3.2 Business environment in the sector

Sector boosted by willingness to invest

The global economic recovery in 2011 improved the level of orders on hand in many sectors – albeit with regional differences. According to the German Association of the Automotive Industry (VDA), the worldwide market for new cars expanded by around 6 per cent to 65.4 million units last year. Continued growth in world trade also benefited the logistics sector. The German Engineering Federation (VDMA) reported a 10 per cent rise in order intake for Germany's export-oriented engineering sector in 2011. The strong starting position and the ongoing recovery in some areas were accompanied by spending on capital equipment. This increase in investing activities had a positive impact on demand for industrial trucks.

Commodities price index reaches all-time high

Prices for many commodities rose sharply in 2011. Among the commodities relevant to the KION Group that increased in price, oil and metal particularly stood out – with at times substantial increases. Although prices declined during the last few months of 2011, having shot up at the start of the year, the commodities price index of the Hamburg Institute of International Economics (HWWI) reached its highest ever average for the year. Commodity prices, as measured by the HWWI index, climbed by 22.4 per cent in euros and 28.6 per cent in US dollars compared with 2010. The oil price – an indicator of the price of plastics and of energy costs – increased to over US$ 125 per barrel on the back of unrest in North Africa and the Middle East. Metal prices were pushed up by the improving global economy and strong demand from China for copper, steel and aluminium.

Euro loses value

Exchange rates proved highly volatile over the course of the year against the backdrop of the euro crisis and partly due to government intervention. The relative stability of the euro over the year as a whole was mainly due to its strong performance in the first six months. However, the euro fell against other reserve currencies at the end of 2011. A weaker euro is generally favourable for European exports but it also makes important input materials more expensive. Sharp fluctuations throughout the year were the major challenge in 2011 rather than the euro's absolute exchange rate.

The KION Group sells many of its products in the European Economic Area and issues invoices in euros even outside the European Monetary Union, depending on the sales structure. Owing to increasing unit sales in emerging markets, some trade receivables are denominated in foreign currencies. The most significant foreign currencies for the KION Group are the Chinese renminbi, pound sterling and the Brazilian real.