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ePaper created 2015-05-06, 08:22:31 | version 1.38.0
36 out in the past and in 2014, for example in the Sensors and Materials Technology business groups, mean that the company now is able to respond quickly and flexibly to a potential decline in demand in standardized products, without jeopardizing innovation-driven growth. The Quartz Glass business group cushioned the commercial impact of the somewhat weak recovery in investment in the semi conductor industry through activities in other sectors, most notably the telecommunications industry. There are no expectations of any major decline in the telecommuni cations industry over the medium to long-term, although this cannot be ruled out. Once products have been successfully launched, it is vital to the business group’s long-term market positioning that it makes continual improvements to the products. The success of the business group is also dependent to a large degree on a continuation of the increasing dynamism in the product landscape of recent years. Financial opportunities and risks Heraeus stands to benefit financially in particular from fluctuations in the exchange rate and fluctuations in in terest rates (rising interest rates on investments, close-to- zero interest rates on borrowing). With regard to exchange rate fluctuations, the avoidance of risks always takes precedence over the exploitation of opportunities. The individual financial risks identified are for the most part related to credit and counterparty risk. Heraeus mitigates these risks through active global receivables management, which is the responsibility of the individual business groups. This has been facilitated by the installation of additional reporting and monitoring tools. Because of its international activities, Heraeus is exposed to various financial risks. In addition to credit and liquidity risk, this relates primarily to market risk. Financial risks are continuously monitored and managed by the central Treasury department (inhouse bank). The Group’s central Treasury department was expanded in recognition of the increased significance of these risks within the Group as a result of the capital markets crisis. In addition to regular reporting, the Financial Risk Com mittee continuously monitors the inhouse bank as well as the impact of financial risks on the Heraeus Group. This committee comprises the Chief Financial Officer, the heads of Group Finance, Group Accounting, and Group Controlling plus representatives from the business groups. Market risk includes currency risk, interest-rate risk, and other price risks. Heraeus uses standardized processes to determine important risk positions, evaluates these risks with different risk instruments (limits, hedge ratios) on a weekly basis, and initiates any necessary measures (see the notes to the consolidated financial statements, ‘Financial risk management’ section). Currency risks resulting from the international orientation of individual Group companies are mitigated by the use of selected derivative financial instruments, in particular forex forward transactions and forex options. This means that hedging decisions are made on the basis of a rolling, currency-differentiated plan, according to the latest Group risk guidelines. The main currency risks relate to cash flows in US dollars. Currency hedging transactions are used so far as they are legally permissible and economically viable. The planned currency exposures for 2014 were mainly hedged by cur- rency derivative contracts. Hedging measures have already been implemented for 2015, albeit to a lesser extent.