairment charges and charges and benefits related to major legal, anti-trust, environmental and tax cases.
Operating income as a percentage of revenue.
This is income excluding net financing expenses, results from associates and joint ventures, income tax and profit from discontinued operations. Operating income includes the share of non-controlling interests. Operating income includes identified items to the extent these relate to lines included in operating income.