Annual Report 2005/06 - voestalpine

expansion of autonomy in the supply of the
most important raw materials, as well as
energy and logistics.
• IT systems: At most of the Group´s locations,
business and production processes
that are based on complex information technologies
are handled by a separate subsidiary
that specializes in IT and is wholly
owned by voestalpine AG. In order to minimize
IT risks to the greatest degree possible
(particularly the threat to data security and
the breakdown of critical systems), Groupwide
minimum standards in electronic data
processing have existed for some time.
Additional extensive measures to avoid IT
security risks include both the internal
sector and maintenance and warranty agreements
with external suppliers.
• Production facilities: To minimize the risk
of outages for critical production facilities,
significant investments are being made on
an ongoing basis to optimize sensitive components,
improve preventive maintenance,
and train employees.
• Employees: The primary risks in this sector
are the changes in the age structure as
a result of the general demographic development
and the associated danger of losing
know-how. Within the scope of the Groupwide
“LIFE” program, extensive measures
are being taken to keep older employees on
the job, while simultaneously recruiting
qualified, young workers in the technical
professions and vocations. To ensure the
transfer of expertise between the generations,
special projects, such as “Knowledge
Relay” (”Wissensstafette”) or “Employees
Train Employees” (“Mitarbeiter schulen Mitarbeiter
”), were established and implemented
throughout the Group.
• Liquidity risk: An essential instrument
in the control of the liquidity risk is precise
financial planning; the operative companies
submit these plans directly to the Group
treasury of voestalpine AG on a revolving
basis. Using the consolidated operating results,
the need for financing and credit lines
is established with banking institutions.
• Credit risk: The credit risk of the Group’s
underlying transactions is kept low by means
of precise management of receivables. About
70% of the underlying transactions are secured
by credit insurance policies. Additionally,
there are security deposits through
banks, such as guarantees and letters of
credit.
• Currency risk: Hedging occurs because
of naturally closed positions, where, for example,
trade account receivables in USD
are offset by trade account payables for purchases
of raw materials (USD netting). In
addition, derivative financial instruments
are utilized for hedging purposes.
• Interest risk: voestalpine AG differentiates
between the cash-flow risk (risk that
interest expenditures or interest income
change to our detriment) for financial instruments
with variable interest and the
* Additional information regarding the mentioned topics and the financial instruments used for risk hedging is presented in the
relevant chapters of the Management Report and in the Appendix to the Annual Report (Chapter “Financial instruments”).
Management Report
Annual Report 2005/06
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