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Operating Assets, Liabilities, and Contingent Liabilities

(24) Inventories

Accounting and measurement policies

In addition to directly attributable unit costs, the cost of sales also includes overheads attributable to the production process, which are determined on the basis of normal capacity utilization of the production facilities. Goods for resale are recognized at cost. When determining amortized cost, the “first-in, first-out” (FIFO) and weighted average cost formulas are used.

Inventories are tested for impairment using a business sector-specific method. Under this method, cost is compared to the net realizable values. If the net realizable value is lower than the amortized cost, the asset is written down by a corresponding amount, which is recognized as an expense in the cost of sales.

In addition to the impairment derived from the sales market, impairment losses may also be necessary for quality reasons or due to a lack of usability of the items or their remaining shelf life. If the reason for impairment no longer applies, the carrying amount is adjusted to the lower of cost or the new net realizable value.

Since inventories are, for the most part, not manufactured within the scope of long-term production processes, borrowing costs are not included.

Inventory prepayments are reported under other non-financial assets.

Significant discretionary decisions and sources of estimation uncertainty
Identification of impairments or reversal of impairments

Discretionary decisions are required in the identification of impairment as well as in identifying the need to reverse impairment of inventories. There are estimation uncertainties with respect to the calculation of the net realizable value. In particular, changes in selling prices and expected costs of completion are considered in calculating this value.

Inventories consisted of the following:

€ million


Dec. 31, 2022


Dec. 31, 20211

Raw materials and supplies





Work in progress





Finished goods/goods for resale











The previous year’s figures have been adjusted to improve comparability, as the further standardization of the ERP systems in the Life Science business sector resulted in a different allocation to the individual items in the financial year.

The increase in inventories in fiscal 2022 was driven by all three business sectors. Whereas the upturn in the Healthcare business sector was only minor, the Life Science and Electronics business sectors saw significant growth in inventories. This development was driven in particular by the Process Solutions business unit in the Life Science business sector and the Semiconductor Solutions business unit in the Electronics business sector. The reasons were a need to build up stocks of raw materials and work in progress in order to secure production and supply, as well as delays in global logistics processes.

Impairment losses included in the cost of sales are shown in Note (10) “Cost of sales”.

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