english - About Heraeus

Outlook: Stable
The stable outlook reflects Standard & Poor's Ratings Services' belief that Germany-based precious metals and
technology group Heraeus Holding GmbH will preserve its intermediate financial profile, despite the weak
economic environment. We believe the company will be able to balance investments, dividends, and acquisitions
in line with its financial profile. At the current rating level, we see headroom to accommodate small to midsize
acquisitions, assuming no significant deterioration of industry conditions in Heraeus' end markets. We believe that
Heraeus will be able to maintain credit metrics in line with our benchmarks for the current ratings, including funds
from operations (FFO) to adjusted debt of about 35% and debt to EBITDA of about 2.5x.
Downside scenario
Ratings downside could result should Heraeus' debt to EBITDA rise above 2.5x on a protracted basis. Downside
risks would likely be driven by a significant cyclical downturn in the industry, coupled with excessive debt levels
from a substantial increase in investments or acquisition activities, or deteriorating liquidity.
Upside scenario
Ratings upside could arise if we were to see sustainable strong credit metrics, including FFO to debt of 45%-50%
and debt to EBITDA of less than 1.5x.
Standard & Poor's Base-Case Scenario
Assumptions Key Metrics
• Low double-digit percentage revenue decline in
2012, flat in 2013 in a difficult macro environment.
• EBITDA margins weaker in 2012 and 2013 than in
2011, but in line with the historical average between
11% and 14%.
• Capital expenditures in line with historical levels at
about 3%-4% of product revenues over the next two
years.
Business Risk: Satisfactory
2011A 2012E 2013E
EBITDA margin (%) 12.0 11.0-11.5 11.5-12.0
FFO/debt (%) 56.4 45-50 40-45
Debt/EBITDA (x) 1.2 1.3-1.7 1.3-1.7
A--Actual. E--Estimate
Summary: Heraeus Holding GmbH
Our assessment of Heraeus business risk as "satisfactory" reflects the group's leading niche market positions in most of
its core businesses. Heraeus' operations include precious metals, sensors, dental products, quartz glass, specialty light
sources, and biomaterials and medical products. The ratings also reflect the group's good diversity by region, product,
and customer base. We understand the company derives a significant proportion of its earnings from end markets with
relatively stable demand patterns, which mitigates exposure to cyclical demand from other end markets.
WWW.STANDARDANDPOORS.COM/RATINGSDIRECT MARCH 28, 2013 3
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