According to studies by Oxford Economics, the global economy will continue to recover, although the emerging economies will fare better than mature markets. A key component of our strategy is therefore to build our sales activities in emerging markets, particularly in Asia. We invest continually in these markets. In the reporting period, we opened a new plant in Chakan, India. Historically, the crane/hoists sector is a late-bias industry, i.e. it experiences a significantly delayed reaction to macroeconomic changes. Nonetheless, we consider this market segment to have clear opportunities for growth due to advancing industrialisation in emerging markets and also believe that demand for high-quality products will rise. There is considerable potential here for Industrial Cranes if we extend the product range into the middle price bracket. Due to the shift in our customers’ investment behaviour as a result of the economic and financial crisis, we see additional growth potential in the middle price bracket in mature markets. We will expand our product portfolio accordingly and adjust it to meet changed customer requirements. This enables locally based development teams in decentralised competence centres to offer products precisely matched to market needs. In India, for instance, we unveiled our first locally produced Process Crane in the past financial year.

Under the given conditions, market development in the Port Technology segment for financial year 2010/2011 is heavily dependent on the performance and market opportunities of customers. The key will be for container traffic transport volumes to increase once again, resulting in positive development of the corresponding demand for port and handling technologies. However, it must still be assumed that there will be a delay between the current recovery in global trade and an increase in investments in this segment. This is because utilisation of existing facilities is still too low and there is an expectation that customers will wait for sustained growth before selectively investing resources. In port technology especially, the crisis caused a serious financial impact not only on suppliers like Demag Cranes, but also on customers. We can therefore expect to see continued restraint when it comes to capital expenditure. The innovative products that continually allow Demag Cranes to showcase its focus on the future also provide additional opportunities in the Port Technology segment. A prime example of a groundbreaking and environmentally friendly product is the battery-powered Automated Guided Vehicle (AGV). In this context, it should be noted that Gottwald Port Technology GmbH (Gottwald), a subsidiary of Demag Cranes AG, along with REFU Elektronik GmbH and the Institute of Automotive Engineering (ika) of RWTH Aachen University, are participating in a consortium to research alternative drive systems for the heavy-load segment. As at 1 July 2010, the consortium has received confirmation of funding from the German Federal Ministry of Education and Research (BMBF) for a joint project to improve energy efficiency in heavy-load vehicles. The overall objective of the project is to research a system solution for energy-efficient drive trains in heavy-load industrial vehicles. In addition, Demag Cranes Group subsidiary Gottwald Port Technology GmbH, together with HHLA Container-Terminal Altenwerder GmbH (CTA), the Institute of Automotive Engineering (ika) of RWTH Aachen University and Institut für Energie- und Umweltforschung Heidelberg GmbH (ifeu), is involved in a consortium researching a battery-powered drive train for container transport vehicles.

In both the Industrial Cranes and Port Technology segments, there is additional growth potential in expanding systems integration, i.e. generating added value for our customers by providing logistics services above and beyond the scope of the products we supply. We see Demag Cranes as a market and innovation leader in this regard: for many customers, we are the first point of contact when they need a skilled partner for this type of solution. In the future, we plan to continue to significantly grow this aspect of our business.

It also remains difficult to forecast market development for financial year 2010/2011 in the Services segment, but the success of the segment during the crisis must be viewed as an excellent starting point for the future of the Group. The trend towards outsourcing and switching to professional maintenance services persists, and we therefore assume that the Services segment will continue to perform well following the crisis. The renewed increase in capacity utilisation in industry additionally had a positive effect on our outlook, although uncertainty still generally prevails concerning whether current capacity levels can be maintained or whether the improved business situation in recent months was just a catch-up effect. In general, we also see a stronger growth trend in the Services segment in emerging markets. Thanks to our existing installed base, mature markets are also a source of further growth opportunities.

In addition to stepped-up coverage of our installed base, we have identified additional growth potential for the Services segment for which we have adjusted our strategic focus. By assuming more functional accountability and offering a broad selection of services, we enable our customers to focus on their own core business and gain maximum benefits from their crane systems in all processes. In addition to greater coverage of our own installed base, this includes providing services for cranes and hoists by third-party suppliers and augmenting our service portfolio to include services for crane-related products, such as load handling attachments. Emerging markets also offer enormous potential for the future in this regard.