Annual Report 2012

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40 Heraeus 2012 ··· Group Management Report ··· Consolidated Financial Statements Precious Metals Regional expansion of activities, particularly in Asia, is progressing as planned. Furthermore, the strategy provides for further expansion of activities in the Displays market. After completing the integration of Ferro activities and staff adjustments, business in Precious Colours is looking significantly more profitable. In addition, the division has been steadily optimizing its product portfolio. However, precious metal prices remain high and the situation in the Middle East is strained, so these two factors combined to have a negative effect on this business. The division completed the renovation / expansion of its global production sites in 2012. TRADING As expected, the weakening of the global economy kept things a lot quieter in the precious metals markets. The debt problem and associated economic difficulties led to a continuing decrease in demand in many European countries, affecting the automotive industry in particular. Prices of platinum and palladium for industrial use were influenced by the restraint displayed in certain industries, and declined during the year, sometimes significantly, for both metals. Another example of the weak demand throughout the financial year was the fact that even interruptions resulting from strikes at the large South African manufacturers led to only temporary price increases. In addition to primary production, secondary circulation is stabilizing supply as a result of growing recycling quantities. Some globally active clients who are less affected by weak demand in Europe are using the falling prices to secure future metal requirements. The division could benefit from this development. The more efficient use of pastes in the photovoltaics industry, in addition to the high levels of inventory in the solar industry, led to reduced silver procurement activities. Business in gold investment bars continued at a high level until a weak phase occurred in the first quarter. Due to the current economic environment, we can assume that precious metal prices will not fall in the near future because interest rates remain low, meaning that tangible assets such as equities and precious metals remain attractive to investors. Annual industrial consumption is currently below production quantities, with investors absorbing the surpluses. Current prices for the platinum group metals do not allow for profitable production in many South African mines. The largest producer, Anglo American Platinum, has already reacted to this and announced that it will decrease platinum production in 2013 by around 15% to approximately 2.1 million ounces. In this environment, however, no problems are expected in securing the general supply of precious metals. The quantities that are effectively secured by contract, as well as availability on spot and secondary markets create sufficient security. RESEARCH AND DEVELOPMENT Expansion of development sites in Asia (China, Japan, Korea, and Singapore) has equipped the precious metals business group for the challenges and opportunities of a dynamic market environment. In research and development, existing and supplementary technology components (e.g. coating technologies) and market access (e.g. in the electronics industry) have been explored to open up new business opportunities across divisions.
The 2012 Heraeus Innovation Award and other indicators highlighted the success of research and development activities: The Chemicals Division successfully introduced an innovative process for largescale technical manufacture of the preliminary catalyst platinum oxalate. In addition, a process innovation in China enabled the processing of fluorinated materials in a new recycling plant for precious metals. The Medical Components Division developed a magnetically hard, preciousmetal alloy for implants for treating patients with advanced cardiac failure. In addition, the division opened a development center for materials used in medical technology. Total expenditures for research and development amounted to € 24.0 million in 2012 (previous year: €17.8 million). The division achieved an innovation rate of 29.5%, which was below the previous year’s record level. 41
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Page 61 and 62: 2012 2011 2010 2009 2008 GLOBAL EMP
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