Engineering
Engineering
Engineering
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Management report on the Group<br />
2.7 Management report on the Group Expected developments and associated opportunities and risks<br />
By improving customer retention,<br />
Elevator Technology lessens the the<br />
risk of losing maintenance units.<br />
116 | 117<br />
To counter the risks of currency effects such as an increase in the value of the Brazilian Real, which would<br />
negatively impact the competitiveness of our plant near Rio de Janeiro, we have introduced a wide range of<br />
measures to both expand sales in Brazilian currency and reduce the share of costs incurred in Brazilian<br />
currency.<br />
Materials Services – The business area counters the risks associated with providing materials services for<br />
customers throughout the world with a wide range of measures. Inventories are optimized by systematic<br />
improvements to net working capital management. Cost-reduction measures help increase efficiency and<br />
cost-effectiveness. These measures are supported by continuously improved logistics and efficient<br />
management tools.<br />
Cyclical risks are countered by our worldwide presence, broad customer base and high degree of<br />
diversification. The resultant wide spread of risks also applies to bad debt risks, which are additionally<br />
limited by the use of hedging instruments.<br />
Together with other companies in the sector, the Materials Services company ThyssenKrupp GfT Gleistechnik<br />
GmbH is involved in investigations by the Federal Cartel Office into anticompetitive agreements in sections of<br />
the rail business. The responsible public prosecutor’s office is carrying out investigations into several former<br />
employees. The official and internal investigations continue. Risks exist with regard to a possible fine and<br />
potential claims for damages from customers. With the support of external lawyers, we are working<br />
intensively on further clarifying the matter and are cooperating with the authorities. The necessary personnel<br />
actions have been taken. We wrote to our main customers and informed them that antitrust infringements<br />
had occurred. Extensive further measures have been and will be taken to contain the risks in connection with<br />
the incident.<br />
Elevator Technology – The risk situation of Elevator Technology is mainly determined by two factors: the<br />
different areas of business and the international reach of the business activities.<br />
In the service and modernization business we have implemented customer retention strategies to lessen the<br />
risk of losing maintenance units. Continuous efficiency-enhancement programs help offset rising personnel<br />
and procurement costs where these cannot be passed on in full to customers.<br />
The new installations business is exposed to cyclical risks due to its close links with the construction sector.<br />
However, longer project lead times in this business mean that downturns can be identified in good time to<br />
take countermeasures, e.g. capacity cutbacks. In addition, targeted project management measures help<br />
contain risks in the processing of major projects.<br />
Thanks to the regional distribution of our business activities, many of the risks are balanced because the<br />
markets in which Elevator Technology operates are in different growth phases. Exchange-rate risks are<br />
hedged as far as possible with corresponding financial instruments and are additionally mitigated by settling<br />
sales and costs congruently.