Expected Developments

Future Orientation of the Group

We do not plan on making any fundamental changes to the Group’s strategy or organizational structure in the next two years. The focus on specialty markets and the offer of innovative chemical solutions based on our customers’ requirements will continue to drive our business development.

We do not expect our entry into new market segments or application areas to lead to any significant changes in our sales structure in the medium term. We also expect the balanced regional sales distribution to basically remain stable.

Acquisitions, however, could lead to changes in our sales and market structures. Bolt-on acquisitions and particularly the integration of a new business division could result in a shift.

Economic and Industry Outlook

Global economic growth should slightly recover in 2020 compared with the previous year. The International Monetary Fund (IMF) forecasts a 3.2 % increase in global economic output. This would mean growth above the expected level in 2019 (2.9 %).

The main drivers of this development are likely to be the industrialized nations, although, according to the IMF, individual countries will benefit from the global upturn in very different ways. The IMF expects that growth in the U.S. will continue to weaken (from + 2.3 % in 2019 to + 2.0 % in 2020). In contrast, the IMF forecasts slight growth in the Eurozone (from + 1.2 % in 2019 to + 1.3 % in 2020). For Germany, the IMF expects the pace of growth in 2020 to more than double from 2019 (+ 0.5 %) to 1.1 %. The main driver is exports, which should benefit German industry significantly once the global economy stabilizes. However, the IMF also sees numerous risks in its assessment for 2020 that could lead to a slowdown in global growth. These risks essentially involve the increasing uncertainty about the geopolitical situation that could lead to restrictions on international trade and a renewed escalation in the trade dispute between the USA and China. The IMF sees problems in emerging markets, including India, as a further risk.

According to the IMF forecast, growth in the emerging markets should be over 4 % in 2020 and thus exceed the previous year’s level and the growth expected for the industrial economies (+ 1.6 %), but at a much slower pace than in previous years. This development will continue to be driven in particular by the Asian economies. China and India are showing the strongest growth, albeit also at a lower level than in the previous years. In addition, based on the latest IMF assessment, consumption in India in particular has recently weakened more than expected and as a result growth forecasts for 2020 have been revised significantly downwards, at 5.8 %. The forecast for China was revised downwards, from 6.0 % to 5.4 %, due to the Coronavirus (SARS-CoV-2) infections in February 2020. Latin America is expected to exhibit an increase in growth momentum compared with the previous year, although at 1.6 % it would be at a lower level than is forecast for the emerging economies in Asia. Against the background of the global economic outlook for 2020, growth in the general chemicals sector is expected to remain at the previous year’s level. The American Chemistry Council (ACC) forecasts a 2.0 % increase in global chemical production in 2020, compared with an expected 1.2 % in the previous year. This growth should be driven primarily by the chemical industry in Latin America and Europe. However, chemical production should also develop positively in Asia.

On the basis of the economic and industry-specific framework conditions, we assume that the general demand on all of the markets relevant for ALTANA will basically be positive, although there will be regional and market-specific differences. The extent to which changes in storage levels along the value chain will influence the actual demand for the products of our divisions largely depends on the expected 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 adjusted 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 operating activities in the coming years. In the short term, however, this may lag behind the very good figures of recent years. We will use the cash inflow primarily to finance investments and for bolt-on acquisitions. In addition, the promissory note loan will also be repaid as scheduled in 2020.

We project the value management key figures for 2020 to decline compared to the past fiscal year. This will be due on the one hand to a slight increase in operating capital as a result of expected investments and acquisitions, and on the other to a decrease in operating income.


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, our internal control system, compliance organization, and risk management in the strict sense, i. e. the identification, documentation, and evaluation of risks including the derivation of appropriate precautionary measures and countermeasures.

Our strategic corporate planning is closely tied to our medium- to long-term financial planning. The extent of the fulfillment of our targets is examined in monthly reports on the company’s business performance and in our shortterm financial planning. Apart from an analysis of the current business situation, our expectations for the current fiscal year are discussed extensively at the level of the divisions on a regular basis. As a result, deviations from planned developments can be recognized and countermeasures introduced if necessary.

Our internal control system defines organizational and procedural requirements that serve to prevent damage to the company, among other things. In connection with our established compliance organization, it aims to prevent possible violations of guidelines and laws on the part of employees. At ALTANA, risk management in the strict sense is viewed as the systematic compilation, evaluation, documentation, communication, and, if not already in place, the derivation of measures regarding the relevant risks. Thus it is an essential component of the company’s system for early risk recognition in accordance with section 91 (2) of the German Stock Corporation Act. This system was voluntarily examined by the auditor.

The audit deemed the system capable of recognizing risks that can endanger the existence of the company at an early stage.

Risks that are identified are evaluated in a uniform way. So-called evaluated risks are assessed based on the probability of their occurring and the potential damages. Individual risks can be rated based on this assessment. Risks rated as very high are risks which could cost the company € 25 million or more in the next twelve months. Individual risks that could cost the company between € 12 million and € 25 million are rated as high risks; risks that would cost between € 5 million and € 12 million are categorized as medium risks, and risks that would cost less than € 5 million are deemed low risks. The prioritization resulting from the assessment determines focal points for the development and initiation of countermeasures to prevent or reduce the potential effects of risks.

The individual risks and risk fields described in the following pages could have a material adverse effect on the Group’s earnings, financial, and asset situation in the years to come and thus give rise to a negative deviation from the forecast development. For individual risks categorized as “medium,” “high,” and “very high” we address changes in our appraisal compared to the previous year.

Economy and Industry Risks
The development of the general economic conditions worldwide has a decisive impact on our business performance. The performances of the economies of the U.S., China, and Germany – industrial nations important for ALTANA – have a particularly strong impact on the direction and intensity of demand for our products.

A global economic crisis leading to an economic collapse would bring about significant sales decreases with corresponding influences on our earnings. Recessions limited to certain regions in sales markets important for us could also significantly impair our business performance. With the global orientation of our sales activities, we try to shape our dependence on regional or national markets in such a way that the effects of geographically confined economic crises on the Group are limited.

Thus, the U.S., the most important single country for us, currently accounts for almost 20 % of total Group sales. The distribution of our business activities in the core regions of Europe, Asia, and the Americas also has a balanced structure.

At the same time, we continually update our appraisal of the regional economic development in our internal reporting system to be able to react to foreseeable effects by controlling our procurement, production, and sales activities. We react to long-term shifts in the regional significance of sales markets by adjusting our sales and local production and organizational structures.

In addition to general economic risks, there are market-related sales risks concerning individual product groups or application areas. Particularly medium-to long-term trends that structurally lead to a decrease in demand in our target markets can mean that we will not achieve our growth and profitability targets. We try to counteract industry-related sales risks by broadly diversifying our offer. We supply many different industries, which in turn sell their end products in various markets. Therefore, our dependence on the underlying markets is limited. Our analyses show that the important automotive sales market accounts for less than 20 % of sales. The sales share of other industrial sectors that are important for ALTANA, including the graphicarts industry and the construction sector, are also expected to not exceed 20 %.

The analysis of our industry-specific and application-related sales is a component of our annual strategy process. In addition, we examine changes in future growth potential arising from demand trends and technological developments, and adjust our strategic orientation in the divisions if necessary.

The occurrence of a global economic crisis or the emergence of regional economic crises are two significant economic and industry risks, which in 2019 were categorized as “high” or “medium” and which in the previous year were still classified as “very high” or “high” risks. In the 2019 fiscal year, our assessments of the probability of both risks occurring did not change due to the continuing high level of uncertainty about economic development resulting from various economic risks. However, since a restrained market development was already taken into account in the medium-term financial planning, the potential losses decreased compared to the previous year. The evaluated risk of the two individual risks occurring also declined vis-à-vis the previous year.

Sales Risks
Sales risks result mainly from intensified competition or shifts in customer structure. They include sales risks for individual products or product groups due to specific demand trends.

This can lead to decreasing sales revenues, which can be caused by declining sales volumes or falling prices. Since in many cases we cannot adjust the cost structure in the short term, this can lead to a drop in profitability.

We counter sales risks by continually optimizing our product and service portfolio, above all on the basis of our innovative ability. In the process, it is decisive that we cooperate closely with our customers at an early stage of development work to adapt to market needs. With our innovation strategy, we can counter increased competition in our markets.

A loss of, mergers of, or backward integration of customers can lead to major changes in the customer structure. Due to our very diversified customer structure, however, these risks are limited. In addition, we cooperate closely with our core customers within the framework of our key account management.

The group of sales risks is still assessed as being “medium.” In the year under review, we only slightly changed our assessment of the probability of occurrence and loss potential from sales risks.

Risks from Business Combinations and Investments
Apart from operating growth, acquisitions of companies, business activities, and individual technologies play a key role for the implementation of the strategy for profitable growth at ALTANA. Depending on the size of the activities acquired, inadequate integration can place a burden on the Group’s earnings situation and limit its financial headroom. In addition, a business performance that is worse than what was expected when the acquisition was made can lead to impairments of assets with a negative impact on earnings.

To minimize the effects of the risks from business combinations, we examine our acquisition targets systematically and comprehensively and analyze them in detail in a multistage approval process.

We assess the risk of impairments of assets from acquisitions, which we classify as a medium risk, as being higher than in the previous year. In the past year, the ongoing weak economic situation in the industrial sector led to business developments below expectations, which inevitably leads to an increase in impairment risks.

Procurement Risks
Limited availability of certain raw materials or substantial raw-materials price increases that we cannot or can only partially pass on to the markets in the short term constitute the primary procurement risks. These can have a negative impact on the Group’s earnings situation.

We continually analyze the situation on the raw-materials markets that are relevant for ALTANA. By doing so, we can identify price trends and structural shifts on the part of suppliers at an early stage and devise suitable measures. We take this knowledge into account when we arrange supply contracts. In addition, we take account of the volatility of raw-materials prices in our customer relations. To be able to pass on price increases to the markets in the short term, we use the flexibility of price mechanisms and price lockup periods.

The group of procurement risks is still classified as medium compared to the previous year. However, due to a lower probability of occurrence and slightly lower losses, this risk decreased slightly in the past fiscal year.

Financial Market Risks
Financial market risks primarily concern short-term and significant changes in exchange-rate relations and interest rates, as well as default risks and the covering of financialresource needs.

Due to exchange-rate fluctuations, the translation of foreign currency positions into the Group currency, the euro, can have a negative effect on the Group’s sales and earnings performance (translation risks). Such negative effects can also result from business conducted in a foreign currency (transaction risks). As in the previous year, we categorize translation risk as being a medium risk. Interest-rate changes influence financing costs. Defaults on trade accounts receivable or financial receivables can also have a negative effect on the Group’s earnings situation and its financial resources. If there is a lack of availability of financial resources for the implementation of acquisitions or major investment projects, we might not reach our strategic targets.

We safeguard against material transaction risks by concluding forward foreign-exchange contracts in cases where we assume that the underlying business can be realized with a sufficient degree of certainty. In the case of risks from operating activities, the total amount expected is safeguarded in different tranches to offset short-term exchange-rate fluctuations.

More information on our evaluation and accounting procedures for hedges can be found in the online Consolidated Financial Statements on page 57 ff. (note 28).

To minimize credit default risks, we systematically examine the credit rating and payment behavior of our counterparties. The latter include customers, the banks we do business with, and other business partners where payment default can have an influence on our financial situation.

We safeguard availability of financial resources through central control and monitoring of our Group-wide financial resources. In addition, by utilizing various financing instruments, we centrally provide a financial resources framework. It can be used to cover unplanned financial requirements in the short to medium term (e.g. due to acquisitions).

Our assessment of financial market risks is nearly unchanged vis-à-vis the previous year. We evaluate the most important individual risk in this risk group, namely negative effects on earnings from exchange-rate changes, as having the same probability of occurrence as in the previous year and a slightly lower potential to lead to losses. Continued high cash inflows from operating business activity and the existing general financial resources framework continue to suffice to cover the expected cash outflows for investments, repayments, and dividends.

Innovation Risks
ALTANA’s position as an innovation and technology leader is a major success factor for the company. It is important for a supplier of highly specialized chemical products to continually introduce new products on the market and to be perceived by our customers as a competent and innovative partner. If this was no longer the case in the future, risks could result for our sustainable growth, the attainment of our profitability targets, and ALTANA’s positioning in the relevant markets. The same applies if competitors patent knowhow that we use but have not protected, as we would then no longer be able to use it, or only at additional cost.

With our innovation culture, which is put into practice at all levels of our organization, we highlight the importance of innovation and safeguard its status. Both at a decentralized and a Group level, we can continually evaluate and control our research and development activities based on financial and non-financial criteria. By investing above-average amounts in research and development and focusing on product adjustments and new developments, we can continually introduce products on the market that are tailored to customers’ individual and current needs and thus positively influence our competitive position.

It is important to protect knowhow we develop with patents to convert our knowledge edge into economic sucimcess.This includes safeguarding technologies as well as methods and product properties we currently use so that other companies cannot patent them.

Due to an expansion of activities in the field of digital applications and business models and the risks associated with them, our assessment of innovation risks in 2019 was slightly higher than in the previous year. However, the innovation risk is still classified as low overall.

Other Risks
Production risks concern technical disruptions or human failure in production that can be harmful to people or the environment. Our goal is to minimize the effects of machine failure on the value chain by operating production lines independently from one another. It is compulsory for our staff to receive training in the clearly defined process and quality standards in the areas in question. In addition, we conclude property damage as well as plant and equipment break-down insurances.

Information technologies form the basis of nearly all of ALTANA’s business and communications processes. Breakdowns or other disruptions of IT systems can lead to far-reaching impairments in all of the Group’s value-added stages, which can have significant effects on business performance (IT risks). In addition, potential risks arise from data loss or theft of business secrets. ALTANA attaches great importance to smooth availability of IT applications and services. To guarantee this, corresponding processes and organizational structures have been established. Emergency plans are in place in case of significant disruptions or losses of data.

Delivery of faulty products can cause damage to people, property, or the environment and thus cause liability risks. This can have significant effects on the Group’s asset situation. We minimize this risk by standardizing production processes to a large extent and by taking comprehensive quality-control measures. In addition, we continually conduct analyses to assess the hazardous potential of our input materials and products, and we conclude insurances.

Changes in political and regulatory framework conditions can lead to restrictions on trade or foreign-exchange transactions. Due to political unrest, it can be more difficult or even impossible to access the Group’s assets in the country or countries in question. On account of regulatory adjustments, it might no longer be possible to process or sell certain products or ingredients, or only with strong restrictions. We continually examine the political environment in the countries important for us and take current tendencies into account when evaluating business relationships. We only make direct investments in countries in which we assume the political environment is highly stable. We actively take part in legislative procedures and discussions important for us that focus on changes in the regulatory environment. As a result, we can anticipate possible new requirements early on.

In the past fiscal year, with largely unchanged probabilities of occurrence, loss values increased, especially regarding risks due to tariff trade barriers and due to ongoing initiatives to regulate chemical products in various countries.

The United Kingdom left the European Union on January 31, 2020, with an exit agreement. This initially provides for a transitional phase until December 31, 2020, during which there should be no significant changes to the previous situation from an economic perspective. If no comprehensive trade agreement between the United Kingdom and the European Union is concluded and ratified by the end of the transitional period, there is still the risk of a medium-term restriction of business relations. This scenario still does not represent a significant individual risk for ALTANA. Due to the fact that the withdrawal was postponed several times last year, we already identified and prepared all measures that would have had to be implemented in 2019 in the event of such a scenario. We estimate the potential negative impact on earnings that could result from increased customs duties and higher administrative expenses for imports and exports to be low in absolute terms. In addition, there is a comparatively low risk that the availability of raw materials will be restricted by the discontinuation of REACH certifications for products that have so far only been registered in the United Kingdom.

Legal violations (compliance risks) can give rise to liability risks or tarnish our reputation, which can have a significant effect on the Group’s earnings and asset situation. We counter these risks within the framework of our compliance management system, inter alia by regularly informing and training our employees about relevant legal requirements.

An important basis for long-term success are competent and committed employees. Should we no longer be able to recruit or retain suitable specialists or managers in the future, risks could arise for the successful implementation of our strategy (personnel risks). To counter these risks, ALTANA offers a sophisticated work environment and an attractive compensation system, which is supplemented by various pension plans and wealth creation schemes. Moreover, we regularly offer further education and training programs to budding junior staff members, as well as to specialized and managerial staff.

Production processes and / or supply chains can be impaired or interrupted by the transnational effects of diseases and any resulting measures that may be necessary to stop the disease from spreading further. Thus, there is the risk of economic losses. However, since these risks generally occur only for a limited time and only in certain places, we assess the effects on ALTANA generally to be minor due to our decentralized structures and the fact that our sites are distributed around the world. The further course of the Coronavirus (SARS-CoV-2) infections can have an impact on the economic development, especially in China, but possibly also in other countries. Both the duration and the concrete effects on ALTANA’s economic performance in 2020 cannot be quantified at present.

Compliant Group Accounting
Essential accounting-related risks arise particularly when extraordinary or non-routine issues are handled. These include the first-time consolidation of acquired businesses or parts of companies as well as the recording of the sale of Group assets. Accounting of financial instruments is also subject to risks due to the complex evaluation structure. Risks also arise from fraudulent acts.

At ALTANA, a separate department of the Group’s holding company coordinates and monitors Group accounting. A core component of the control system are the guidelines, process descriptions, and deadlines that this department defines centrally for all companies, guaranteeing a standardized procedure for preparing the financial statements. For complex issues, the instruments needed for uniform accounting are retained centrally for all Group companies. For recording extraordinary processes and complex special issues, we regularly obtain external reports, advice, and statements.

The financial statements of the individual Group companies are prepared decentrally by the local accounting departments. Hence the individual companies are responsible for preparing the financial statements, in keeping with Group guidelines and country-specific statutory accounting requirements.

The work steps needed to prepare the financial statements are defined such that important process controls are integrated. These include guidelines pertaining to the separation of functions and allocation of responsibilities, to control mechanisms, and to IT system access regulations. The respective management explicitly confirms to the Group’s management that the annual financial statements are correct and complete. In addition, important financial statements are audited by the company or Group auditors in charge.

The local financial statements are recorded and consolidated via standardized formats and processes in a central IT system. At the divisional and holding company levels numerous manual and IT-assisted control mechanisms are applied. They encompass an analysis and a plausibility examination of the registered data and the consolidated results by Group accounting as well as by the controlling department and other departments with expertise in this area. Required corrections of the information in the financial statements are generally made at the level of the individual company to ensure the data are uniform and are transferred.

The company auditor and the Group auditor examine issues, processes, and control systems relevant for the generation of financial statements. The Group auditor reports on the audit directly to the Supervisory Board and the Audit Committee. In certain cases, audits are carried out by the central Internal Audit department.

After each process related to the preparation of the financial statements, optimization potential identified at the different levels is analyzed and necessary adjustments of the processes are made.


The identification and evaluation of opportunities for our future business development is integrated into the different planning, analysis, and control processes.

Within the framework of strategic planning, we analyze demand trends as well as market and technology developments with regard to options for action that could enable ALTANA to create value. In addition, the divisions continually examine possibilities of developing new sales markets. During the financial-planning process, the effects of action options are evaluated and discussed so that we can optimally exploit future opportunities. Finally, possible opportunities for short-term business development, along with the attendant risks, are dealt with in detail at all levels of management.

Below, major opportunities are described that could lead to ALTANA’s surpassing its short-, medium-, or long-term goals. The order corresponds to our assessment of the effects on our business performance.

Economic and Industry Development
Should the economic environment in the established industrial regions important for ALTANA, particularly in the U.S., China, and Europe, develop better than we anticipated, unexpected growth impetus could arise. As a result, demand for our products and services could develop more positively and exceed our forecast. The same applies to growth in the important emerging countries in Asia and South America. If the growth rates in these nations were higher than expected, we might be able to benefit from this to a disproportionately high extent due to our market positions.

In addition to regional factors, growth impetus can also result from individual branches of industry. Further potential could be opened up, in particular, if the automotive sector and the construction industry showed a positive development, or if there was a trend reversal concerning the use of silver and gray colors in the consumer sector.

We have to continually streamline our product and service portfolio to be able to continue to pursue our strategy for profitable growth in the long term. Should ALTANA manage to enhance its innovativeness more quickly than expected or to increase its share of new products for which there is a high demand beyond the target level, there would be even better prospects for growth. The same applies if we entered new markets or opened up new application fields for our products.

Business Combinations and Portfolio Measures
Acquisitions play a key role in ALTANA’s long-term value creation. In recent years, we have continually advanced the Group strategically due to acquisitions. At the same time, we cleansed our portfolio of those activities that were not in line with our strategic aims and for which there were no long-term value-creation perspectives within the Group.

In the future, we intend to continue to boost our growth by acquiring businesses and activities. This is an essential prerequisite for us to achieve our strategic growth targets. Should opportunities arise in the future that exceed our expectations, these new activities could help us strengthen our market positions and open up new market segments. This, in turn, could help us achieve our strategic targets more quickly.

The ALTANA Group is decentralized to a large extent. Still, in some areas of the value-creation chain and in certain management functions, central units support the divisions and play a coordinating role. To the extent that we manage to push forward the networks within the Group more strongly than expected, this may spawn further potential to improve efficiency.

The Management Board’s Overall Statement on the Anticipated Development of the Group Including Its Overall View of the Risk and Opportunity Situation

For 2020, we expect global economic growth to be somewhat stronger than in the previous year, especially in the second half of the year. In this environment, we expect ALTANA to achieve operating sales growth in the low single-digit percentage range with slightly lower earnings profitability. The acquisitions already agreed upon will lead to additional sales growth, but will temporarily weaken the key performance indicators for value-oriented management.

We believe that the risk of burdens from a development of the global economy that is worse than we expected or even recessive, or in important core regions, continues to exist. In addition, considerable risks to our short-term sales and earnings performance are posed by the higher price volatility on the raw-materials markets, by impairments for intangible assets acquired within the framework of acquisitions, and by short-term exchangerate fluctuations.

Overall, we have not found any risks that could endanger the continued existence of the company. The risks we face are set against opportunities that could enable us to achieve sales and earnings performance surpassing our forecasts.