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Procurement

We will continue optimizing our procurement management in 2013: prices, terms, and especially quality are key factors for securing further earnings growth.

Based on recent developments in the financial and the real markets, we assume that price fluctuations will continue despite tension easing in the commodities markets in the short and medium term. Fresenius Medical Care will concentrate on networking more closely with strategic partners, and increase the diversification of the supplier portfolio. In 2013, the automated replenishment control described here will be introduced into additional countries in Europe.

Changes in commodity prices for relevant raw materials of Fresenius Kabi in 2013 will be particularly dependent on the global economy and the debt crises in Europe and the United States. If demand does not normalize, we again expect commodity prices to be volatile at a high or very high level.

At times when general economic conditions are challenging, rapid and reliable market information is essential for efficient procurement and sourcing processes. This gives us an advantage, allowing us to market optimally and find the potential for further savings. The “Sourcing Information System” Project initiated in the second half of 2012 will link sourcing data from around the world, process it, and provide both global and local procurement functions with important information for successful purchasing transactions. As the system develops, it will tie in existing information segments, e. g. the supplier assessment described in the Management Report. The year 2013 will also see an expansion of our Risk Management system. These steps will complement our global information management system for all procurement processes.

Fresenius Kabi’s Strategic Sourcing is responsible for sourcing energy throughout Europe, and its duties include, e. g. following daily price movements on local stock exchanges.

The debt crisis in Europe and ongoing unrest in the crisis regions will continue to lead to uncertainty on stock exchanges and so presumably to price fluctuations. The aim is to find the best possible time to source materials, but to give priority to reliable planning. The premium for renewable energies will increase in 2013 by another 47%, pushing our energy costs up further.

The HELIOS Group Purchasing Department will complete integration of the Damp Group hospitals into the central procurement systems and the HELIOS purchasing concept in the first quarter of 2013. The newly acquired HELIOS hospital Wipperfürth, North Rhine-Westphalia, will benefit from structures, standards, and terms, following the close of the transaction.

In 2013, we will focus on comprehensively analyzing more product groups, such as our operating technology, and assessing the potential for savings there.

Changes in food prices will not have a significant impact on the cost structure of the HELIOS hospitals, as their share in the overall procurement volume, and therefore in total costs, is insignificant.

We had already contracted our electricity for 2013 in October 2010. As a consequence, the highly volatile price movements on the European Energy Exchange EEX did not affect us. In addition, we aim to disengage ourselves from these market price movements by possibly switching our heating suppliers. HELIOS plans to switch all hospitals to partially renewable energy-based heat generation over the long term. 12 hospitals already produce energy from a biomass boiler (wood pellets). Further hospitals will follow in 2013.

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