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.