Financial Instruments

The system used by the Bayer Group to manage credit risks, liquidity risks and the different types of market price risk (interest-rate, currency and commodity-price risks), together with its objectives, methods and procedures, is outlined in the Opportunity and Risk Report, which forms part of the Combined Management Report.

Financial instruments by category

The following table shows the carrying amounts and fair values of financial assets and liabilities by category of financial instrument under IFRS 9 and a reconciliation to the corresponding line items in the statements of financial position. Since the line items “Trade accounts receivable,” “Other receivables” and “Other liabilities” contain both financial instruments and nonfinancial assets or liabilities (such as other tax receivables), the reconciliation is shown in the column headed “Nonfinancial assets / liabilities.”

The transition effects from the reclassification and remeasurement of financial assets upon the first-time application of IFRS 9 are detailed in Note “Effects of new financial reporting standards.”

Carrying Amounts and Fair Values of Financial Instruments

 

 

Dec. 31, 2018

 

 

Carried at amortized cost

 

Carried at fair value
[fair value for information5]

 

Nonfinancial assets / liabilities

 

 

 

 

Carrying amount

 

Based on quoted prices in active markets (Level 1)

Based on observable market data (Level 2)

Based on unobservable inputs (Level 3)

 

Carrying amount

 

Carrying amount in the statement of financial position

 

 

 

Carrying amount

Carrying amount

Carrying amount

 

 

Measurement category (IFRS 9)1

 

€ million

 

€ million

€ million

€ million

 

€ million

 

€ million

1

AC: at amortized cost
FVTOCI: at fair value through other comprehensive income
FVTPL: at fair value through profit or loss

2

Measured at fair value through profit or loss as required by IFRS 9

3

Measured at fair value through other comprehensive income in accordance with paragraph 5.7.5 of IFRS 9

4

Designated as FVTPL upon first-time recognition in accordance with IFRS 9

5

Fair value of the financial instruments at amortized cost under IFRS 7 paragraph 29(a)

Trade accounts receivable

 

11,686

 

 

 

 

 

150

 

11,836

AC

 

11,686

 

 

 

 

 

 

 

11,686

Nonfinancial assets

 

 

 

 

 

 

 

150

 

150

Other financial assets

 

440

 

1,584

241

1,113

 

 

 

3,378

AC

 

440

 

 

[441]

 

 

 

 

440

FVTP2

 

 

 

1,432

28

895

 

 

 

2,355

FVTOCI (no recycling)3

 

 

 

144

 

186

 

 

 

330

Derivatives that qualify for hedge accounting

 

 

 

 

101

 

 

 

 

101

Derivatives that do not qualify for hedge accounting

 

 

 

8

112

32

 

 

 

152

Other receivables

 

516

 

 

 

42

 

1,828

 

2,386

AC

 

516

 

 

[516]

 

 

 

 

516

FVTPL2

 

 

 

 

 

42

 

 

 

42

Nonfinancial assets

 

 

 

 

 

 

 

1,828

 

1,828

Cash and cash equivalents

 

4,052

 

 

 

 

 

 

 

4,052

AC

 

4,052

 

 

[4,052]

 

 

 

 

4,052

Total financial assets

 

16,694

 

1,584

241

1,155

 

 

 

19,674

of which AC

 

16,694

 

 

 

 

 

 

 

16,694

of which FVTPL

 

 

 

1,432

28

937

 

 

 

2,397

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

40,226

 

996

172

 

 

 

 

41,394

AC

 

40,226

 

[32,395]

[7,091]

 

 

 

 

40,226

FVTPL (nonderivative)4

 

 

 

996

 

 

 

 

 

996

Derivatives that qualify for hedge accounting

 

 

 

 

35

 

 

 

 

35

Derivatives that do not qualify for hedge accounting

 

 

 

 

137

 

 

 

 

137

Trade accounts payable

 

5,414

 

 

 

 

 

 

 

5,414

AC

 

5,414

 

 

 

 

 

 

 

5,414

Other liabilities

 

1,136

 

7

320

20

 

988

 

2,471

AC

 

1,136

 

 

[1,136]

 

 

 

 

1,136

FVTPL (nonderivative)4

 

 

 

 

 

20

 

 

 

20

Derivatives that qualify for hedge accounting

 

 

 

 

297

 

 

 

 

297

Derivatives that do not qualify for hedge accounting

 

 

 

7

23

 

 

 

 

30

Nonfinancial liabilities

 

 

 

 

 

 

 

988

 

988

Total financial liabilities

 

46,776

 

1,003

492

20

 

 

 

48,291

of which AC

 

46,776

 

 

 

 

 

 

 

46,776

of which FVTPL (nonderivative)

 

 

 

996

 

20

 

 

 

1,016

of which derivatives that qualify for hedge accounting

 

 

 

 

332

 

 

 

 

332

of which derivatives that do not qualify for hedge accounting

 

 

 

7

160

 

 

 

 

167

The category AC (measured at amortized cost) within other financial assets and financial liabilities also include receivables and liabilities under finance leases in which Bayer is the lessor or lessee and which are therefore measured in accordance with IAS 17.

Due to the short maturities of most trade accounts receivable and payable, other receivables and liabilities, and cash and cash equivalents, their carrying amounts at the closing date do not significantly differ from the fair values.

The fair values of financial assets and liabilities measured at amortized cost that are given for information are the present values of the respective future cash flows. The present values are determined by discounting the cash flows at a closing-date interest rate, taking into account the term of the assets or liabilities and the creditworthiness of the counterparty. Where a market price is available, however, this is deemed to be the fair value.

The fair values of financial assets measured at fair value correspond to quoted prices in active markets (Level 1), or are determined using valuation techniques based on observable market data as of the end of the reporting period (Level 2) or are the present values of the respective future cash flows, determined on the basis of unobservable inputs (Level 3).

The fair values of derivatives for which no publicly quoted prices exist in active markets (Level 1) are determined using valuation techniques based on observable market data as of the end of the reporting period (Level 2). In applying valuation techniques, credit value adjustments are determined to allow for the contracting party’s credit risk.

Currency and commodity forward contracts are measured individually at their forward rates or forward prices on the closing date. These depend on spot rates or prices, including time spreads. The fair values of interest-rate hedging instruments and cross-currency interest-rate swaps were determined by discounting future cash flows over the remaining terms of the instruments at market rates of interest, taking into account any foreign currency translation as of the closing date.

Fair values measured using unobservable inputs are categorized within Level 3 of the fair value hierarchy. This applies to certain debt or equity instruments, in some cases to the fair values of embedded derivatives, and to obligations for contingent consideration in business combinations. Credit risk is frequently the principal unobservable input used to determine the fair values of debt instruments classified as “FVTPL – at fair value through profit or loss” by the discounted cash flow method. Here the credit spreads of comparable issuers are applied. A significant increase in credit risk could result in a lower fair value, whereas a significant decrease could result in a higher fair value. However, a relative change of 10% in the credit spread does not materially affect the fair value.

Embedded derivatives are separated from their respective host contracts, provided these are not financial instruments. Such host contracts are generally sale or purchase agreements relating to the operational business. The embedded derivatives cause the cash flows from the contracts to vary with exchange-rate or price fluctuations. The internal measurement of embedded derivatives is mainly performed using the discounted cash flow method, which is based on unobservable inputs. These include planned sales and purchase volumes, and prices derived from market data. Regular monitoring is carried out based on these fair values as part of quarterly reporting.

The financial liabilities arising from the debt instruments (exchangeable bond) issued in June 2017 that can be converted into Covestro shares are measured at fair value through profit or loss. This exchangeable bond is a hybrid financial instrument containing a debt instrument as a nonderivative host contract and multiple embedded derivatives.

Until May 2018, the interest in Covestro was accounted for in the Bayer Group consolidated financial statements as an associate using the equity method. Various share disposals led to the loss of significant influence on the financial and business policy decisions of Covestro. This in turn resulted in a change in the accounting method. Since May 2018, Bayer has reported the Covestro interest as an equity instrument. Changes in its fair value are recognized through profit or loss.

The changes in the amount of financial assets and liabilities recognized at fair value based on unobservable inputs (Level 3) for each financial instrument category were as follows:

Development of Financial Assets and Liabilities (Level 3)

 

 

Assets – FVTPL1

 

FVTOCI1 (no recycling)

 

Derivatives (net)

 

Liabilities – FVTPL1 (nonderivative)

 

Total

 

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

Carrying amounts (net), January 1, 2018

 

821

 

68

 

10

 

(7)

 

892

1

See Chapter “Financial Instruments”, Table “Carrying Amounts and Fair Values of Financial Instruments” for definition of measurement categories.

Gains (losses) recognized in profit or loss

 

28

 

 

5

 

(5)

 

28

of which related to assets / liabilities recognized in the statements of financial position

 

28

 

 

 

(5)

 

23

Gains (losses) recognized outside profit or loss

 

 

13

 

 

 

13

Additions of assets / (liabilities)

 

102

 

116

 

17

 

(10)

 

225

Settlements of (assets) / liabilities

 

(14)

 

(7)

 

 

1

 

(20)

Disposals from divestments / changes in scope of consolidation

 

 

(4)

 

 

1

 

(3)

Carrying amounts (net), December 31, 2018

 

937

 

186

 

32

 

(20)

 

1,135

he changes recognized in profit or loss were included in other operating income / expenses, as well as in the financial result in interest income, exchange gains or losses and in other financial income and expenses.

Income, expense, gains and losses on financial instruments can be assigned to the following categories:

Income, Expense, Gains and Losses on Financial Instruments

 

 

2018

 

 

Assets – AC1

 

Assets – FVTPL1

 

FVTOCI1
(no recycling)

 

Derivatives that do not qualify for hedge accounting

 

Liabilities – AC1

 

Liabilities – FVTPL1 (nonderivative)

 

Total

 

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

1

See Chapter “Financial Instruments”, Table “Carrying Amounts and Fair Values of Financial Instruments” for definition of measurement categories.

Interest income

 

111

 

95

 

 

 

50

 

 

256

Interest expense

 

(65)

 

 

 

(2)

 

(1,226)

 

(1)

 

(1,294)

Income / expenses from affiliated companies

 

 

 

 

 

 

 

Changes in fair value

 

 

(444)

 

 

41

 

 

230

 

(173)

Impairment losses

 

(200)

 

 

 

 

 

 

(200)

Impairment loss reversals

 

185

 

 

 

 

 

 

185

Exchange gains / losses

 

249

 

 

 

87

 

(497)

 

 

(161)

Gains / losses from retirements

 

 

 

 

 

 

 

Other financial income / expenses

 

(17)

 

6

 

 

 

(15)

 

(2)

 

(28)

Net result

 

263

 

(343)

 

 

126

 

(1,688)

 

227

 

(1,415)

The interest income and expense from assets and liabilities within the AC category also included income and expenses from interest-rate derivatives that qualified for hedge accounting.

The changes in the fair value of assets within the FVTPL category included changes in the fair value of the Covestro interest, which has been presented as an equity instrument since May 2018. The changes in the fair value of derivatives that do not qualify for hedge accounting related mainly to forward commodity contracts and embedded derivatives.

The changes of €230 million (2017: negative changes of €172 million) in the fair value of (nonderivative) liabilities within the FVTPL category contain fair value adjustments pertaining to the debt instruments (exchangeable bond) issued in June 2017. The changes in fair value relating to credit risks were not material.

Derivatives that form part of a master netting arrangement, constitute a financial asset or liability and can only be netted in the event of breach of contract by, or insolvency of, one of the contracting parties do not satisfy, or only partially satisfy, the criteria for offsetting in the statement of financial position according to IAS 32. The volume of such derivatives with positive fair values was €166 million (2017: €654 million), and the volume with negative fair values was €455 million (2017: €520 million). Included here is an amount of €104 million (2017: €312 million) in positive and negative fair values of derivatives concluded with the same contracting party.

The following table shows the carrying amounts and fair values of financial assets and liabilities by category of financial instrument for the comparative period under IAS 39.

Carrying Amounts and Fair Values of Financial Instruments

 

 

Dec. 31, 2017

 

 

Carried at amortized cost

 

Carried at fair value
[fair value for information2]

 

Nonfinancial assets / liabilities

 

 

 

 

Carrying amount

 

Based on quoted prices in active markets (Level 1)

Based on observable market data (Level 2)

Based on unobserv­able inputs (Level 3)

 

Carrying amount

 

Carrying amount in the statement of financial position

 

 

 

Carrying amount

Carrying amount

Carrying amount

 

 

Measurement category (IAS 39)1

 

€ million

 

€ million

€ million

€ million

 

€ million

 

€ million

1

AfS: available for sale; at fair value through other comprehensive income
HtM: held to maturity; at amortized cost
LaR: loans and receivables; at amortized cost

2

Fair value of the financial instruments at amortized cost under IFRS 7. Paragraph 29(a)

Trade accounts receivable

 

8,582

 

 

 

 

 

 

 

8,582

LaR

 

8,582

 

 

 

 

 

 

 

8,582

Other financial assets

 

1,823

 

452

2,085

803

 

 

 

5,163

LaR

 

1,731

 

 

[1,731]

 

 

 

 

1,731

AfS

 

35

 

448

1,452

793

 

 

 

2,728

HtM

 

57

 

 

[58]

 

 

 

 

57

Derivatives that qualify for hedge accounting

 

 

 

 

296

 

 

 

 

296

Derivatives that do not qualify for hedge accounting

 

 

 

4

337

10

 

 

 

351

Other receivables

 

380

 

 

 

46

 

1,250

 

1,676

LaR

 

380

 

 

[380]

 

 

 

 

380

AfS

 

 

 

 

 

46

 

 

 

46

Nonfinancial assets

 

 

 

 

 

 

 

1,250

 

1,250

Cash and cash equivalents

 

7,581

 

 

 

 

 

 

 

7,581

LaR

 

7,581

 

 

[7,581]

 

 

 

 

7,581

Total financial assets

 

18,366

 

452

2,085

849

 

 

 

21,752

of which LaR

 

18,274

 

 

 

 

 

 

 

18,274

of which AfS

 

35

 

448

1,452

839

 

 

 

2,774

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

12,958

 

1,220

240

 

 

 

 

14,418

Carried at amortized cost

 

12,958

 

[11,327]

[2,183]

 

 

 

 

12,958

Carried at fair value (nonderivative)

 

 

 

1,220

 

 

 

 

 

1,220

Derivatives that qualify for hedge accounting

 

 

 

 

187

 

 

 

 

187

Derivatives that do not qualify for hedge accounting

 

 

 

 

53

 

 

 

 

53

Trade accounts payable

 

4,568

 

 

 

 

 

561

 

5,129

Carried at amortized cost

 

4,568

 

 

 

 

 

 

 

4,568

Nonfinancial liabilities

 

 

 

 

 

 

 

561

 

561

Other liabilities

 

681

 

2

319

7

 

1,759

 

2,768

Carried at amortized cost

 

681

 

 

[681]

 

 

 

 

681

Carried at fair value (nonderivative)

 

 

 

 

 

7

 

 

 

7

Derivatives that qualify for hedge accounting

 

 

 

 

288

 

 

 

 

288

Derivatives that do not qualify for hedge accounting

 

 

 

2

31

 

 

 

 

33

Nonfinancial liabilities

 

 

 

 

 

 

 

1,759

 

1,759

Total financial liabilities

 

18,207

 

1,222

559

7

 

 

 

19,995

of which at amortized cost

 

18,207

 

 

 

 

 

 

 

18,207

of which derivatives that qualify for hedge accounting

 

 

 

 

475

 

 

 

 

475

of which derivatives that do not qualify for hedge accounting

 

 

 

2

84

 

 

 

 

86

The following table shows the changes in the financial assets and liabilities recognized at fair value based on unobservable inputs (Level 3) for each financial instrument category for the comparative period under IAS 39:

Development of Financial Assets and Liabilities (Level 3)

 

 

AfS1

 

Derivatives (net)

 

Liabilities – at fair value (nonderivative)

 

Total

 

 

€ million

 

€ million

 

€ million

 

€ million

1

See Chapter “Financial Instruments”, Table “Carrying Amounts and Fair Values of Financial Instruments” for definition of measurement category.

Carrying amounts (net), January 1, 2017

 

851

 

(8)

 

(8)

 

835

Gains (losses) recognized in profit or loss

 

15

 

21

 

 

36

of which related to assets / liabilities recognized in the statements of financial position

 

15

 

21

 

 

36

Gains (losses) recognized outside profit or loss

 

(16)

 

 

 

(16)

Additions of assets / (liabilities)

 

6

 

 

 

6

Settlements of (assets) / liabilities

 

(17)

 

 

1

 

(16)

Disposals from divestments / changes in scope of consolidation

 

 

(3)

 

 

(3)

Carrying amounts (net), December 31, 2017

 

839

 

10

 

(7)

 

842

The following table shows the income, expense, gains and losses on financial instruments for the comparative period under IAS 39:

Income, Expense, Gains and Losses on Financial Instruments

 

 

2017

 

 

LaR1

 

HtM1

 

AfS1

 

Held for trading

 

Liabilities – at amortized cost

 

Liabilities – at fair value (non-derivative)

 

Total

 

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

1

See Chapter “Financial Instruments”, Table “Carrying Amounts and Fair Values of Financial Instruments” for definition of measurement categories.

Interest income

 

61

 

 

37

 

 

78

 

 

176

Interest expense

 

 

 

 

(3)

 

(628)

 

 

(631)

Income / expenses from affiliated companies

 

 

 

2

 

 

 

 

2

Changes in fair value

 

 

 

 

17

 

 

(172)

 

(155)

Impairment losses

 

(139)

 

 

(1)

 

 

 

 

(140)

Impairment loss reversals

 

23

 

 

5

 

 

 

 

28

Exchange gains / losses

 

(733)

 

 

 

(232)

 

620

 

 

(345)

Gains / losses from retirements

 

 

 

5

 

 

 

 

5

Other financial income / expenses

 

(14)

 

 

(7)

 

 

 

 

(21)

Net result

 

(802)

 

 

41

 

(218)

 

70

 

(172)

 

(1,081)

Maturity analysis

The liquidity risks to which the Bayer Group was exposed from its financial instruments at the end of the reporting period comprised obligations for future interest and repayment installments on financial liabilities and the liquidity risk arising from derivatives.

There were also loan commitments under an as yet unpaid €965 million (2017: €1,005 million) portion of the effective initial fund of Bayer-Pensionskasse VVaG, which may result in further payments by Bayer AG in subsequent years.

Maturity Analysis of Financial Instruments

 

 

Carrying amount

 

Interest and repayment

 

 

Dec. 31, 2018

 

2019

2020

2021

2022

2023

after 2023

 

 

€ million

 

€ million

€ million

€ million

€ million

€ million

€ million

Refund liabilities

 

3,789

 

3,622

152

15

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

 

Bonds and notes / promissory notes

 

35,402

 

3,235

2,094

5,762

2,951

4,414

29,610

Liabilities to banks

 

4,865

 

751

158

4,345

3

Remaining liabilities

 

955

 

627

60

53

43

32

303

 

 

 

 

 

 

 

 

 

 

Trade accounts payable

 

5,414

 

5,380

32

1

1

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

 

 

 

 

 

 

 

Accrued interest on liabilities

 

268

 

257

1

1

1

1

7

Remaining liabilities

 

888

 

791

56

17

8

3

13

 

 

 

 

 

 

 

 

 

 

Liabilities from derivatives

 

 

 

 

 

 

 

 

 

Derivatives that qualify for hedge accounting

 

332

 

172

66

70

26

Derivatives that do not qualify for hedge accounting

 

167

 

167

 

 

 

 

 

 

 

 

 

 

Receivables from derivatives

 

 

 

 

 

 

 

 

 

Derivatives that qualify for hedge accounting

 

101

 

42

9

3

Derivatives that do not qualify for hedge accounting

 

152

 

121

(1)

(10)

 

 

 

 

 

 

 

 

 

 

Loan commitments

 

 

965

Financial guarantees

 

 

Maturity Analysis of Financial Instruments

 

 

Carrying amount

 

Interest and repayment

 

 

Dec. 31, 2017

 

2018

2019

2020

2021

2022

after 2022

 

 

€ million

 

€ million

€ million

€ million

€ million

€ million

€ million

Financial liabilities

 

 

 

 

 

 

 

 

 

Bonds and notes / promissory notes

 

12,436

 

719

2,096

1,487

2,288

236

7,125

Liabilities to banks

 

534

 

527

20

Remaining liabilities

 

1,208

 

716

359

40

32

26

177

 

 

 

 

 

 

 

 

 

 

Trade accounts payable

 

4,568

 

4,555

11

2

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

 

 

 

 

 

 

 

Accrued interest on liabilities

 

149

 

140

1

1

1

1

5

Remaining liabilities

 

539

 

455

66

3

2

2

11

 

 

 

 

 

 

 

 

 

 

Liabilities from derivatives

 

 

 

 

 

 

 

 

 

Derivatives that qualify for hedge accounting

 

475

 

443

34

6

Derivatives that do not qualify for hedge accounting

 

86

 

88

1

2

 

 

 

 

 

 

 

 

 

 

Receivables from derivatives

 

 

 

 

 

 

 

 

 

Derivatives that qualify for hedge accounting

 

296

 

144

62

17

2

Derivatives that do not qualify for hedge accounting

 

351

 

331

4

1

1

 

 

 

 

 

 

 

 

 

 

Loan commitments

 

 

1,005

Financial guarantees

 

 

12

Information on derivatives

Asset and liability fair values and future cash flows are exposed to currency, interest-rate and commodity price risks. Derivatives are used to reduce this risk. In some cases they are designated as hedging instruments in a hedge accounting relationship.

Currency risks

Foreign currency receivables and liabilities are hedged using foreign exchange derivatives without the existence of a hedge accounting relationship. A bond of Bayer AG denominated in British pounds was swapped on the issuance date into a fixed-rate euro bond by means of a cross-currency interest-rate swap, which was designated as a cash flow hedge. Cross-currency interest-rate swaps used to hedge intra-Group loans were also designated as cash flow hedges.

Fluctuations in future cash flows resulting from forecasted foreign currency transactions and procurement activities are avoided partly through derivatives contracts, most of which are designated as cash flow hedges.

Foreign currency risks related to the acquisition of Monsanto Company were partially hedged with currency derivatives designated as cash flow hedges. The fair value of these derivatives was reclassified from other comprehensive income to goodwill in the statement financial position as of the acquisition date.

Interest-rate risk

The interest-rate risks from fixed-interest borrowings are managed in part using interest-rate swaps. Two interest-rate swaps in the total amount of €200 million were designated as fair value hedges for the €750 million bond issued in 2014 and maturing in 2021. The carrying amount of this bond as of December 31, 2018, was €747 million. A hedge-related fair value adjustment of €6 million resulted in the carrying amount increasing to €753 million. No material ineffective portions of hedges required recognition through profit or loss in 2018 or 2017.

Interest-rate risks in connection with the financing of the Monsanto acquisition were partially hedged through interest-rate derivatives designated as cash flow hedges. The fair values of these derivatives as of the acquisition date will be amortized from reserves for cash flow hedges into interest income and expense over the term of the bonds issued to finance the acquisition.

Commodity price risks

Hedging contracts are also used to partly reduce exposure to fluctuations in future cash outflows and inflows resulting from price changes on procurement and selling markets. Some of these contracts are designated as cash flow hedges or fair value hedges.

The carrying amount of inventories designated as the hedged item in fair value hedges was €63 million as of December 31, 2018. A hedge-related fair value adjustment of minus €11 million reduced the carrying amount to €52 million. No material ineffective portions of hedges required recognition through profit or loss in 2018.

Hedging of obligations under stock-based employee compensation programs

A portion of the obligations to make variable payments to employees under stock-based compensation programs (Aspire) is hedged against share price fluctuations using derivatives contracts that are settled in cash at maturity. These derivatives are designated as cash flow hedges.

Further information on cash flow hedges

Other comprehensive income from cash flow hedges increased by €125 million in 2018 (2017: decreased by €144 million) due to changes in the fair values of derivatives. Total changes of €124 million in the fair values of derivatives were expensed in 2018 (2017: €3 million).

The following table shows changes in reserves for cash flow hedges (before taxes), broken down by risk category:

Changes in Reserves for Cash Flow Hedges (before taxes)

 

 

Currency hedging of recorded transactions

 

Currency hedging of forecasted transactions

 

Interest-rate hedging of forecasted transactions

 

Commodity price hedging

 

Hedging of stock-based employee compensation programs

 

Total

 

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

 

€ million

December 31, 2017

 

21

 

(95)

 

(19)

 

 

(4)

 

(97)

Changes in fair values

 

(10)

 

100

 

283

 

(17)

 

(231)

 

125

Reclassified to profit or loss

 

 

(3)

 

(19)

 

 

146

 

124

Reclassified to goodwill

 

 

(37)

 

 

 

 

(37)

December 31, 2018

 

11

 

(35)

 

245

 

(17)

 

(89)

 

115

No material ineffective portions of hedges required recognition through profit or loss in 2018.

The fair values of the derivatives in the major categories as of year-end are indicated in the following table together with the included volumes of hedges.

Fair Values of Derivatives

 

 

Dec. 31, 2017

 

Dec. 31, 2018

 

 

 

 

Fair value

 

 

 

Fair value

 

 

Notional amount1

 

Positive fair value

Negative fair value

 

Notional amount1

 

Positive fair value

Negative fair value

 

 

€ million

 

€ million

€ million

 

€ million

 

€ million

€ million

1

The notional amount is reported as gross volume, which also contains economically closed hedges.

2

Derivatives with positive fair values are recognized under “Other financial assets” in the statement of financial position.

3

Derivatives with negative fair values are recognized under “Financial liabilities” in the statement of financial position.

4

Derivatives with negative fair values are recognized under “Other liabilities” in the statement of financial position.

5

The portion of the fair value of long-term interest-rate swaps that relates to current interest payments was classified as current.

Currency hedging of recorded transactions2,3

 

12,321

 

233

(240)

 

18,165

 

129

(172)

Forward exchange contracts

 

10,399

 

144

(53)

 

16,942

 

83

(137)

Cross-currency interest-rate swaps

 

1,922

 

89

(187)

 

1,223

 

46

(35)

of which cash flow hedges

 

1,880

 

87

(187)

 

1,198

 

45

(35)

 

 

 

 

 

 

 

 

 

 

 

Currency hedging of forecasted transactions2,4

 

9,475

 

116

(194)

 

4,233

 

35

(70)

Forward exchange contracts

 

9,292

 

105

(194)

 

4,169

 

35

(69)

of which cash flow hedges

 

9,205

 

103

(192)

 

3,941

 

34

(64)

Currency options

 

183

 

11

 

64

 

(1)

of which cash flow hedges

 

183

 

11

 

64

 

(1)

 

 

 

 

 

 

 

 

 

 

 

Interest-rate hedging of recorded transactions2,3

 

200

 

11

 

200

 

8

Interest-rate swaps

 

200

 

11

 

200

 

8

of which fair value hedges

 

200

 

11

 

200

 

8

 

 

 

 

 

Interest-rate hedging of forecasted transactions2,4

 

9,086

 

64

(81)

 

 

Interest-rate swaps

 

9,086

 

64

(81)

 

 

of which cash flow hedges

 

9,086

 

64

(81)

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity price hedging2,4

 

420

 

6

(3)

 

936

 

32

(14)

Forward commodity contracts

 

414

 

6

(3)

 

934

 

31

(14)

of which fair value hedges

 

 

 

87

 

(3)

of which cash flow hedges

 

 

 

464

 

14

(3)

Commodity option contracts

 

6

 

 

2

 

1

of which fair value hedges

 

 

 

 

of which cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hedging of stock-based employee compensation programs2,4

 

544

 

20

(15)

 

731

 

(226)

Share price options

 

75

 

5

 

 

of which cash flow hedges

 

75

 

5

 

 

Forward share transactions

 

469

 

15

(15)

 

731

 

(226)

of which cash flow hedges

 

469

 

15

(15)

 

731

 

(226)

 

 

 

 

 

 

 

 

 

 

 

Total

 

32,046

 

450

(533)

 

24,265

 

204

(482)

of which current derivatives

 

30,259

 

317

(499)

 

23,169

 

171

(320)

for currency hedging

 

20,678

 

242

(415)

 

22,253

 

145

(242)

for interest-rate hedging5

 

9,086

 

64

(81)

 

 

for commodity price hedging

 

420

 

6

(3)

 

746

 

26

(14)

for hedging of stock-based employee compensation programs

 

75

 

5

 

170

 

(64)

The following table provides an overview of the hedging rates for the material derivatives that existed at year-end and qualified for hedge accounting:

Hedging Rates of Derivatives that Qualify for Hedge Accounting

 

 

Dec. 31, 2018

 

 

Short-term derivatives

 

Long-term derivatives

 

 

Nominal value (million)

 

Ø hedging rate

 

Nominal value (million)

 

Ø hedging rate

Currency hedging of recorded transactions

 

 

 

 

 

 

 

 

Cross-currency interest-rate swaps – cash flow hedges

 

 

 

 

 

 

 

 

 

 

Sell

 

 

 

 

 

 

EUR / TRY

 

120 TRY

 

3.2287

 

 

EUR / USD

 

1,350 USD

 

1.1544

 

 

 

 

 

 

 

 

 

 

 

Currency hedging of forecasted transactions

 

 

 

 

 

 

 

 

Forward exchange contracts – cash flow hedges

 

 

 

 

 

 

 

 

 

 

Sell

 

 

 

 

 

 

EUR / AUD

 

243 AUD

 

1.6242

 

 

EUR / BRL

 

1,685 BRL

 

4.5360

 

 

EUR / CAD

 

499 CAD

 

1.5765

 

 

EUR / CNH

 

5,900 CNH

 

8.1207

 

 

EUR / GBP

 

326 GBP

 

0.8918

 

 

EUR / JPY

 

51,690 JPY

 

130.1871

 

 

EUR / KRW

 

122,670 KRW

 

1,322.7477

 

 

EUR / MXN

 

2,629 MXN

 

24.7583

 

 

EUR / RUB

 

16,835 RUB

 

78.8858

 

 

EUR / TWD

 

1,929 TWD

 

35.5132

 

 

EUR / USD

 

883 USD

 

1.1998

 

 

EUR / ZAR

 

1,236 ZAR

 

16.9930

 

 

USD / CAD

 

151 CAD

 

1.3050

 

 

 

 

Buy

 

 

 

 

 

 

EUR / USD

 

150 USD

 

1.1813

 

 

AUD / USD

 

14 USD

 

0.7145

 

 

 

 

 

 

 

 

 

 

 

Hedging of stock-based employee compensation programs

 

Number of shares (thousands)

 

Ø hedging rate (€)

 

Number of shares (thousands)

 

Ø hedging rate (€)

Forward share transactions – cash flow hedges

 

 

 

 

 

 

 

 

 

 

Buy

 

 

 

Buy

 

 

Bayer shares

 

1,517

 

104.29

 

6,971

 

82.42

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