Financial Statements and Management Report - Thyssenkrupp

1.6 Management report Expected developments and associated opportunities and risks
Sales risks
As a global industrial group, ThyssenKrupp is dependent on the international economic situation. Especially
in the currently weakening global economy, we closely monitor economic trends in our sales regions in order
to minimize the market risks. If necessary we have a package of measures at our disposal, for example an
immediate adjustment of our capacities.
Our international presence in different sectors and our widely differentiated product and customer structure
make us largely independent of regional crises on our sales markets. Our effective receivables management
system counters the risk of bad debt and continuously monitors the credit rating of our customers. More
details on sales risks are provided in the section headed “Specific risks for our operations”.
Risks associated with business relationships with customers in countries with trade restrictions
Due to our global organization, ThyssenKrupp has business relationships in countries subject to trade
restrictions. In 2010 the Federal Republic of Germany, the EU and the USA, acting on the basis of UN
Resolution 1929, expanded existing trade restrictions on the Islamic Republic of Iran to include the
petroleum sector, and added further individuals and a number of banks to the sanctions lists to prohibit
business with them. Violations of the tightened trade restrictions are subject to severe penalties and could
damage ThyssenKrupp’s reputation. We have always complied scrupulously with export control regulations
and in particular trade restrictions. In addition, the Executive Board of ThyssenKrupp AG ordered a review of
the business activities with Iranian customers in existence before the tighter trade restrictions came into
effect to establish whether they comply with the new laws. In September 2010 it was decided that
ThyssenKrupp will not enter into any new transactions with Iranian customers. This measure significantly
reduces the risk of a potential violation of trade restrictions. In addition, an Elevator investment in Iran has
been sold.
Procurement risks
Depending on the market situation, prices for raw materials and energy can fluctuate significantly. We
safeguard our competitiveness by adjusting purchasing prices and securing alternative procurement
sources. The geographical distribution of orders makes us less vulnerable to regional supply bottlenecks. To
hedge against raw material price swings, in particular for nickel and copper, we also use derivative financial
instruments – mainly commodity forward transactions. The use of these instruments is subject to strict
rules. Details of these risk areas are provided in the Notes.
The energy transition in Germany will permanently increase the price of electricity with the rise in the share
of renewable energies and the associated need to expand the electricity grids. On top of this there are costintensive
regulatory requirements for the electricity and gas networks of our major production locations. To
counter the risk of rising energy prices we pursue a structured energy procurement policy. Furthermore all
business areas are further increasing their efforts to save energy and recycle waste so as to prevent
greenhouse emissions and conserve natural resources.
Risks associated with acquisitions, disposals and restructurings
Active portfolio management is a key element of our corporate development. We constantly monitor and if
necessary make provision in the balance sheet for risks associated with the disposal or acquisition of
companies, business activities and real estate and with restructurings.
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