Dependence on customers
Hartmann’s sales are distributed on a relatively limited number of major customers and a large number of small customers. Contracts with customers are typically signed for periods of 12 months. The customer portfolio is assessed to be developing towards fewer and larger customers and Hartmann is therefore expected to become more dependent on this group of customers in future.
Demand for eggs
Hartmann’s core business consists of sales of egg packaging, and the group is therefore dependent on the demand for eggs. The consumption of eggs is sensitive to many factors beyond Hartmann’s control,including health perceptions among consumers, fear of potential health risks posed by diseases in laying hens, etc. However, the recent economic downturn has confirmed that the consumption of eggs, and hence the demand for Hartmann’s products, has been resilient to the slowdown in economic growth.
Dependence on suppliers
Hartmann contracts with a number of suppliers of recycled paper, energy and other raw materials used in production. If contracts with one or more of these suppliers are terminated or breached, or the suppliers fail to meet their contractual obligations for other reasons, it may mean that Hartmann cannot obtain delivery of the necessary raw materials or that it may be compelled to make purchases from alternative suppliers and not necessarily on the same terms.
Hartmann has contracted with several different suppliers of recycled paper, energy and other raw materials, and distributing its production across several different locations in Europe also helps ensure flexibility in relation to suppliers.
Fluctuations in the prices of raw materials
Hartmann is dependent on the purchase prices of the raw materials used in its production. Hartmann is particularly exposed to fluctuations in the purchase price of recycled paper and energy (electricity and gas), which are the most important raw materials used in production. There is limited scope for reducing Hartmann’s sensitivity to developments in the price of recycled paper if deliveries of required volumes are to be secured and maintained. Hartmann uses other types of paper in production and to some extent substitutes some types of paper for other types if prices are more favourable. Seen in isolation, a price increase of 5% on all types of paper used in Hartmann’s production will adversely affect operating profit by approximately DKK 7 million.
Hartmann regularly signs fixed-price agreements with energy suppliers, typically for periods of 6 or 12 months, covering a substantial part of the group’s energy consumption. However, some of the countries in which Hartmann operates do not permit fixed-price agreements with energy suppliers. Seen in isolation, a general price increase of 5% on Hartmann’s purchases of energy will adversely affect operating profit by approximately DKK 8 million.
Hartmann is committed to reducing its sensitivity to fluctuations in the prices of raw materials through continual implementation of technological improvements and optimisation of work processes.