predicted, it is not possible to make concrete statements
about the influence. Concrete risks can result from a deviation
of the actual exchange-rate development from our
planning assumptions.
Expected Earnings, Asset, and Financial Situation
Expected Sales and Earnings Performance
On the basis of the growth anticipated for the global economy,
we expect the demand for our products and services
to exhibit a positive development in the new fiscal year. We
expect our operating sales growth, i. e. sales growth adjusted
for exchange-rate and acquisition effects, to be in the
1 % to 5 % range. This growth should result from an
increase in the sales volume and positive effects from price
increases and shifts in the product mix.
We expect nominal sales in 2019 to be influenced by
negative effects of exchange-rate changes. For the most
part, sales in the divisions should develop in the same range
as Group sales.
In terms of the most important functional cost factors,
we do not foresee significant shifts of cost ratios in relation
to sales. We expect the materials cost ratio to largely undergo
a stable development at the level of the past fiscal year.
For personnel expenses and other fixed cost figures, we
project a relative increase at the same level as sales growth.
Against this background, we anticipate that in 2019 the
EBITDA margin will develop roughly at the level of the
previous year and thus within our strategic target range of
18 % to 20 %.
After 2019, we expect stable growth momentum with
slightly higher profitability.
Expected Asset and Financial Situation
There should not be any significant shifts in the balance-sheet
structure in 2019. In the next two years, our capital
expenditure for property, plant and equipment and intangible
assets should be above our long-term target range of
5 % to 6 % due to strategic growth projects. The development
of the absolute values of net working capital should be
analogous to the general business development, though
we are striving to slightly improve the ratios.
Based on the anticipated business performance, we
should achieve liquidity surpluses from operating activities.
These surpluses will be used primarily to finance investments
and bolt-on acquisitions. In addition, we plan to repay
the promissory note loans on schedule in 2019 and 2020.
We project the value management key figures to increase
slightly in 2019 compared to the past fiscal year. This
should result from an improved earnings situation.
Risks
Management and control of the ALTANA Group are geared
to the strategy that has been defined and the target levels
derived from it. Due to changes in the economic environment
or internal factors of influence, it might not be possible to
implement the strategy successfully or to achieve targets in
the planned time frame or to the planned extent. To be
optimally prepared for such situations, ALTANA systematically
identifies, evaluates, and considers risks within the framework
of decision-making processes.
To anchor our risk policy at all decision-making levels,
we established a Group-wide risk management system that
brings together various information, communications, and
monitoring systems. Core elements of our risk management
include strategic corporate planning, internal reporting,
72 Expected Developments