LAS TIC Y LAS PRÁCTICAS DE EVALUACIÓN

Important raw materials for manufacturing our prod- ucts for the automotive industry include metals such as steel, aluminum and copper, the prices of which generally influence our costs indirectly via purchases from our suppliers. Depending on the contractual arrangement with the supplier concerned, a change in price usually affects us only after a time lag of several weeks or months. We cannot avoid lasting changes in raw material prices, and we pass these on to our customers by means of corresponding price adjust- ments, depending on the customer contracts con- cluded.

After significant price increases in almost all metals in the previous year and the associated price adjust- ments in our input products, the cost pressure for the Automotive Group decreased somewhat over the course of fiscal 2012. Although the market prices of many metals rose significantly in the first quarter of 2012, they then fell considerably as the year pro- gressed due to increasing uncertainty regarding the global economic development and mostly consol- idated at lower than the average prices for the previ-

price hikes by steel producers in the first quarter of 2012. As the year progressed, steel prices for flat and long products decreased again due to a decline in demand and closed the year only around 3% higher than the closing prices for 2011. If average prices are considered, this gives a rather different picture: The price of flat steel, for example, averaged around €600 per tonne in 2012 and was thus 9% lower than in 2011, whereas the stainless steel price remained above €1,100 per tonne (only 2% lower than its price in the previous year despite a decline of roughly 17% in the nickel price).

Aluminum, which is used primarily to manufacture die casting parts but also for stamped and bent compo- nents, recorded a similar price trend to steel in 2012. After rising 16% to $2,353 per tonne, the market price fell back to $2,073 per tonne by the end of the year, 3% higher than the previous year’s figure. In contrast, the average aluminum price for the year was down 15% year-on-year in U.S. dollars but only 8% in euros. Copper, which is mainly used in electric motors and for mechatronic components, began 2012 with a 15% price increase to €8,740 per tonne, but then declined significantly and by mid-year had returned to its level at the beginning of the year. In the second half of the

Following significant price increases in the previous year, the average prices for silver and palladium per troy ounce each decreased by 12% on a U.S. dollar basis in 2012, whereas the gold price went up another 6%. On a euro basis, the price decreases for silver and palladium came to only 4% and 5% respectively and there was a 15% increase for gold. All in all, the devel- opment of precious metal prices in fiscal 2012 once again led to a slight increase in costs for the Automo- tive Group.

The Automotive Group was heavily impacted in 2012 by the prices for the rare earths dysprosium and neo- dymium, which are required by our suppliers primarily for permanent magnets in electric motors. Here, we continued to feel the effects of the previous year’s extreme price increases, leading to slightly higher expenses for the Automotive Group in fiscal 2012 as compared to 2011. The average dysprosium price for

the year fell by 24% in 2012 as against 2011 to €773 per kilogram but was still 400% higher than in 2010. The average price for neodymium decreased by 35% to €80 per kilogram in 2012 and was thus still 190% above its 2010 level.

The production of tires and industrial rubber products primarily requires natural rubber and synthetic rubber. It also uses relatively large quantities of carbon black from crude oil as the main filler material and of steel cord and nylon cord as the main structural materials. The different types of natural rubber we require are purchased primarily in Thailand, Malaysia and Indone- sia, which together account for roughly 80% of annual global natural rubber production. All rubber-producing countries now manufacture natural rubber as techni- cally specified rubber (TSR) in line with the standards published by the International Organization for Price developments (indexed to January 1, 2008)

Standardization (ISO). Various different types of natural rubber are traded on the commodity exchanges in Singapore and Tokyo. The price trends tend to be similar but are very volatile.

The price of TSR 20 natural rubber rose by 25% at the beginning of 2012, but was back at the level of the 2011 closing price by the end of the year. After more than doubling in the previous years, the average price for the year for TSR 20 decreased by 24% to €2.69 per kilogram.

Prices for ribbed smoked sheets (RSS) developed very similarly. In 2012, the price for RSS 3 initially increased by 16% but ended the year down roughly 10% on the previous year’s closing price. The average price for the year, which had doubled in the previous years, also fell by 24% to €2.53 per kilogram.

After natural rubber as a raw material used directly, crude oil is the most important basic building block of many production materials such as synthetic rubber, carbon black and various chemicals. Sometimes multi- stage production processes are performed by primary suppliers to make the crude oil into the materials pur- chased by Continental. The crude oil price also in- creased substantially to begin with in 2012, but then fell sharply by the middle of the year. This was fol- lowed by a rapid recovery and subsequent consolida- tion. On December 31, 2012, Brent oil, sourced in the

North Sea, cost $113 per barrel and was therefore up 4% on the end of 2011. The average price level for 2012 of $113 per barrel was only 1% higher than the 2011 average, but was up 10% year-on-year in euros at €88 per barrel. Compared to the average price of $80 per barrel in the period from 2008 to 2010, this represents a 40% increase on a U.S. dollar basis and a 54% increase on a euro basis.

The price trend for butadiene, the main input material for synthetic rubber, was as volatile in fiscal 2012 as in the previous year but moved in the opposite direction: Following a sharp increase of 33% up until mid-April 2012, reaching a peak of $1.63 per pound, the price then dropped by more than half to end the year down 43% at $0.70 per pound. In terms of average prices, there was a decline of 19% to $1.07 per pound in 2012. Compared to 2010, however, this still corre- sponds to a 49% increase.

In contrast, the price of styrene – another input mate- rial for synthetic rubber – continued to rise in the year under review, increasing by 22% as against 2011 in terms of year-end prices and by 4.5% in terms of average prices.

Overall, the lower prices for natural and synthetic rubber in particular resulted in an encouraging im- provement in the operating margins of our Rubber Group in 2012.

Earnings, Financial and Net Assets Position