short- to medium-term development. Stock-level changes can
lead to significant effects.
The development of crude-oil prices cannot be predicted
reliably. We expect that in 2020 there will be no significant
price movements. The availability, pricing, and consumption
volume of chemical products are subject to the influence
of the crude-oil market, albeit to different extents. In addition,
the expectations of market participants in terms of the future
development of oil prices can result in significant changes
in the level of storage along the entire value chain of the
chemical industry.
As in the previous years, the exchange-rate relations important
for ALTANA may continue to show pronounced
volatilities in 2020. The development of regional interest rates
and economic output, as well as political influences, can be
of decisive importance for exchange-rate fluctuations. Since
the intensity and direction of the exchange rates cannot
be predicted, it is not possible to make concrete statements
about the influence. Concrete risks, as well as opportunities,
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 adjust-
ed for exchange-rate and acquisition effects, to be in the low
single-digit percentage range. This growth should result
from an increase in the sales volume and positive effects from
the product mix.
The nominal sales increase in 2020 should be higher due
to already agreed acquisitions and potential further acquisitions.
In addition to the successful acquisition of the activities
of Gulf Scientific in January 2020, we also concluded
an agreement at the end of 2019 to acquire all the shares in
the Swiss company Schmid Rhyner AG. The integration
of Schmid Rhyner, which specializes in print finishing solutions,
should take place in the first quarter of 2020. In
addition, we expect the nominal sales increase in 2020 to be
only slightly affected by negative 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 2020 the
EBITDA margin will decline slightly towards the lower end
of our strategic target corridor of 18 % to 20 %. The further
course of the Coronavirus (SARS-CoV-2) infections and
its effects on demand, production, and delivery processes
cannot be estimated at present, but may have an impact
in 2020 on our growth and earnings situation in China and
possibly also at Group level.
After 2020, 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 2020. 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 absolute values of net
working capital should develop in line with the general
business trend, although we are aiming for a slight improvement
in ratios.
Based on the anticipated business performance, we
will continue to generate a clearly positive cash flow from
72 Expected Developments