CONSOLIDATED FINANCIAL STATEMENTS >
DIRECTORS’ REPORT
100
| 2013 ANNUAL REPORT | PRYSMIAN GROUP
SOURCING
The main raw materials used by the Group in its production
processes are copper, aluminium, lead, special glass and coating
for optical fibres, as well as various petroleum derivatives, such
as PVC and polyethylene.
Market volumes were slightly lower in 2013, reflecting a still
weak global economic environment especially in Europe and
causing a generally declining trend in the average price of the
principal commodities compared with the previous year. In
the case of base metals, copper and aluminium prices were
noticeably lower than the year before, down by as much as 8%
in USD prices, reflecting a gradual slowdown by the emerging
economies and consequent emergence of fears about possible
reductions in future demand by these countries. Lead went
against this trend, posting a slight increase in price on the
previous year. The average price of Brent crude declined, albeit
marginally. Among the various petroleum derivatives, the price
of polyethylene was generally stable compared with the previous
year, with limited fluctuations over the 12-month period. PVC
and plasticisers displayed stable or slightly declining price trends
due to continued weakness in overall demand.
Once again in 2013, the Prysmian Group was able to deal with
fluctuations in base metals through strict application of its
hedging policies and daily ma tching between purchase and
sales commitments. Sales price adjustment mechanisms,
combined with careful hedging, helped mitigate the impact of
price fluctuations on the income statement. As for other raw
materials, work continued to rationalise and consolidate the
supplier base. The Group’s increased size and consequently
greater bargaining power with suppliers have allowed it to
successfully achieve synergies of scale.
The strengthening of commercial relationships with key
suppliers over the year allowed the Group to minimise costs
and the risk of disruption in supplies, ensuring both short and
long-term benefits for the Group. In addition, the process of
transforming organisation of the Procurement function was
completed during the first half of the year; it now adopts a
global approach through a single organisational model, common
processes and commodity management policy aimed at
maximising the benefits of the Group’s size and geographical
scale, in complete fulfilment of local needs.
AN INTEGRATED SUPPLY CHAIN
Prysmian Group continually strengthens its relationships with strategic suppliers, through
centralised procurement and adoption of a global approach involving just one organisational
model, common processes and a single commodity management policy.
