2.8 MEUR - Gorenje - Gorenje Group

Volatile Raw Materials Market
We expect the prices of raw materials
in 2012 to be at the level of the
previous period’s average prices.
Due to the impact of specific market
factors, the prices of copper
and aluminium will grow faster.
There will be also a great uncertainty
about the future movement
of prices of oil and plastics due to
strained and unforeseeable geopolitical
events
The costs of sheet steel, plastics, electronic components,
compressors, glass and glass ceramics have
a major impact on our operating costs. Different
coloured metals (copper, aluminium, nickel) are also
Chart 4: Share of raw materials in the costs of materials of the Home Appliances Division
Motors: 7 %
Gas: 4 %
Packaging: 4 %
Ferrous compo.: 8 %
Others: 12 %
Glass & glass ceramic: 8 %
Compressors: 8 %
The Management Board of the company Gorenje, d.d.
Steel: 18 %
El compo.: 15 %
extensively used in production through various electrical
components and steel products.
The volatility of raw materials markets has strongly
increased after the last crisis due to financial instability
and unpredictability of economic circumstances.
The price movement of raw materials is affected by
numerous factors: macroeconomic environment (the
rate of recovery of the global economy, GDP growth,
inflation, global trade, etc.), key market factors in raw
materials industries (supply, demand, inventories, new
projects for exploitation of sources), psychology of
stock exchange investors, exchange rate movements
(particularly the US dollar), and unexpected political
and environmental events.
In the climate of high volatility in global markets, we
use various methods of protection against adverse
effects of the market prices of raw materials. With
Plastics & chem.: 16 %
Chart 5: Changes in the prices of major raw materials of the Home Appliances Division
60 %
40 %
20 %
0 %
-20 %
-40 %
31 %
17 %
Brent crude
oil
42 %
-24 %
20 %
2 %
-19 % -20 %
46 %
32 %
28 %
Copper Aluminum Zinc Nickel Plastixx
(polymers)
2010 2011
ANNUAL REPORT 2011
the help of market analyses and timely perception of
trends, we decide, together with our suppliers, on the
best method of protection in terms of timing, costs,
risk, and duration of contract / lease. Various tools and
methods are applied to reduce exposure to raw materials
pricing risk, including forward leases, derivative
financial instruments, and cap price contracts.
Numerous market indicators show that raw materials
prices bottomed out in the last months of 2011. Forecasts
for slow global economic growth and unstable
financial conditions will limit demand for raw materials
and curb extreme price increases in the near future.
Prices of raw materials in 2012 should be at the level of
the previous period’s average if conditions of a moderate
economic recovery without recession are present.
The impact of specific market factors will cause the
prices of copper and aluminium to increase faster. Uncertainty
about future movements in oil and plastics
36 %
-1 % -3 %
Steel sheet
CRC EU
23