Company Report

Ladies and Gentlemen, Friends of our Company,

In 2008, the HOYER Group succeeded in continuing the positive development of the previous years and is again able to report another very respectable business performance. Given the recent dramatic downturn in the world economy, which has since had a noticeable effect on our company, this was by no means a foregone conclusion. Skepticism regarding the future development of business is spreading in parts of our key industries - especially in our principle market, the chemical industry. In the petrochemical, polymer and fine and specialty chemicals sectors in particular, stagnation or even a further decrease in turnover is anticipated.

If these forecasts are correct, the HOYER Group must acknowledge the possibility of a decline in its own turnover. Industry as a whole does not believe that the German government’s economic stimulus packages will have much success in cushioning the effects of the downturn. Even the Federal Ministry of Transport now expects freight volumes to decrease - for the first time since 1990. We must therefore be prepared to brace ourselves for a crisis!

Well prepared to deal with difficult times

When I look at our current situation, I see a company which is in a strong position thanks to the economic boom of the past few years. In 2008, the Group increased its turnover by 5.5 % to reach an all-time high of EUR 987 million. Despite the reduced turnover in the latter part of the year caused by the recession, we still exceeded the previous year’s already high profitability with an EBIT margin of 4.2 %. We used this improved result to strengthen our capital base, and the high cash flow once again enhanced our healthy balance sheet structures.

The strategic decisions that we have made in the past years have turned out to be the right ones. The fact that our business comprises six business units, providing different combinations of transport and broad-based logistics services to different business sectors as well as to different regional and international markets, considerably reduces our exposure to risk. This structure lends itself to synergies that benefit both our customers and the HOYER Group. For example, we have streamlined and standardised our organisational structure. We have disposed of our shareholding in the railway company rail4chem, which was not compatible with the rest of our portfolio.

Market consolidation expected in the logistics sector

2009 will be a landmark year for our sector in a number of respects. Competition will intensify considerably. EU regulations are driving up costs - drivers now require additional qualifications, for example - and tolls for commercial vehicles also continue to rise. On top of this, there will be increased competition in road transport as a result of the EU-wide licensing of transport companies. A wave of insolvencies, mostly effecting smaller companies with a weak equity base, is expected.

However, for companies who like HOYER are firmly rooted in the market and have anticipated the forthcoming lean period these upheavals also offer plenty of opportunities. We believe there will be opportunities to make strategic acquisitions during the coming year, which we will exploit when the businesses concerned complement our existing business unit structure.

One such opportunity arose in January 2009, when HOYER acquired the Irish tank container company SCL Transport Ltd., a move that strengthened the capacity utilisation between Ireland and England of the business unit CHEMILOG. It is quite possible that FOODLOG will also benefit from acquisitions that will open up new market prospects in the food and sugar sector.

Even though the HOYER Group will have to accept and come to terms with some reduction in transport volumes in the short term - depending on the region and sector - I firmly believe that the company will ultimately emerge from the crisis stronger than before. Supporting this view are our freedom from stock market influence, our diversification, and our wide range of products, which includes more complex, full-service offerings in addition to our freight services. When companies need to reduce costs and focus more closely on their core business, our Supply Chain Solutions division can manage parts of the customer’s production chain at attractive terms. Its highly qualified staff and its competitive cost structures are what make the CHEMILOG service offering so outstanding. In recognition of this, HOYER intends to steadily transfer its skills in these fields to other business areas.

"Company before family" - a strategic vision for the future

In view of the increasingly difficult market environment, the HOYER Group needs a reliable and experienced hand at the helm - particularly in the finance sector. In Gerd Peters, who has 22 years of experience in controlling and financial management, the company has found a capable successor to our previous CFO, Dr. Michael Lukarsch.

We are also aware of the need to hand over to the next generation, and we are pleased to note that the third HOYER generation is enthusiastic about the transport and logistics business. This was in fact one of the main items on the agenda at the last family day, which was held in Rotterdam, where there was a clear understanding of how the prosperity of the company forms the basis for the prosperity of everyone - the employees and the family. "Company before family" - this message underlines an important aspect of HOYER’s corporate culture.

I look forward to continuing this journey with you all along our chosen path.

With kind regards from Hamburg,

Thomas Hoyer