29. Employee benefits
The Group operates various defined benefit plans. The largest defined benefit plan is in Switzerland. In addition, the Group has a number of defined contribution plans.
Overview of employee benefits
(In € million) |
|
As of |
|
As of |
|---|---|---|---|---|
Salaries and wages accrued |
|
57.3 |
|
45.8 |
Provision for annual leave |
|
15.8 |
|
15.2 |
Provision for other employee benefits |
|
6.0 |
|
6.1 |
Net defined benefit obligations: |
|
|
|
|
Pension benefit liabilities |
|
98.2 |
|
104.3 |
Total employee benefit liabilities |
|
177.3 |
|
171.4 |
Current |
|
73.1 |
|
61.0 |
Non-current |
|
104.2 |
|
110.4 |
Total employee benefit liabilities |
|
177.3 |
|
171.4 |
The Group had a net defined benefit asset of €181.8 million as of December 31, 2024 (€191.8 million as of December 31, 2023). This relates to the defined benefit pension plan in Switzerland. The Group’s net defined benefit liabilities relate to defined benefit pension plans in other countries.
Personnel expenses
Personnel expenses recognized in the statement of profit or loss and other comprehensive income were €620.8 million in the year ended December 31, 2024 (€585.0 million in the year ended December 31, 2023), of which €35.9 million relates to contributions to defined contribution plans (€34.8 million in the year ended December 31, 2023).
Defined benefit pension plans
The Group makes contributions to defined benefit pension plans. It operates defined benefit pension plans in countries including Austria, France, Germany, India, Indonesia, Saudi Arabia, South Korea, Switzerland, Taiwan, Thailand, the UAE and the USA. The majority of the Group’s pension obligations are in Switzerland. The retirement plans are subject to governmental regulations relating to how they are funded. The Group usually funds its retirement plans at an amount equal to the annual minimum funding requirements specified by the government regulations covering each plan.
This note generally includes aggregated disclosures in respect of the Group’s pension plans as the plans are not exposed to materially different risks. However, certain information relating to the Swiss retirement plan is disclosed separately as it is the Group’s largest pension plan.
As of December 31, 2024, the Swiss retirement plan comprised 72% of the present value of the Group’s pension plan obligations (71% as of December 31, 2023). As of December 31, 2024, the fair value of the assets of the Swiss retirement plan exceeded the present value of its pension obligations by €181.8 million (€191.8 million as of December 31, 2023). See also the section “Expense recognized in other comprehensive income” below. For the years ended December 31, 2024 and December 31, 2023, the amount recognized as a net defined benefit asset did not exceed the asset ceiling.
Expected annual contributions to the Group’s defined benefit pension plans during the year ending December 31, 2024 are estimated to be €6.1 million. The Group’s pension plans had a weighted average duration of 14 years as of December 31, 2024 (12 years as of December 31, 2023).
Movement in net defined benefit obligation
Information about the net defined benefit obligation as of and for the years ended December 31, 2024 and December 31, 2023 is included below.
|
|
Defined |
|
Fair value of |
|
Impact of |
|
Net defined benefit |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In € million) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Carrying amount as of the beginning of the year |
|
532.6 |
|
501.9 |
|
(620.1) |
|
(579.9) |
|
(0.0) |
|
61.4 |
|
(87.5) |
|
(16.6) |
Service cost |
|
9.2 |
|
7.9 |
|
– |
|
– |
|
– |
|
– |
|
9.2 |
|
7.9 |
Interest expense/(income) |
|
11.5 |
|
13.6 |
|
(10.7) |
|
(13.0) |
|
– |
|
– |
|
0.8 |
|
0.6 |
Administrative expenses |
|
– |
|
– |
|
0.6 |
|
0.6 |
|
– |
|
– |
|
0.6 |
|
0.6 |
Curtailments and settlements |
|
0.2 |
|
0.1 |
|
– |
|
– |
|
– |
|
– |
|
0.2 |
|
0.1 |
Total expense/(income) recognized in profit or loss |
|
20.9 |
|
21.6 |
|
(10.1) |
|
(12.4) |
|
– |
|
– |
|
10.8 |
|
9.2 |
Actuarial losses arising from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demographic assumptions |
|
14.5 |
|
6.9 |
|
– |
|
– |
|
– |
|
– |
|
14.5 |
|
6.9 |
Financial assumptions |
|
5.0 |
|
15.6 |
|
– |
|
– |
|
– |
|
– |
|
5.0 |
|
15.6 |
Return on plan assets, excluding interest income |
|
– |
|
– |
|
(22.9) |
|
(23.7) |
|
– |
|
– |
|
(22.9) |
|
(23.7) |
Change in asset ceiling |
|
– |
|
– |
|
– |
|
– |
|
– |
|
(62.2) |
|
– |
|
(62.2) |
Total remeasurement (gains)/losses included in other comprehensive income |
|
19.5 |
|
22.5 |
|
(22.9) |
|
(23.7) |
|
– |
|
(62.2) |
|
(3.4) |
|
(63.4) |
Contributions by the Group |
|
– |
|
– |
|
(7.6) |
|
(5.8) |
|
– |
|
– |
|
(7.6) |
|
(5.8) |
Contributions by plan participants |
|
1.9 |
|
1.8 |
|
(1.9) |
|
(1.8) |
|
– |
|
– |
|
– |
|
– |
Benefits paid by the plans |
|
(34.0) |
|
(35.4) |
|
34.0 |
|
35.4 |
|
– |
|
– |
|
– |
|
– |
Addition through business combinations |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
Effect of movements in exchange rates |
|
(2.5) |
|
20.2 |
|
6.6 |
|
(31.9) |
|
– |
|
0.8 |
|
4.1 |
|
(10.9) |
Total other movements |
|
(34.6) |
|
(13.4) |
|
31.1 |
|
(4.1) |
|
– |
|
0.8 |
|
(3.5) |
|
(16.7) |
Carrying amount as of the end of the year |
|
538.4 |
|
532.6 |
|
(622.0) |
|
(620.1) |
|
(0.0) |
|
(0.0) |
|
(83.6) |
|
(87.5) |
Comprised of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Swiss retirement plan |
|
389.3 |
|
375.6 |
|
(571.1) |
|
(567.4) |
|
(0.0) |
|
(0.0) |
|
(181.8) |
|
(191.8) |
All other plans |
|
149.1 |
|
157.0 |
|
(50.9) |
|
(52.7) |
|
– |
|
– |
|
98.2 |
|
104.3 |
Carrying amount as of the end of the year |
|
538.4 |
|
532.6 |
|
(622.0) |
|
(620.1) |
|
(0.0) |
|
(0.0) |
|
(83.6) |
|
(87.5) |
Included in the statement of financial position as: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee benefits (asset) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(181.8) |
|
(191.8) |
Employee benefits liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
98.2 |
|
104.3 |
Total net defined pension benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
(83.6) |
|
(87.5) |
Expense recognized in profit or loss
The net pension expense is recognized in the following components in the statement of profit or loss and comprehensive income.
(In € million) |
|
Year ended |
|
Year ended |
|---|---|---|---|---|
Cost of sales |
|
5.0 |
|
4.8 |
Selling, marketing and distribution expenses |
|
1.7 |
|
1.1 |
General and administrative expenses |
|
4.1 |
|
3.3 |
Total net pension expense |
|
10.8 |
|
9.2 |
thereof the Swiss retirement plan |
|
4.0 |
|
2.6 |
Expense recognized in other comprehensive income
The remeasurement of the Group’s defined benefit pension plans as of December 31, 2024 resulted in a €1.5 million net increase in other comprehensive income (net of tax), of which a €2.3 million decrease relates to the Group’s Swiss retirement plan.
The remeasurement of the Group’s defined benefit pension plans as of December 31, 2023 resulted in a €53.2 million increase in other comprehensive income (net of tax), of which €57.1 million relates to the Group’s Swiss retirement plan. The increase is due to positive asset performance, partially offset by a decrease in the discount rate, and to an increase of the asset ceiling.
Plan assets
(In € million) |
|
As of |
|
As of |
|---|---|---|---|---|
Equity instruments |
|
147.0 |
|
144.2 |
Debt instruments |
|
274.2 |
|
270.6 |
Real estate |
|
164.5 |
|
174.1 |
Other |
|
36.3 |
|
31.2 |
Total plan assets |
|
622.0 |
|
620.1 |
Approximately 92% of total plan assets were held by the Swiss retirement plan as of December 31, 2024 (92% as of December 31, 2023). The debt instruments consist principally of corporate and government bonds. The equity and debt instrument values are based on quoted market prices in active markets. The real estate is held through unlisted funds. The investment policy of the Swiss retirement plan is to target an asset mix of around 25% equity instruments, 45% debt instruments and 25% real estate funds, and to hold 5% in cash. An assessment of the investment policy for the Swiss retirement plan is performed yearly.
Actuarial assumptions
The amounts recognized under the Group’s defined benefit pension plans are determined using actuarial methods. The actuarial valuations involve assumptions regarding discount rates, expected salary increases and the retirement age of employees. These assumptions are reviewed at least annually and reflect estimates as of the measurement date. Any change in these assumptions will impact the amounts reported in the statement of financial position, plus the net pension expense or income that may be recognized in future years. The mortality table used for the Swiss retirement plan for 2024 and for 2023 was BVG 2020 GT.
While the Swiss retirement plan does not provide for compulsory benefit increases for pensioners, increases have been granted from time to time at the discretion of the foundation board, depending on the funding situation at the time.
The discount rate and future salary increases are the assumptions with the most significant effect on the defined benefit obligation. They are presented in the table below.
|
|
Swiss retirement plan |
|
All plans |
||||
|---|---|---|---|---|---|---|---|---|
(In %) |
|
As of |
|
As of |
|
As of |
|
As of |
Discount rates |
|
0.95% |
|
1.50% |
|
0.95%–7.0% |
|
1.2%–7.1% |
Future salary increases |
|
1.50% |
|
2.00% |
|
0.0%–9.0% |
|
0.0%–9.0% |
The table below shows the effect on the defined benefit obligation of a change in the discount rate and future salary increases.
|
|
Swiss retirement plan |
|
All plans |
||||
|---|---|---|---|---|---|---|---|---|
(In € million) |
|
As of |
|
As of |
|
As of |
|
As of |
Discount rates |
|
|
|
|
|
|
|
|
50 basis points increase |
|
(7.4) |
|
(5.7) |
|
(15.8) |
|
(13.7) |
50 basis points decrease |
|
8.1 |
|
6.2 |
|
17.2 |
|
15.0 |
Future salary increases |
|
|
|
|
|
|
|
|
50 basis points increase |
|
1.5 |
|
1.3 |
|
3.2 |
|
2.8 |
50 basis points decrease |
|
(1.4) |
|
(1.2) |
|
(2.9) |
|
(2.5) |
Accounting policy
Short-term employee benefits
Short-term employee benefits are expensed in profit or loss as the related services are provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans and outstanding annual leave balances if the Group has a present legal or constructive obligation to pay this amount as a result of past services provided by the employee and the obligation can be estimated reliably.
Defined benefit plans
The Group’s obligation with respect to its defined benefit plans is calculated separately for each plan by estimating the amount of the future benefits to which employees are entitled in return for their services in the current and prior years, discounting that amount to determine the present value of the Group’s obligation and then deducting the fair value of any plan assets. The discount rate used is the yield on high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have maturity dates approximating the terms of the Group’s obligations. The calculations are performed annually by qualified actuaries using the projected unit credit method.
If the calculation results in a potential asset for the Group (such as for the Group’s Swiss retirement plan), the recognized asset is limited to the present value of economic benefits available in the form of reductions in future contributions to the plan (the case for the Swiss retirement plan) or any future refunds from the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
Remeasurements of the net defined liability, comprising actuarial gains and losses, the return on plan assets (excluding interest) and, if any, the effects of the asset ceiling (excluding interest), are recognized immediately in other comprehensive income.
The net interest expense/(income) on the net defined benefit liability/(asset) for the period is determined by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined liability/(asset) as of that time, taking into account any changes from contributions and benefit payments. Net interest expense and other plan expenses are recognized in profit or loss.
If the benefits of a plan are changed or a plan is curtailed, the resulting change in benefit that relates to past services or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.
Defined contribution plans
The Group’s obligation for contributions to defined contribution plans is expensed as the related service is provided. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. The Group has no further obligations once the contributions have been paid.
Termination benefits
Termination benefits, when applicable, are payable when employment is terminated by the Group before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for such benefits. Termination costs are expensed when the Group can no longer withdraw the offer of the benefits or when the Group recognizes any related restructuring costs, whichever occurs earlier.
Significant judgments and estimates
Amounts recognized under the Group’s defined benefit pension plans are determined using actuarial methods. These actuarial valuations involve various assumptions that reflect estimates as of the measurement date. See the section “Actuarial assumptions” above for an overview of the impact of any change in these assumptions.