3.2 Business environment in the sector

Sharp price rises for raw materials

Various raw materials are used in the production of parts bought in by the KION Group as well as at its own foundries and component production sites. The most widely used material is steel in the form of sheet metal or in processed form in almost all components. Average steel prices, which had fallen significantly in 2009, increased by 31 per cent in 2010. There was even greater recovery in the price of cast-iron scrap, which climbed by an average of 53 per cent. Prices for copper on the London Metal Exchange also rose by 55 per cent on average during the year. However, the sharpest price rise among the raw materials relevant to the KION Group was for natural rubber at 98 per cent. The oil price – an indicator of the price of plastics and of energy costs – increased by 36 per cent in 2010.

Euro crisis puts pressure on the common currency

The bulk of KION's products are sold in the European Economic Area. But even outside the euro zone, products are invoiced in euros, depending on the sales structure. Besides the major non-European currencies, some revenue is generated in foreign currencies, particularly in the emerging markets of Asia and South America. The most significant foreign currencies for the KION Group are the Chinese renminbi, pound sterling and the Brazilian real. Due to the euro crisis, the euro fell against other reserve currencies in May, but was able to make up for this to some extent during the second half of the year. On a year-on-year basis, however, the euro fell against all of the currencies that are relevant to the KION Group.