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ePaper created 2015-05-06, 08:22:31 | version 1.38.0
5HERAEUS | FINANCIAL REPORT 2014 | LETTER FROM THE BOARD OF MANAGEMENT The main objectives for the Heraeus Group are to achieve long-term financial stability and to maintain its independence as a family-owned company. For this, it is necessary to create profitable growth that will stand the test of time. Heraeus has set itself ambitious growth targets in the Vision 2020 of its Corporate Guiding Principles. Our focus in 2014 was on creating the right organizational structure and setting the strategic course to achieve this planned growth. In addition to extensive internal change, 2014 was shaped globally by major political and economic uncertainties and varying economic fortunes, some of which have had a significant impact on the business of our company. Weak growth in the eurozone and in China and the crises in Ukraine and the Middle East resulted in a fall in demand and generally weak economic growth. The business situation and financial performance were also negatively impacted by unfavorable currency effects. Only the USA, another important sales market, recovered from the setbacks of previous years. The Heraeus Group’s results for 2014 were satisfactory despite the generally uncertain and unstable background. Product revenue excluding precious metals held steady against the previous year’s level (down by 0.3 percent). Product revenue including precious metals, at €3.4 billion, fell short of the figure for 2013. Precious metal trading revenue, at €12.2 billion, was also down on the previous year. This was mainly due to weaker demand in the investment sector coupled with lower precious metal prices. Operating profit before interest and taxes (EBIT), at €188.0 million, was also down significantly on the previous year. The main drivers for this result were negative exchange rate effects amounting to €57.0 million. As a result of the substantial depreciation of the euro, particularly against the US dollar, measurement on the balance sheet date of financial instruments used to hedge foreign-currency transactions led to considerable unrealized exchange rate losses. Net income was €134.0 million. This significant deviation from the previous year was expected and was primarily due to the inclusion of one- off gains on the disposal of the Heraeus Kulzer business in 2013. We pursue a long-term strategy based on the Heraeus Corporate Guiding Principles and work toward clear growth targets. Our successful business approach is predicated on our strong position in a large number of markets, which paid off again last year because of the mixed performance of different areas of our business, and on our extremely robust financial structure. In the last quarter of 2014, Heraeus substantially reorganized its operational business in order to align its individual business units more closely with customers and markets. This realignment into functional areas, the global business units, has three main objectives. Firstly, these clearly defined business units have given us a stronger market focus. Secondly, we have significantly enhanced the functional respon- sibility of Research & Development, Production, and Sales by organizing them around flatter hierar- chies. And finally, we are aiming for the reorganization to foster collaboration and innovation across the Group.