Engineering

2.7 Management report on the Group Expected developments and and associated opportunities and and risks risks
The “Steel in Transition” program helps
Steel Americas contain risks.
The “Steel in Transition” program helps
Steel Americas contain risks.
Specific risks for our operations
Steel Europe – Risks going forward for the business area include in particular risks on the sales and
procurement markets as well as risks from exchange-rate fluctuations and emissions trading. If the
economic situation deteriorates, the risk of customer insolvencies increases. High capacity utilization
increases the risk of production losses.
To contain the risk of cyclical demand fluctuations, the business area optimizes its costs in all areas, adjusts
production promptly, and concentrates on high-end market segments subject to lower cyclicality. To mitigate
the risk of customer insolvencies, Steel Europe monitors the situation intensively and uses all the options
available to safeguard deliveries, for example through commercial credit insurance facilities or adjusted
payment conditions. Quality and supply risks are minimized through the ongoing optimization of our value
chains.
A business and technical risk controlling system for property insurance is an integral component of the risk
management process. Additional investment and maintenance budgets are available to further optimize fire
prevention. The risks of other business interruptions are reduced by ongoing preventive maintenance,
modernization and investment. In the event of business interruptions, business continuity plans are in place
which specify measures for remedying damages.
Steel Americas – Alongside risks on the sales and procurement markets and risks from exchange rate
fluctuations, the risks in this business area include risks in connection with the ramp-up and operation of
facilities and production operations.
At the two major Steel Americas plants in Brazil and the USA, delays or quality problems could still occur in
the further course of the ramp-up. However, thanks to intensive controls and tight risk management as well
as regular risk meetings and reports, all material risks are immediately identified and suitable
countermeasures initiated.
Our efficient claims management system ensures that all claims of our contractual partners are properly
handled and managed. ThyssenKrupp is involved in legal, arbitrational and out-of-court disputes in
connection with the construction of the melt shop and coke plant in Brazil which could lead to compensation
payments.
Operating risks which may occur in connection with the ongoing ramp-up are minimized by tailored and
coordinated ramp-up periods, the careful selection and training of new employees, and the use of know-how
from the Steel Europe business area.
In close cooperation with the Steel Europe business area – in the joint “Steel in Transition” program – Steel
Americas is working to contain the price and volume risks in the procurement of raw materials and the
implementation of the premium strategy. This involves for example the transfer of best practice knowledge
and the use of synergy effects. Both these measures also reduce cost risks from consumption variances as
well as risks in the winning of target customers and the corresponding certification processes. At the same
time price and sales risks are reduced by expanding the customer base and accessing premium market
segments. In addition we are adapting the startup of the final units and the slab and coil production
operations in line with the economic situation.
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