Macroeconomic environment uncertain and situation in stainless steel market segment remains difficult
The International Monetary Fund (IMF) expects gross domestic product to grow globally by 3.4 per cent in 2016, which would thus be just above the 2015 level of 3.1 per cent. Economic development in the key markets of Haniel’s divisions is expected to remain stable: For instance, growth in the US is expected to remain stable at 2.6 per cent in 2016 (previous year: 2.5 per cent) and the US is expected to remain a key driver of global growth. In addition, following euro zone growth of 1.5 per cent in 2015, the IMF is forecasting growth of 1.7 per cent for 2016. Germany in particular will contribute to this trend, with 1.7 per cent growth. With respect to developing and emerging economies, the IMF is forecasting 6.3 per cent growth in China in 2016 (previous year: 6.9 per cent). As a result, not only will additional positive momentum for the global economy be lost, but also this slowdown in China and other developing and emerging economies will increasingly erode expectations of market participants: For instance, the Organisation for Economic Cooperation and Development (OECD) has already revised its forecast downwards and expects certain industrialised countries – particularly the US – to experience slightly lower growth rates instead of a stable trend.
Aside from the general economic situation, the development of the stainless steel market segment is of crucial significance to ELG. Global stainless steel production is particularly dependent on the general economic trend and on Chinese demand for stainless steel products – both remain uncertain. It is assumed that global stainless steel production will trend sideways. In Europe, stainless steel production is even expected to decrease slightly. The price of nickel, the key raw material in the stainless steel business, fell dramatically in 2015. Prices are currently not expected to recover any time soon.
In an economic environment which is forecasted to remain stable overall yet uncertain, Haniel’s Management Board believes that there are imponderabilities for 2016 arising not only from the difficult market environment for stainless steel: In addition, several political and economic developments have the potential to contribute to a significant worsening of the economic trend around the world. These include above all conflicts in the Arabic and African regions, the stability of the European Union, the development of the financial markets and commodity prices – particularly the price of oil – and a sharper economic decline in China.
Since the various divisions are active internationally, the results of the Haniel Group also depend on the development of various exchange rates, particularly the US dollar, the British pound and the Swiss franc. In addition, the investment result from Metro is impacted significantly by the development of the Russian rouble.
Deviations from the assumed economic development and the future exchange rates compared to the planning assumptions may significantly change the forecasts for revenue and profit.