Company Report

Ladies and Gentlemen,
Friends of our Company,

You may recall that in our last annual report on 2009, when I was looking ahead to 2010, I said that I remained cautious about the prospects of the HOYER Group's business performance over the next 12 months. There was in fact good reason for taking this view, especially as the issue of global debt and the associated volatility of the financial markets remained unresolved. I cannot say this often enough: this unresolved debt crisis is the most serious risk we face. Even several years of weak growth in the US, Japan and Europe would be easier to deal with than the national bankruptcy of major countries. Fortunately, the economy is now recovering, quickly and robustly. Thanks in no small part to the Asian economies, Germany in particular has enjoyed astonishing economic growth.

In a manner appropriate for a dynamic family enterprise, we were already planning for the »post-crisis« period in 2009. And we still need to constantly review the strategic direction of the company in order to prepare it for a business environment that values rapid, flexible action more than ever before. The actions we took were helped by a strong economy and a good capacity utilisation rate. Thanks to our business unit-based business model, our tight cost management, our cautious investment spending and our confidence to act in an entrepreneurial fashion, we were able to further improve all balance sheet ratios of the HOYER Group in 2010.

In a recovering climate - for us and for large sections of our customer base - we were able to increase our turnover in the 2010 financial year to EUR 990 million, 16 percent higher than the previous year. In view of the severity of the crisis, this was better than we had hoped for. Even more gratifying is the fact that this more than compensates for the 14 percent fall in turnover we experienced in 2009 compared with the previous year. With a return on turnover of 3.1 percent (before taxes and excluding special items), the performance of the HOYER Group was most satisfactory and above the industry average. The high pressure on margins in the chemicals sector is responsible for our profit margin failing to increase in line with our turnover.

The decision to pay down our debts and strengthen our cash flow rather than making investments has also proven itself. In the 2010 financial year, the HOYER Group made a few targeted acquisitions in order to create additional strategic options in its network, which currently extends to 80 countries. Our guiding principle here has always been to do our very best to satisfy the global needs of our customers whilst at the same time keeping our family business on a sound footing. In this context, the management decision to combine the CHEMILOG and GLOBAL TRANSPORT business units is worthy of special mention. This step, which was initiated in 2010 and will be concluded in 2011, is generating considerable additional synergies from, for example, the merger of organisational units and the pooling of purchasing capacities.

Unfortunately, the start of 2011 was marked by a great deal of political turbulence. The main causes of concern, which should not really have surprised us, are the crises in North Africa and the Middle East. Events in Japan have, amazingly, had very little impact on our business. Commodity market trends, especially the price of oil, will continue to affect us, whilst the growing problems in the euro area (»transfer union«) and the accompanying loss of confidence are cause for great concern. In view of the fact that the first quarter of 2011 was the best in our company's history, there is still some room for optimism.

We believe that entrepreneurs have always relied on the dynamic nature of the markets, on a willingness to embrace change and a passion to excel at the tasks entrusted to them. I consider the »HOYER Code of Conduct«, which was conceived and introduced during the past financial year as an ethical guide for all employees, to be an important part of that belief. We must, and indeed will, pay more attention to the needs of our employees, whom I would like to sincerely thank at this juncture for their excellent work during the past year. A family-owned enterprise can only serve the interests of the customer and the family when its employees appreciate the company's strategy, recognise their own ideals and aspirations within the company, enjoy the work and, of course, are paid properly and in line with market rates.

Along with a respect for tradition and a genuine responsibility for all stakeholders in the company and in our environment, we subscribe to the model that very much defines the way medium-sized, family-owned enterprises do business in Germany and that has made them so successful until today. We will hold firm to these values in the future, and trust that you will remain with us as we continue on our journey.