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2.7 Management report on the Group Expected developments and and associated opportunities and and risks risks The Group’s Group’s financing financing and liquidity will will remain on a solid basis in in 2011/2012. Alongside numerous customer-related development projects, the focus will increasingly be on basic research and development work. Procurement – Materials expense is expected to amount to around 60% of sales. We expect to continue to avoid delivery bottlenecks in the future by strengthening our long-standing supplier relationships and further optimizing our international purchasing operations. Energy – Energy supplies to our worldwide plants are secured. In Germany we have already agreed prices and volumes to secure a high portion of our electricity and natural gas requirements; compared with the past fiscal year we will significantly improve our cost position. Environmental protection – In the new fiscal year we expect the amounts we spend on ongoing environmental protection to be comparable with 2010/2011. The greater part of this will again relate to air pollution control and water protection measures. Capital expenditure is expected to decrease slightly because in 2010/2011 some of the expenditure resulted from the completion of the facilities in Brazil and the USA. Expected financial and liquidity situation Despite the problems on the European financial markets and the associated difficult conditions, our financing and liquidity will remain on a solid basis in fiscal 2011/2012. Net financial debt is likely to vary significantly in the course of the year. With our major projects – the new steel mill in Brazil and the new production and sales location in the USA – and the capacity optimization program at the Duisburg location all in the ramp-up phase, capital spending is back below the level of the prior years and is expected to remain at this level in 2012/2013. Opportunity report Identifying opportunities in market and technology trends and incorporating them into the Group’s strategy going forward is a key element of our Groupwide strategic dialogue. The business areas carry out SWOT analyses to identify the relevant strengths, weaknesses, opportunities and threats for their operating units. An opportunity reporting system is being developed that will feed into the business areas’ standard monthly reports. The management of our opportunities is a task shared by all the Group’s decision makers – from the Executive Board of ThyssenKrupp AG to the business area management boards and managements of the Group companies through to the project leaders with responsibility for markets. Strategic opportunities for the Group The global growth areas of demographic change, urbanization and globalization offer wide-ranging opportunities for ThyssenKrupp. With our high-quality products, sophisticated innovations and efficient production sites we see good opportunities for growth particularly in the international markets, in which we position ourselves as a premium supplier. 106
Management report on the Group 2.7 Management report on the Group Expected developments and associated opportunities and risks Pages 108–119 Pages 50–54 106 | 107 In pursuing our Strategic Way Forward, we will use our leading engineering expertise in the application areas “Materials”, “Mechanical” and “Plant” and expand our business in the growth markets of the world, for example Asia. However if the global economy were to weaken, it would take us longer to utilize these opportunities. The associated risks are addressed in the risk report. In parallel with our strategic growth we will evolve our organizational structure and further improve our internal structures and processes. The corporate program impact will increase the Group’s efficiency and reduce costs. Together with business area-specific programs this will contribute to the sustainable success of the Group. Detailed information on our corporate strategy including impact is provided in the section “Strategic Way Forward”. Operating opportunities of the continuing business areas Steel Europe – The increasing urbanization and mobility of societies and the modernization of the energy infrastructure offer a wide range of opportunities for the use of high-quality steel products. Steel Europe’s portfolio of products and services is already geared to this. In addition, the business area is further optimizing its cooperation with Steel Americas. With the extensive program of measures “Steel in Transition – Managing the Triangle” the implementation of the transatlantic steel strategy is being driven forward in close cooperation with Steel Europe. Key points of contact here are in knowledge transfer and joint raw materials purchasing. The main aim of the program is to transfer Steel Europe’s successful premium business model to the North American Market and to build a global supply chain network for slabs in the Brazil-USA-Europe triangle. Steel Americas – Improving production and logistics processes, in particular through the “Steel in Transition” program, and enhancing market penetration are the approaches identified for Steel Americas. Continuous market monitoring, global key account management and intensive technical customer support should help us utilize new market and sales opportunities. Our attractive product mix and service portfolio can open up promising prospects for accessing the North American market. As major US steel users increasingly set up new plants in the south of the USA, this could expand our customer base. Materials Services – As producers and fabricators continue to concentrate increasingly on their core activities, services from Materials Services will gain further in importance. Our advantages lie in our strong customer focus, specific knowledge of markets and sectors, global connections and wide-ranging project management expertise. Elevator Technology – The Elevator Technology business area has been a leading player on the world market for elevators, escalators, moving walks, passenger boarding bridges and stair and platform lifts for many years. This market will continue to offer potential for growth and profit in the future. To tap into this we are further expanding our range of products – for standard installations, customized solutions as well as service and modernization packages. Key to this is our tight-knit sales and service network with more than 900 locations around the globe.
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