INVERTO GmbH
INVERTO GmbH: European Businesses Caught Off Guard by Rapid Price Rises and Supply Shortages of Raw Materials
DGAP-News: INVERTO GmbH
/ Key word(s): Study/Study results
European Businesses Caught Off Guard by Rapid Price Rises and Supply Shortages of Raw Materials – Nine out of ten companies (89 percent) are reporting limited availability of raw materials – 92 percent expect falling margins and profits as a result of rising costs, despite countermeasures – 43 percent of businesses expect strong price increases in raw materials, compared to just 1 percent last year (2020) – The price rises are most acute for: aluminium (48 percent), plastics (48 percent), ferrous metals and steel (48 percent) and wood, paper and cellulose (40 percent) – Customers and consumers will feel the brunt of these price hikes, with 75 percent of respondents passing on increased costs – compared to just 26 percent in 2020 Now in its 12th iteration, INVERTO’s 2021 Raw Material Study underlines the significant burden which rising prices and limited supply are having on European businesses. Nine out of ten companies (89 percent) that participated in the study note limited availability of raw materials. The surge in prices are most acute for: aluminium (48 percent), plastics (48 percent), ferrous metals and steel (48 percent) and wood, paper and cellulose (40 percent). Thibault Lecat, Managing Director of INVERTO UK, comments: “Volatility within this market has increased dramatically as a result of the pandemic and the pace of change is startling. Just months ago 17 percent saw limited availability in aluminium, but today, we’re in danger of running out, as production of magnesium, which is indispensable for aluminium, has been largely shut down in China and is restarting slowly. “Similarly, businesses were caught off guard by the recent spike in energy prices, with only around a quarter expecting electricity or gas and oil price rises. Now, as we enter winter, the surge in energy prices is causing crisis talks with European political leaders, gas storage facilities are running empty and in some areas there are even fears of cold homes and blackouts.”
Major changes in price agreements with suppliers On the supplier side, however, companies cannot avoid the increased costs: compared to previous years’ studies, fixed price models have decreased, or suppliers only accept short time periods in which they guarantee fixed prices. On the other hand, there has been an increase in price models in which sliding clauses or surcharges have been defined for the raw material share. More than 40 percent of the respondents are also forced to pay spot prices for at least some of the materials they need. Implementing an index-based escalator clause has also allowed some companies to automatically benefit when costs fall, while suppliers receive a fair price for their share of value creation. In addition, the model offers an argumentation aid to pass on increased costs to one’s own customers. The importance of risk management
Methodology
About INVERTO A subsidiary of the Boston Consulting Group (BCG) since 2017, INVERTO supports companies in developing strategies, increasing efficiency and digitising procurement, helping clients to remain competitive. Clients range from international corporations to leading medium-sized companies from industry and commerce, as well as the world’s leading private equity firms. INVERTO’s international footprint spans nine locations in eight countries across Europe and Asia. INVERTO UK was founded in 2008, employs more than 20 specialist consultants and is headed up by Managing Director, Thibault Lecat. The business is based in central London and has a strong track record in retail, FMCG, media and telecoms. For more information, please visit www.inverto.com
08.12.2021 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG. |