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How do we secure our growth?

How ebm-papst is dealing with the debt crisis and currency fluc­tu­a­tions


Managing Director Finances and Control­ling ebm-papst Group Hans Peter Fuchs explains how ebm-papst is dealing with the debt crisis and currency fluc­tu­a­tions

What growth targets has ebm-papst set for itself?

The target for the ebm-papst group is to grow to a world-wide turn-over of two billion EUR within this decade. In addi­tion to excel­lent prod­ucts, this requires financing power that will allow us to invest in expanding our capacity. Of course, require­ments also increase due to our busi­ness, as customers are granted payment terms. The increase of this working capital is not to be under­es­ti­mated and usually ties up a substan­tial amount of money. This has to be provided using either our own or outside capital. Both require a certain minimum prof­itability, which ensures that we remain liquid inde­pen­dently and that banks grant us favourable credit terms.

What are the risk factors that could jeop­ar­dise this growth?

Presently, it is hard to predict future trends. One reason is that we are confronted with payment flows in some 25 curren­cies around the world. Added to this is the inse­cu­rity in capital markets: since the begin­ning of the finan­cial crisis, the fluc­tu­a­tion range of exchange rates — referred to as volatility — has grown to extreme propor­tions. No longer are there sustained trends on which we can base our long-term plans. The most recent example of this is the weak­ness of the euro and the US dollar. To keep the currency risk to a minimum despite these factors, well-planned risk manage­ment is essen­tial.

What precau­tions is ebm-papst taking in this regard?

Securing capital is a complex topic that requires a great deal of exper­tise. For this reason, the ebm-papst group has estab­lished its own trea­sury manage­ment that has central respon­si­bility for the group according to a finance guide­line. It iden­ti­fies risks at an early stage and then responds in a timely manner with the adequate coun­ter­mea­sures. This is of enor­mous signif­i­cance, as after all, it takes a lot of addi­tional turnover to compen­sate for a corre­sponding unplanned currency exchange loss. Intel­li­gent safe­guards against currency exchange fluc­tu­a­tions give us a certain degree of assur­ance in plan­ning and thus a clear compet­i­tive advan­tage.

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