Heraeus_GB15_Magazin_EN_RZ_29_04_lowRes - HIGHLIGHTING THE TRANSFORMATION …

Mr. Rinnert, you have initiated a very comprehensive change process at Heraeus. Why was this necessary? JAN RINNERT: One important reason is that our markets and our customers’ needs have changed significantly. Our competi- tors are winning market shares with products that are in the low-price segment. This is particularly evident, for example, wherever precious metals are being replaced because of cost, as in the electronics industry. Furthermore, the technologies in our markets are changing at a very fast pace. For example, the traditional hard drives business continues to lose shares to semiconductor memory technologies, or technologies such as OLED (Organic Light Emitting Diodes) don’t catch on as fast as they might because major participants in the market make other strategic decisions. This accelerated development and the increasingly globalized competition also intensify the pressure to innovate, to bring new products to market in shorter and shorter cycles. At the same time, we must meet our customers’ service and system requirements more than before, and with cost pressure there as well. What measures have you defined in response to this development? JAN RINNERT: We have identified a number of action areas across the entire company. Since autumn 2014, we have been actively working to orient our business units more closely to our markets and customers, implementing changes swiftly and with good results. For example, at the beginning of 2015, we established new leadership structures in the company with eleven Global Business Units. These GBUs now consolidate the former 35 strategic business segments to form eleven market-oriented areas. We streamlined our leadership structures, taking out two levels of management. This gave us a functional structure with short paths that allow quick entrepreneurial action. The new Global Business Units (GBU) have now addressed their markets in this form for more than a year, mainly with good operational progress. In a second important area, we took steps to improve our operational excellence, with a particular focus on efficiency in production and production-related areas. Starting in the second quarter of 2015, we launched excellence initiatives, with the goal of raising us to a world-class level from top to bottom. During the reorganization, it became clear that work- flows in some of the old business units had more significant shortcomings than we had previously thought. Further optimi- zation measures were needed. We combined these measures to create the Heraeus FIT program. The systematic imple- mentation of this program is having a significant effect on stabilizing and restoring competitiveness for some businesses, especially for our locations in Germany. In addition, we have continued to focus on our processes and systems. Under the Magellan program initiated in 2012, we introduced a global SAP system. This simply allows us to more quickly identify where our businesses are doing well and where they are not. Although such projects always have their snags and require considerable effort from the entire workforce, the changeover was astonishingly quick. Approximately half of us worldwide are using uniform SAP systems. How did your businesses and results fare in this environment? JAN RINNERT: Although our company has a strong foundation, it was very important last year to have done our homework and implemented these change processes systematically, with the necessary investments, write-offs and reserves. Further- more, the very challenging global environment became even more competitive, while we encountered weakening markets in many regions. The slackening development in China, one of our most important markets, excess capacities in the global steel market, significant currency fluctuations and low precious metals prices – all of these did not exactly make our »2016 WILL BE THE YEAR THAT THE TRANSFORMATION TAKES HOLD…« Interview with JAN RINNERT, Chairman of the Heraeus Holding Group Management Board, about the Group-wide change processes.

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