[12] Financial income

Financial income breaks down as follows:

The main reasons for the €95.5 million decrease in financial income to €207.8 million were a reduction in foreign currency exchange rate gains, lower income from fair value hedges, and changes in the fair value of derivatives without a hedge relationship. The decrease was partly offset by higher realized gains on interest-rate derivatives and a rise in interest income from the lease business (details of the countervailing interest expense from the lease business can be found in note [13]). The interest income from the lease business relates to the interest portion of lease payments in which KION Group subsidiaries operate as lessors and the arrangements are classified as a finance lease relationship. In such relationships, the KION Group enters into leases with end customers that are based on fixed interest rates. It hedges most of them using interest-rate derivatives.

Foreign currency exchange rate gains 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.

Furthermore, adjustments to the measurement of lease receivables designated as hedged items in fair value hedges had an impact on the income from fair value hedges in 2023 owing to falling long-term interest rates. There was a countervailing impact from decreases in the fair value of the interest-rate derivatives that are used to hedge the lease portfolio, which are recognized in the expense from fair value hedges. The rise in short-term interest rates led to higher realized gains on interest-rate derivatives over the course of the year.