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19 HERAEUS | MAGAZINE 2015 | FOSTERING COLLABORATION basis for calculating their production costs, but they also have flexibility in taking delivery of the quantities they need. There is a direct link between the precious metal purchase and the product, which allows the customer to obtain everything from a single source. This eases the burden on the customer’s bank credit line, since price hedging by the bank is no longer necessary. And since price hedging is part of the supply agreement, the accounting process is considerably easier.” These are precisely the arguments that customers find convincing. “And when the customer is convinced,our sales colleagues from the relevant GBUs are convinced as well,” Richardt says with a smile. All the same, it’s a long road. “We are taking just one small step at a time, but that is the only way we will reach our goal,” Agarwal notes. Florian Richardt continues to see considerable potential in Flexible Forward: “In addition to the fact that Flexible Forward has a very positive effect on customer loyalty, I am convinced that it will allow Heraeus to generate considerably higher revenues over the long term.” In addition, some customers that used to purchase their precious metals from other suppliers have now switched to Heraeus. By the way, Flexible Forward has benefited not only Heraeus and its customers, but also Florian Richardt and Bikash Agarwal: In recognition of their Heraeus-wide efforts, Richardt and Agarwal were presented with the 2015 Heraeus Innovation Award in the category of “Best Cooperation.” O HOW FLEXIBLE FORWARD WORKS Flexible Forward offers customers the security of a forward to hedge against price fluctuations, combined with the greatest possible flexibility in taking delivery. For products that contain precious metals, Heraeus and the customer agree on a fixed price for a specific quantity over a certain period of time. Within that period, the customer can take delivery as needed. The fixed price provides the customer with a secure basis for calculating production costs and thus also its profit margin. This is especially effective if the cus- tomer is unable to pass on higher prices resulting from volatile precious metal prices to its customers, or if a fixed price has been agreed upon. With this model, the customer runs the risk of precious metal prices dropping and having to pay an above-market price, but it is protected from the risk that rising precious metal prices will eat away at its profit margin. Precious Metal Call-Offs FLEXIBLE FORWARD = Fixed Price – Flexible Call-Offs Spot Price = Volatile Precious Metal Price

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