[14] Financial expenses
Financial expenses break down as follows:
in € million |
2021 |
2020 |
|---|---|---|
Interest expense from loans |
5.3 |
7.7 |
Interest expense from promissory notes |
10.0 |
22.0 |
Interest expense from bonds |
9.3 |
2.5 |
Interest expense from lease and short-term rental business |
50.7 |
53.3 |
Interest expense from procurement leases |
12.2 |
14.1 |
Net interest expense from defined benefit plans and similar obligations |
10.3 |
13.4 |
Foreign currency exchange rate losses |
40.6 |
60.2 |
Changes in fair value of interest rate derivatives (without designated hedge relationship) |
3.4 |
8.8 |
Other interest expenses and similar charges |
14.4 |
20.0 |
Total financial expenses |
156.2 |
201.9 |
In 2021, financial expenses dropped by €45.7 million year on year to reach €156.2 million.
Interest expense from loans, promissory notes, and bonds fell overall in the reporting year due to the ongoing reduction in financial debt.
Interest expense from the lease and short-term rental business, which totaled €50.7 million (2020: €53.3 million), was attributable both to liabilities from financing the lease business and to liabilities from financing the short-term rental fleet. Leases entered into with customers in connection with these financing transactions and that constitute an operating lease relationship, together with the financing of the short-term rental fleet, resulted in interest expense of €27.5 million (2020: €29.2 million). The income from corresponding customer leases and short-term rental agreements is a component of the lease and rental payments received and is therefore reported within revenue rather than as interest income.
The decline in net interest expense from defined benefit plans and similar obligations is attributable to the lower discount rate compared with the previous year.
Foreign currency exchange rate expenses predominantly arise in connection with foreign currency positions in internal financing and the related hedging transactions that are not part of a formally documented hedge.
In 2020, other interest expenses and similar charges had included commitment fees and transaction costs of €7.7 million in connection with an additional liquidity line that had been agreed in order to temporarily secure liquidity but had not been utilized and was terminated ahead of schedule at the end of 2020.