PDF, 1.2 MB - Pfleiderer AG

62 being focused: being better
Future Procurement
The future development of procurement and sales largely depends on economic and sector
growth in the markets in which Pfleiderer operates. In view of the difficult operating environment,
particularly in Germany, consumer behavior towards the furniture industry, Pfleiderer
Wood-Based Panel’s main customer, will be a determining factor. We expect competition with
regard to prices and conditions to remain tough for this Business Center in 2003.
On the other hand, supplies are secure thanks to long and medium-term agreements. By
ensuring optimal storage conditions, the quantities and supply times of raw materials needed
to produce our products have been calculated to ensure availability. While basic prices have
been fixed in agreements with suppliers, it must be assumed that prices will be re-negotiated if
the markets change. Shorter inventory holding periods through storage agreements, especially
with paper suppliers, together with the introduction of just-in-time supplies for the Wood-Based
Panels Business Center, have had a positive effect on cash in hand. As a result of these improvements,
no significant pressure on cash funds due to material procurement is foreseen for
the coming year.
Existing international conflicts and increases in oil prices in 2002 means that prices for
oil and gas-based pre-products are likely to be volatile in 2003. Master agreements with suppliers
are mainly long-term, so that no significant effect on the cost of manufacturing is expected
in fiscal 2003.
Procurement of fresh and used wood as raw material in particleboard production, and for
thermal conversion in our biomass co-generation plants, is safeguarded over the long term by
our affiliate Interwood GmbH and does not harbor any undue price risks.
Future Corporate Structure
The Pfleiderer Group intends to continue to refine its organizational structure in order to
achieve further cost efficiency. Reorganization and changes to legal sub-entities within the
Group are constantly under review in order to meet the strategy of earnings-orientated growth.
Wood-based panels production sites in Germany, as well as logistics and commercial
control, will be bundled together under Pfleiderer Holzwerkstoffe GmbH & Co. KG. The Tipla,
Interwood and Eltec Business Units will continue to operate as independent affiliates, and their
management has already been organized along functional lines. As a result of concentrating
on Wood-Based Panels, Masts (in future, Poles & Towers) and Rail Traffic (in future, Track
Systems), Group management structures will also change. In particular, the Executive Board
will be more involved at the operative level in the activities in the business units.