Sennheiser 2012 Annual Report Download - page 29

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CONSOLIDATED MANAGEMENT REPORT 2012
CONSOLIDATED MANAGEMENT REPORT 2012
At the same time, German businesses reacted to this trend early with more cautious warehousing. Production
should therefore increase quite rapidly as soon as demand recovers, leading to investments that have so far
been postponed.
The relatively pronounced drop in GDP in the fourth quarter of 2012 will limit (seasonally adjusted) average
growth in 2013 to the level seen in 2012. Barring a serious renewed deepening of the Eurozone crisis, the lower
level of uncertainty should be reflected in the form of increased demand and associated economic growth. In
addition, the more positive outlook for the target markets USA and China will support the German economy.
Private spending has room to grow. In the year under review, uncertainty meant that consumers did not spend
as much money as expected in view of increasing employment and pay raises.
The massive improvement in public finance over the past two years has also had a positive effect. The eased
fiscal position has opened up leeway for fiscal policy decisions aimed at quickly counteracting a new crisis with
public spending.
THE SITUATION OF THE ELECTRICAL AND ELECTRONICS INDUSTRY IN GERMANY
The German electrical and electronics industry suffered an economic setback starting in the second quarter of
2012. Although turnover recovered quickly in 2010 and 2011, earnings had yet to reach pre-crisis levels by the
end of 2011.
Capacity utilization in the electrical and electronics industry reached a low of around 70% in mid-2009. Just two
years later, it had climbed to a cyclical high of 86.3%. This figure has since fallen from its peak to 81.1% in early
2013. As a result, capacity utilization was not only well under the record value of 88% (2008), but also slightly
below the long-term average of 83%.
In light of the temporary escalation of the government debt crisis in the Eurozone, it is remarkable that sales
outside Germany held up better than domestic sales in the year under review. The chances of demand within
the Eurozone stabilizing over the course of 2013 have even increased due to a partial easing of the crisis situation
at the end of 2012 on account of measures by the European Central Bank and Europe’s national governments.
The economies of the USA and Asia’s emerging markets have also recently picked up steam. In comparison, the
euro’s moderate recovery since August 2012 has had only a slight cushioning effect. Although the dollar
exchange rate in early 2013 was slightly over $1.30 to the euro, it is important to keep in mind that the electrical
and electronics industry was dealing with an exchange rate of $1.45 to the euro 18 months earlier. The exchange
rate even climbed up to $1.60 in the boom year 2008.
All told, we expect to see a tendency towards recovery in the electrical and electronics industry in 2013. The
lower level of uncertainty over the impact of the Eurozone debt crisis and increasing global economic momentum
make us cautiously optimistic. Still, incoming orders have been by no means brisk in recent times, even taking
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2012. Unemployment reached record levels in Spain, Italy and Greece. Even Great Britain and Germany reported
slower growth, although the dip in performance in these countries was far less severe.
The crisis in the Eurozone is far from over. However, a temporary easing is apparent. The reason for this is the
above-mentioned decisions made by the ECB and Europe’s national governments in the second half of 2012,
which included the pronounced expansion of the money supply.
This easing of the situation in Europe comes at the same time as two additional favorable developments: the
global momentum already described and a slight downward inflationary trend, which should allow the ECB to
continue expanding the money supply well into 2014. As a result, uncertainty continues to wane for investors
and consumers. The chances are good that this trend will result in increased demand and an associated gradual
economic recovery in Europe.
Overall, we expect the economy in the Eurozone to shrink slightly on average in 2013. However, this is due to
the decline in gross domestic product (GDP) that began in the course of 2012, particularly in the second half of
the year.
GERMANY
As in 2011, Germany’s economy significantly outperformed the European average in 2012. However, Germany
was unable to completely avoid the downward spiral that increasingly worsened over the course of the year.
This negative trend resulted from a weakening of global economic momentum lasting until mid-2012 and the
renewed exacerbation of the European government debt crisis.
Despite the general impression, exports – not the domestic economy – were once again the greatest driver of
growth. Germany remains very competitive on the international stage. As a result, resilient growth in exports
to non-European countries was able to compensate for lower demand in many parts of Europe.
Although industrial production had been mired in a downturn since August 2012, exports did not post a clear
decline until the fourth quarter. In contrast, consumer confidence held unusually steady at an above-average
level over the course of the year, likely fueled by a resilient job market and solid wage growth. While unemploy-
ment figures started to creep up slightly in April 2012 after three years of declines, the number of people
employed continued to rise.
German industry’s capacity utilization was slightly below the long-term average at the end of the year under
review, even though industry had recorded a cyclical high in mid-2011. This development defied the concurrent
slowdown in investments and proves the extent to which demand has fallen since mid-2011.
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