Siemens 2011 Annual Report Download - page 178

6 A. To our shareholders
23 B. Corporate Governance 51 C. Combined management’s discussion and analysis
52 C. Business and operating environment
80 C.2 Fiscal  – Financial summary
83 C. Results of operations
101 C. Financial position
114 C. Net assets position
117 C. Overall assessment of the economic position
118 C. Report on post-balance sheet date events
119 C. Report on expected developments and
associated material opportunities and risks
135 C. Information required pursuant to Section  ()
and Section  () of the German Commercial
Code (HGB) and explanatory report

Monthly average prices of aluminum did not show a net in-
crease during the past fiscal year, maintaining the nearly %
rise of fiscal . Aluminum prices have been supported
mainly by high energy costs as well as fundamental demand.
As with copper, we see developments in the aluminum mar-
ket as posing a price risk, rather than a supply risk.
Steel prices showed a more fragmented picture in fiscal .
Prices for hot rolled coil (HRC) sheet products were under
pressure, while prices for plate and long products were more
firm. HRC sheet prices came down slightly after an increase of
approximately % in fiscal , pressured by a significant in-
crease in crude steel production in China, but supported by el-
evated raw material costs (source: CRU, an independent busi-
ness analysis and consultancy group focused on, among oth-
er things, the mining and metals sectors).
In addition to the above mentioned raw materials, we have a
considerable exposure related to rare earth metals. Prices for
some rare earth materials surged during the fiscal year as
overall demand increased while supply remained restricted.
This situation poses a significant price risk as well as supply
risk for technology manufacturers, including Siemens.
Our main exposure to the prices of copper and related prod-
ucts, and to steel and stainless steel, is in the Sectors Industry
and Energy. Our main price exposure related to aluminum is
in the Industry Sector. In addition Siemens is generally ex-
posed to energy prices, both directly (electricity, gas, oil) and
indirectly (energy used in the manufacturing processes of
suppliers). Some of our continuing operations face price and
supply risks related to rare earth metals, particularly the In-
dustry Sector’s Drive Technologies Division and the Energy
Sector’s Renewable Energy Division.
Siemens employs various strategies with a view to reducing
the price risk in its project and product businesses, such as
long-term contracting with suppliers, physical and financial
hedging and price escalation clauses with customers.
Development of raw material prices (Index: Beginning of fiscal  = )
FY  FY  FY  FY  FY 







Copper Aluminum (HG) Steel HRC
Source: London Metal Exchange (LME) for copper and aluminum, CRU HRC Germany for steel; cash prices in € per ton.
Exchange rate development of the US$ per  (Index: Beginning of fiscal  = )
FY  FY  FY  FY  FY 








Source: Bloomberg