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Fresenius Kabi

In 2011, the volatile price development on the global commodity markets influenced the procurement activities of Fresenius Kabi. In the first half of 2011, the underlying raw material prices for most of our procurement materials increased. During the second half of the year the prices stagnated, and for some underlying raw materials they even recovered. Overall, the prices were even higher in 2011 than in 2010.

  • Important plastic granulates used in production at Fresenius Kabi are polyethylene and polypropylene. The underlying raw material for these are ethylene and propylene. Their prices increased in the first half of the year. Even though this development slightly slowed down during the second half of the year, the prices remained above the previous year’s level.
  • A similar development also took place for underlying agricultural raw materials, which are the basis for the carbohydrates (e. g. dextrose, maltodextrin and waxy maize starch) and lactic proteins we use, and for the types of paper we use for our cardboard packaging.
  • We were able to achieve some savings for plastic injection molding parts through in-sourcing projects, i. e. by making products ourselves.
  • With regard to glass, we were able to slightly lower the prices since the end of 2010 in individual cases, although the prices increased on the energy markets.
  • We entered into attractive price agreements for 2011 and 2012 for some active ingredients we use in our IV drugs.

Many different factors contributed to this development. First, the continued demand coming from Asia, and especially China, and secondly, the temporary economic recovery in Europe. The price development on the commodities markets was also impacted by the volatility of the exchange rates, the various social changes in some Arabic countries, as well as various natural disasters which lead to crop shortfalls. The tsunami on the Japanese coast and the nuclear power plant accident in Fukushima that followed even interrupted the manufacturing of several basic natural resources.

In this challenging environment, our global purchasing and sourcing system has proven its reliability: At no point in time, was the supply for our global manufacturing network at risk, as the main criteria for our purchasing activities and the selection of our suppliers are not only high quality, but also flexible and timely supply at competitive prices. Our purchasing risk management also proved to be efficient. For more information on risk management, please refer to the Management Report.

The price development on the energy markets continued to be very volatile and driven by speculation. Through our careful and forward looking purchasing strategy, we had already concluded supply contracts for electricity for 2011 and were able to lower costs compared to the previous year. This effect was almost neutralized, however, as the renewable energy premium was increased by 72%, and tax reliefs fell away. The price for natural gas went up.

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