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Global Sector Outlook

Economic Outlookno.1204 February 2014

www.eulerhermes.us

All things cometo those who waitGreen shoots for one out of four sectors

Economic Research

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Economic Outlook no. 1204 | February 2014 | Global Sector Outlook Euler Hermes

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economic Researcheuler hermes Group

economic Outlookno.1204 Global sector outlook

Contents

the economic outlook is a monthly publi-cation released by the Economic Research Department of Euler Hermes. This publication is for the clients of Euler Hermes and available on subscription for other businesses and or-ganizations. Reproduction is authorized, so long as mention of source is made. Contact the Economic Research Department publication director and chief economist: Ludovic Subran macroeconomic Research and country Risk: Andrew Atkinson, Ana Boata, Mahamoud Islam, Dan North, Daniela Ordonez, Manfred Stamer (Country Economists), Nicolas Bargas, Rémy Carasse and Clémentine Cazalets (Re-search Assistants) sector and insolvency Research: Maxime Lemerle (Head), Bruno Goutard, Yann Lacroix, Marc Livinec, Didier Moizo (Sector Advisors) editor: Martine Benhadj Graphic design: Claire Mabille support: Lætitia Giordanella For further information, contact the Eco-nomic Research Department of Euler Hermes at 1, place des Saisons 92048 Paris La Défense Cedex – Tel.: +33 (0) 1 84 11 50 46 – e-mail: [email protected] > Euler Hermes is a limited company with a Directoire and Supervisory Board, with a capital of 14 468 072,64 EUR, RCS Paris B 388 236 853 photoengraving: Évreux Compo France –Permit February 2014; issn 1 162 – 2 881 ◾ February 21, 2014 ◾

3 editoRial

4 oveRvieW

8 sectoR Risk by countRy

10 agrifood and retailUnder contrasting auspices for 2014

12 automobileIn line with economic cycles

13 Zoom > Car componentProfitable growth

14 chemicalsUnited States: 1 - Europe: 0

15 pharmaceuticalsInnovating more despite zero growth in R&D budgets

16 constructionNew trends in 2014?

18 information and communication technologiesHow to create value without prices

19 Zoom > PaperPrices maintained through capacity adjustment

19 Zoom > TextileFocus on costs

20 economic outlook seRies

21 otheR available publications

22 subsidiaRies

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Euler Hermes Economic Outlook no. 1204 | February 2014 | Global Sector Outlook

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editoRial

Groping their way ludovic subRan

As a recovery starts to take shape, certain sectors plodsorely towards a future that is still much too uncertain.Even though sector risks seem to show an improvement in2014, certain hotspots remain, in construction, the metalindustry and retailing. The big industrial sectors in theWest and the East are transforming at a rapid rate. Thetextile, machinery and equipment, and automotive sectorsare all examples of industries that reinvent themselveswith every decade in response to crises and new modes ofconsumption. Today again, all hands are on deck to revivethose industries that remain the hallmark of a country'sknow-how. In the United States, reindustrializationcontinues and investment in industrial equipment issurging. In Europe, efforts are focused on restoringcompetitiveness and attractiveness all round. In Asia, valuechains vary with circumstances. They form and break, firstwith one ASEAN country and then another, but in theirwake they create growth and employment. In LatinAmerica and the Middle East, industrial policies aremultiplying without being clearly labeled as such, withclear effects in terms of diversification. Everywhere,financing is being reinvented to make up for scarce dollars.New business services, insurance products, innovativefinancing and management tools are becomingwidespread, and offered each day to more companies.Despite globalization, there are as many industrial

trajectories as there are countries and companies. Someseek raw materials, while others jump from innovation toinnovation as their margins stumble through the crisis.Others concentrate on staying solvent. Every sector hasgroped along like this for several quarters, awaiting theright time and the right opportunity: an acquisition orderegulation in a key market. Business plans aremultiplying also, leaving behind them the scars of adifficult year but one that helped them prepare for betterdays. Certain sectors, such as pharmaceuticals, chemicalsor agrifood, are showing that despite increasedcompetition, product innovation still produces results.Companies, therefore, must continue to strive and searchwithout wavering too much and, more importantly,without losing heart. Their hard-won resilience will withoutdoubt pay off in 2014. However, if they are not audaciousand open to change, further turbulence and more knockbacks cold be in store.

4

Sector risk in the world in 2014Evaluation at the end of 2013, countries weighted according to

their share in global GDP

Source: Euler Hermes


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oveRvieW

All things come to those whowait

The global economic recovery expected in 2014-2015 is goodnews. Too modest and heterogeneous, it remains however anecessary but not sufficient condition to benefit fully a majority ofsectors the world over.

The balance of change in oursector risk assessments hasreversed since mid-2013 infavor of more upgrades in riskratings (78 in total in 2013)than downgrades (67).However, this turnaroundmasks contrasting trends:positive in Asia-Pacific andAfrica and the Middle East,stable in North America, butstill negative in the otherregions - especially in Europe.For the vast majority of sectorsshort-term risks have juststabilized (nearly nine casesout of ten).

All in all, 2014 began with a still large number of sectors either showing signs of weakness (49%) or in a state of structural weakness or recognized crisis (25%), as this is the case in the construction and textile sectors. By contrast, the three sectors that present the best risk profile on a global level remain the chemicals industry, pharmaceuticals and the agrifood industry.

maXime lemeRle

25 %of sectors with sound fundamentals in the short-term in all countries monitored

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asia-pacific Resilient to the global cycle in 2013, the re-gion's challenges in 2014-2015 are amongthe largest with, for some sectors, structuralweaknesses (textile, metal and construc-tion).

Up to the end of 2013, Asia-Pacific remainedsufficiently vigorous, despite a downward gearchange, and sufficiently spared from the sourcesof instability, despite occasional disruptions inparticular via the currency or credit markets.The region continues to be fertile ground for awide range of sectors: alongside Africa and theMiddle East, it is the region of the world thatsaw the highest number of improvements in

sector risk ratings (27 out of a total of 78 for the world between end-2012 and end-2013). This improving trend was not uniform across the board. It was concentrated in four countries: the Philippines, Malaysia and Indonesia, thanks to more upbeat trends in particular in construction, IT equipment, telecoms and IT services, and Australia. In addition, almost all of this improvement was felt only in the first half of the year. Last, it was felt neither in Japan (ex-cept for chemicals), where the real structural reforms are a long time coming after the first series of stimulus measures (Abenomics), nor China, which has not been immune to the im-portant changes at work in terms of financing and its struggle against shadow banking. Alto-gether, of all the regions, and in proportion to

the number of countries that form it, Asia-Pacificis home to the most sectors displaying favorableprospects in early 2014, all of which are closelylinked to household consumption (agrifood in-dustry, retail, automobile, pharmaceuticals). Forall that, several sectors are locally in a state ofstructural weakness, as is the case with construc-tion (Japan, South Korea, Australia), textiles(China, Thailand, Taiwan), metal (China, SouthKorea) or air transport (India, Indonesia, the Phi-lippines). In addition, several challenges threatento exacerbate sector risks in the region from2014, such as China's transitioning economicmodel, the next stage of Abenomics or the mar-ket's reaction - in particular the currency andcredit markets - to the adjustment of monetarypolicies (see our Economic Outlook No. 1202-1203).

north americathe crisis seems to be well and truly in rearview for most sectors, despite a few remain-ing weaknesses (construction, textiles,transport) and uncertainties about the paceof the recovery.

In 2013, the situation recovered in two sectors that are symbolic of the recent crisis in the United States: car component makers and construction, although structural weaknesses subsist in the latter - as they do also in textile, transport and consumer electronics devices in the United States, in addition to the textile and paper sectors in Canada. For all the other major sectors, risks stabilized in 2013 thanks to the recovery in ma-nufacturing activity and the upturn in employ-ment, without any big change in competitive-ness. Most of them still show signs of short-term fragility in early 2014 (this is the case for eight out of 17 sectors in the United States and ten in Canada), while the pace of the recovery depends on fiscal and monetary considerations (spectrum of shutdown and tapering calendar). However, the US recovery, driven by consumption and in-vestment (USD 550 billion expected in manu-facturing investment over the period 2014-2015) in the wake of the country's energy revolutionand reindustrialization, could quickly offer more ▶

-10 -5 0 5 10

Computer & TelecomAeronautics

Consumer electronicsIT Services

SemiconductorsPharmacy

Machinery & EquipmentTextile

Air transportConstructionAutomobile

RetailCar component

PaperChemicals

FoodMetal

North America

Latin America

Western Europe

Central and Eastern Europe

Africa and MiddleEast

Asia-Pacific

WITH A SECTORIAL DOWNGRADE WITH A SECTORIAL UPGRADE

2013 changes in sector risks per regionChanges from Q4 2012 to Q4 2013, in number of countries for each sector


�Transport Housing

Consumerelectronics Clothing

Restaurants& hotels

Telecom

Structural downside pressures (competition, offshoring)

Cyclical downside pressures(economic cycle, input prices – raw materials, labor costs)

Food

Main factors driving prices downwards in eurozone by main kind of household expenses

Transport=purchases of vehicles/moto cars, transport services, fuel etc.; Food=food and non-alcoholic beverages; Housing= rents, repair, water supply, electricity costs; Household equipment(and furnishing); Clothing and footwear; Telecom= postal services, telephone etc.Source: Euler Hermes

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favorable prospects. In the meantime, this is al-ready the case for three sectors that present alow level of sector risk both in the United Statesand Canada: chemicals, car manufacturing andthe agrifood industry.

europe the growth recovery remains too heteroge-neous and modest for its remedial effectsto spread quickly throughout all sectors, inparticular the steel industry, retail and con-struction, when many european companiesstill face important challenges (competitive-ness, financing and competitive pressures).

Irrevocably, Europe finished 2013 in first placein terms of the number of sector risk down-grades, with 24 during the year in Western Eu-rope and 18 in Central and Eastern Europe (outof a total of 67 worldwide). Despite the begin-nings of a recovery in economic growth in se-veral countries, the situation regressed in severalsectors, particulary in Spain, Belgium and Finlandin Western Europe (and the Czech Republic, Slo-venia and Latvia elsewhere). On the whole, theserevisions were concentrated in the metal sector(eight countries concerned), plagued by severeovercapacity, followed by, and mainly in Centraland Eastern Europe, retail (six countries) andthe food industry (five countries). The globaloutlook for sectors remains seriously downbeatstill in early 2014. Indeed, the growth recoveryis gaining traction only slowly and, above all, istoo heterogeneous to eradicate the lingeringeffects of the crisis, reflecting the persistenceof challenges that many European companies

are facing: costs (labor, energy, taxes), price andnon-price competitiveness, financing and com-petitive pressures, with deflationary risks. Aboveall, the construction sector is in a situation ofcrisis in over ten countries. Unsurprisingly, thiscrisis situation can also be found in the sectormost closely linked to consumers, i.e. retail, inthe southern European countries (Greece, Por-tugal, Spain, Italy), where the situation of em-ployment and households remains tricky, butalso in the Netherlands and Ireland. Four othermajor sectors also stand out for their structuralweaknesses in many countries: in descendingorder, air transport, steel, household goods andtextiles. From a different angle, the main excep-tions to this still-fragile overall picture are foundmainly in Germany and two of its neighbors,Austria and Switzerland, as well as in Scandina-via, the Czech Republic and Russia. From a sector

viewpoint, these exceptions still concern above all the agrifood industry, chemicals and phar-maceuticals, but also, although less widespread, the automobile industry (Germany and a few Central and Eastern European countries), aeronautics (Germany and France) and information technology and telecoms, in both equipment and services, although mainly in Central and Eastern Europe.

latin americathe lack of vigor in the region's economy in2013 and renewed signs of vulnerability insome countries under the effect of resur-gent currency and funding risks, areweighing on a large number of sectors, inparticular construction.

The region stood out in 2013 for a relativelylarge number of sector risk downgrades (22over the full year for the 11 countries studied inthe region). This surge can be explained by thecombination of several factors: a more mode-rate pace of recovery than expected, includingin demand for commodities, and a marked up-turn in inflation in three significant countries(Brazil, Argentina and Venezuela), leading to asharp hike in key policy rates in Brazil - but alsoa series of rate cuts elsewhere in the region -and steep exchange-rate depreciations. In thiscontext, and in addition to IT and telecomsequipment in Brazil and Argentina, it was mainlyconstruction where the increase in difficultieswas concentrated, with seven countries concer-ned by deteriorating risk in this sector in 2013.This was the case in particular for Chile and ▶


▶

-10 0 10 20 30 40 50 60 70 80

since mid-2013

since mid-2011

AustraliaSwitzerlandSouth Korea

IndonesiaCanadaNorway

ChinaBrazil

EurozoneUnited Kingdom

MexicoSouth Africa

JapanRussia

IndiaUSD Appreciation USD Depreciation

Exchange rateChange in value of USD as of February 2012, in %

Sources: IHS Global Insight, Euler Hermes

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Mexico, but not Brazil, which is benefiting fromits preparation to host the Soccer World Cupand Olympic Games. Altogether, only two sec-tors - construction and textiles - have begun2014 in a situation of structural weakness, butmost sectors show signs of short-term weak-nesses in a large number of countries, the mainexceptions being the food industry and phar-maceuticals. 2014 therefore promises to betricky again, reliant on the global - and especiallyUS - recovery, and the capacity of the most vul-nerable countries to hold up. Note, however,that not a single downgrade in sector risk tookplace in Q4 2013.

africa and middle east

sector risk profile improved clearly in oil-exporting countries, especially in Gcc members, but it stabilized elsewhere, at levels on average much more favorable in south africa and morocco, than in countries hit by political or social turmoil.

The region can be clearly split into two groups.On the one hand, countries for which the overallpicture of sectors is rather favorable despite afew weaknesses in one or another sector: thisincludes in particular the GCC countries, wherethe benefits of the oil bonanza are clearly beingfelt by the chemicals industry and have spread

Top 3


to sectors closely linked to consumers (auto-mobile, food, retail) and to construction, al-though with the risk of giving rise to bubbles;this group also includes Morocco, despite itsstructural weaknesses in construction and tex-tiles, and South Africa, despite its difficulties intextiles. The second group unsurprisingly in-cludes all the countries where chronic politicalinstability is hampering the performances of theeconomy and business in a large number ofsectors to a greater (Libya, Egypt) or lesser ex-tent (Algeria, Tunisia). *

Norway 63.4

Switzerland 57.8

Sweden 49.8

Germany 45.8

Australia 47.7

Netherlands 39.6

France 39.8

Ireland 38.2

Italy 34.2

Japan 35.3

United States 35.7

United Kingdom 31.2

Spain 26.8

Greece 19.4

South Korea 20.7

Czech Republic 11.9

Brazil 11.2

Poland 8.3

Mexico 6.4

China 2.4

India 1.2 Sources: Bureau of Labor Survey, Euler Hermes

Hourly compensation costsManufacturing average, USD

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sector risksby country

Q4 2013

Source: Euler Hermessect

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3Outlook 201424 downward revisions of risk and 14 upward revisions of risk at the end of 2013

é Automobile

@ Car component

B Construction

j Air transport

6 Chemicals

À Pharmacy

‰ Agrifood

î Textile

© Paper

h Semiconductors

+ Metal

Á Retail

F Machinery & Equipement

Ò Aeronautics

& IT Services

∫ Consumer electronics

¬ Computer & telecom

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O 38 changes of sector risk ratings

Sound fundamentals. Very favorable or fairly good outlook.

Signs of weaknesses. Possible slowdown.

Structural weaknesses.

Imminent or recongnized crisis.

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10

80

90

100

110

120 FranceUnited KingdomEuropean UnionGermanyItalySpain

13121110090807

Retail sales of food, beveragesand tobaccoQuarterly index, basis 100=2010

Source: Eurostat


Under contrasting auspicesfor 2014bRuno GoutaRd

aGRiFood and Retail

Between relief (easing of agricultural supply costs), uncertainty (economic)and dynamism (geographical opportunities and search for new models).

◾ the prospect in europe is for a fall in consumer prices in 2014: adjustment in the face of falling agricultural commodity prices or early signs of deflation?

◾ emerging countries are a source of growth but no easy row to hoe for Western agrifood producers and distributors.

◾ us agrifood industry is on the up, but forced to evolve.

prices will be the focus of atten-tion in the european union in2014.

Sales volumes in food retail havedropped once again in the Euro-pean Union, whose economy re-mained moribund in 2013 (-0.8%to November, including beveragesand tobacco, after -1.0% in 2012),leading agrifood industrial produc-tion to slip -0.4% in the first 11months (-0.9% in 2012). In 2014,activity should continue its upwardtrend initiated in late 2013, al-though its pace will remain mode-rate and vary according to the si-tuation of each member state. Onthe other hand, the observation ofstabilization in prices, even contrac-

tion in the last quarters of 2013 (re-tail and/or production), may leadone to question the foundations ofthis growth. Are they cyclical? Is thisa response to the easing of theprices of a wide range of agricul-tural commodities (7.1% in 2013according to the World Bank indexas a result in particular of the cor-rection recorded for corn andwheat) and, if this is the case, willthis weakening continue in early2014 like most current supply-de-mand equilibria? Or are they struc-tural? Are they in response to thetrough in household purchasingpower, dragging retail and then au-tomatically the agrifood industryinto a price war, and thereby trig-gering a deflationary cycle sustai-ned by the economic climate?The first of the two cases is themost plausible: the gradual knock-on effect of the fall in commodityprices offers many producers thepossibility to restore margins andcash reserves somewhat and, forretailers, to give consumers somewelcome financial leeway to nibbleon additional sales volumes. If thesecond possibility prevails, the fi-

nancial situation of the sector'splayers would come under rene-wed pressure, in particular if theprices of agricultural commoditieswere to shoot back up in the fu-ture.

middle classes in emergingcountries still targeted but notwithout difficulty.

Bolstering exports by tapping intothese new destinations (+7.0% forUS exports of food products in va-lue terms to end-September 2013and +8.4% for European exportsexcluding intra-zone in valueterms to October 2013) is an ob-vious growth lever for Europeanand US companies. Also, the gro-wing needs in such countries areshaping the sector landscape, likein the milk powder sector, whereChina's difficulties to meet sanitarystandards locally translate into in-vestments (Chinese or otherwise)in additional industrial capacity inFrance, Ireland, Germany or theNetherlands. In a context of pres-sure on profitability in 2013, someWestern distributors have carried ▶

Food and beverage industryAnnual average

* over 11 monthsSources: Eurostat, National Statistics

output 2013/2012 2012/20111

Germany* -0.6% 0.4%

France* -1.6% -0.4%

Italy* -0.7% -1.1%

Brazil -0.1% -1.4%

United States 1.2% 3.7%

sector Risk

United StatesBrazilGermanyFranceUnited KingdomSwedenFinlandItalySpainNetherlandsChinaAustraliaJapan


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Retail Q3 2013 Q4 2013

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0European UnionUnited States

20132012

Consumer prices - foodQuarterly change in %

Source: Eurostat


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out disinvestments and, especially,strategic refocusing in their domes-tic markets, which generally contri-bute the lion's share of earnings.Nevertheless, regional heavy-weights such as Russia, which is ex-pected to be Europe's largest retailmarket by 2018, or India (changingregulatory environment) continueto be host to the biggest maneu-verings. More generally, 2013 pro-vided a reminder of the potholeson the road for Western groups inemerging regions: with negativecurrency effects, high cost inflation,the development of local competi-tors and, above all, lower economicgrowth. On this last point, it has be-come apparent that some playersneed to rethink their strategy andreposition themselves in the upper-middle-class segment, which issmaller but also less sensitive tosuch inevitable economic fluctua-tions.

in a growing us market, couldthe competitive lines of thefuture be taking shape?

In a more buoyant economic en-vironment, operating profitability in food retail has held up, at 3.1%on average over the first three quarters of 2013 (according to the Census Bureau) but is still below pre-crisis levels (3.8% in 2007). Comforted by another year of growth in production (+1.2% com-pared with 2012), profitability in the agrifood industry also streng-thened, this for the second year in a row. Two developments in parti-cular reflect the renewed confi-dence taking root in American soil: the +1.8% increase in capacity in the agrifood industry (catchup af-ter the cuts carried out in the years 2009/2010/2011 to improve capa-city utilization and therefore pro-ductivity), and, in the spirits sector, the takeover of US company Bea-m Inc (for USD 16 billion!) by Ja-pan's Suntory. In addition to this glowing report, deep changes are under way, as shown by the on-going rollout, although still

limited, by Amazon of its delivery service for fresh products or the inflection of direction by Walmart, which in 2014 is set to open more small and medium-sized stores than superstores for the first time!

-3.2%retail sales of food products,beverages and tobacco inthe European Unionin 2013 compared with 2010

▶

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400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

1,300,000

1,400,000

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10

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14Size (right axis)number of persons

Auto production (left axis)millions units

13121110090807060504030201004

5

6

Productivity gains in the US automotive industryNumber of vehicles produced and size of the industry

Sources: National Statistics, Euler Hermes

this should continue through 2014. With expected growth of +3% in 2014, the market could see a sales volume of 12.6-12.7 million units. While this incipient recovery is welcome, the level of sales will remain very low compared with the 16 million annual sales in 2007. Problems of overcapacity and pro-fitability for volume carmakers will persist, especially as the trade war to preserve market

in line with economic cyclesyann lacRoiX

automobile

Global market still growing although some emerging (promising) countriesstalled in 2013.

◾ united states and china are driving global growth.◾ the european market hit a 17-year low but is slowly picking up.◾ some emerging countries stalled in 2013, with weak growth prospects in 2014.

the united states and chinaalone account for more than55% of global car sales.

Car sales in China returned to dou-ble-digit growth in 2013 (+15.7%)and hit a record level of almost 18million units sold. The country thusconsolidated its place as the largestmarket in the world held since2010, and where Western manu-facturers - via joint ventures withChinese state-owned makers -have a 60% market share. In 2014,we expect growth to continue ataround +10% in a market that willhead towards 20 million vehicles

sold. The gap with the US market,the second-largest in the world, willtherefore continue to grow. Salesin the United States increased by+7.5% to nearly 16 million units in2013 and should grow more mo-derately in 2014, at around +4% for16.5 million units sold. A salientpoint from 2013 is the recovery inthe market shares of US manufac-turers and the ongoing competiti-veness gains by the US car industry.Once again profitable, US carma-kers are replacing and strengthe-ning their product range to rampup their international development.

the european market is expectedto return to the growth track in2014 after hitting a 17-year lowin 2013.

The European market hit bottom in 2013 with 12.3 million vehicles sold, down by -1.8%. In spite of that, monthly data show signs of a rebound in 2014. Over the course of 2013, the low point was reached in June, when the market barely sold more than 12 million units (12-month moving average). The recovery in the market consolidated in the second half of the year and everything suggests

+5%Global sales

in 2014

▶


sector Risk

United StatesBrazilGermanyFranceChinaJapanIndiaRussiaTurkey


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car automobilecomponentQ4 2013

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-15

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15

20

25

30 RussiaIndia ChinaJapanBrazilUnited StatesEurope (30)

121110090807060204030201122012 2013

Car registrations per regionAnnual change in %, passenger cars,

light commercial vehicles


-30 -20 -10 0 10 20 30 40RomaniaThailand

ArgentinaBrazilChina

SlovakiaSpain

United StatesMexico

United KingdomTurkey

ItalyGermany

RussiaSouth Korea

CanadaIndia

JapanCzech Republic

PolandBelgium

FranceSlovenia

Car component outputChange from H1 2012 to H1 2013, in %


shares will continue, as will its ne-gative effect on margins.

in 2013, the Ribs (Russia, india,brazil) posted volume declinesof between -3% and -10%.

Caught between economic slow-down and rising inflation - and the-refore rising interest rates - someemerging markets stalled in 2013.In Brazil, the market's fall gatheredpace late in the year under the ef-fect of interest rate hikes (BACENbase rate), from 7% in the firstmonths of 2013 to 10% by the yearend. With an interest rate of 10.5%in January 2014, the market's reco-very will be slow and gradual, al-though we expect a small +3% in2014 with a volume of 2.85 millionunits, still below its 2012 level. Afterdouble-digit growth in the period

2010-2012, the Russian market fellby -5.5% in 2013, and a slightcontraction of -2% is also expectedfor 2014. Aware of the limits of theRussian car industry, the govern-ment has announced subsidies ofalmost EUR 6 billion for researchand development, support for em-ployment in the sector and com-pensation for costs resulting from

the requirement to adapt to newemissions standards. Last, India re-corded a steep -10% fall in 2013,returning to 1.8 million units afterthree years also of strong growth.For 2014 we expect a recovery inthe car market to get under way inthe second half after the electionsin May, with a modest +3% to +4%over the full year.

strong but geographically disparate globalgrowth, requiring investment and disinvest-ment.

Car component:profitable growthyann lacRoiX

the world of auto-part makers has changedover the past decade.

Considered a few years ago as mere sub-contractors, they have succeeded in freeingthemselves from the shackles of their tradi-tional clients - in most cases national - andinvesting in buoyant new markets. Thisglobal presence alongside carmakers makesthem indispensable and allows them tobetter absorb research and developmentcosts, notably in equipment to reduce fuelconsumption and therefore CO2 emissions,or in driver assistance systems providingmore comfort and safety. It is with this stra-tegy, by positioning themselves as leadersin their industry and pruning non-core ope-

rations, that they have strengthened their bargaining power to impose selling prices that enable them to post a healthy level of profitability. The profits earned are vital for financing productive investment in growth regions (United States and Southeast Asia) at the same time as restructurings (plant closures and job redundancies) in regions where activity is in decline, such as Western Europe. *

Zoom

▶


Car registrations per regionMillions units, passenger cars, light commercial vehicles


dec-13 dec-12 change

China 17.93 15.49 15.7%

United States 15.88 14.79 7.4%

Europe (30) 12.29 12.50 -1.8%

Japan 5.38 5.37 0.1%

Russia 2.78 2.94 -5.5%

Brazil 2.76 2.85 -3.1%

India 1.81 2.01 -10.0%

total 58.82 55.95 5.1%

14

500

1,000

1,500

2,000 Western EuropeUnited States

131211100908070605

Price of ethylene by regionUSD/mT

Sources: Nextant, Bloomberg


United States : 1 - Europe : 0

chemicals

america at the forefront.

The renaissance of the US chemi-cals industry is under way, as illus-trated for example by one of its lea-ding players, LyondellBasell. Afterfiling for bankruptcy in 2009, thecompany returned to a better pathand, in 2013, posted a bumper yearwith earnings of almost USD 4 bil-lion. After its relative stability lastyear, activity in the US chemicalsindustry is expected to grow by+3% in 2014. Its massive use ofethanol produced from its abun-dant shale gas resources - in placeof naphtha, which is sold at fourtimes the price in Europe - has en-abled the upstream US industryand, more specifically, its petroche-mical industry, to produce muchcheaper ethylene, which is used ina vast array of applications such asconstruction and public works,packaging and the automobile in-

dustry. The price competitivenessof the European petrochemical in-dustry is therefore no longer ableto keep pace with that in the Uni-ted States. With regard to pros-pects for the US chemical industryout to 2015 (with growth expectedto be in excess of +3.5%), invest-ments in capacity are gatheringpace in this sector. To date, invest-ment in the sector in the UnitedStates is estimated at USD 90 bil-lion, including a total of 136 newplants, half of which from non-USchemicals groups. In addition, thenumber of related jobs created outto 2018 is estimated at 1.2 million.The appeal of the US chemicalsmarket is such that, just recently,Saudi petrochemicals giant SABICmentioned the possibility of inves-ting in an ethane-based steamcracking facility in that country.

europe on the defensive.

The European chemicals industry is yet to return to its pre-crisis pro-duction levels. At end-October 2013, output was still 7% below its 2007 level. While the recovery in European chemicals production re-mains fragile at present, its perfor-mance last quarter was reassuring: it grew by +2% on the back of polymers (+7%) and specialty chemicals (+3%) despite

persistent difficulties in petroche-micals, which weakened a further-5% much to the chagrin of Frenchgroup Kem One among others. Al-together, 2013 volumes were downslightly by around -0.8% y/y. Throu-ghout the past year, European che-micals sales are likely to have de-creased by around -1.5% comparedwith 2012 as a result of more pres-sure on prices, which are expectedto have decreased by around -0.8%.For all that, and this is a first positivepoint, the pricing power of Euro-pean chemicals remains intact:prices are still 12% higher than in2008. The second good point is theresilience of its positive trade ba-lance: EUR 38 billion (+2.4%) for Q32013 compared with 2012, al-though its EUR 5 billion surplus withthe United States masked a pro-nounced downturn in flows ofaround -30% over the period. In away, the situation of Asia's chemi-cals industry is similar to its Euro-pean counterpart: both suffer fromthe disadvantage of exorbitant rawmaterial procurement costs. Ahuge difference between the two,however, lies in the fact that the Eu-ropean industry lacks the dyna-mism of Chinese manufacturingproduction - its largest market - tofeed off which, while slowing, is ne-vertheless preferable to weakgrowth.

Upward cycle in the United States

◾ Global chemicals production expected to grow by +4% in volume terms in 2014 after +2.5% in 2013, with the market valued at around usd 3,700 billion.

◾ broad spectrum of activities comprising five major segments: consumer chemical products (16%), specialty products (28%), polymers (14%), inorganic chemicals (16%) and petrochemicals (26%).

◾ excluding pharmaceuticals, industrial realities contrast from region to region: the petrochemical industry, for example, is under duress in europe but not in the united states.

◾ sector invigorated in the united states but still on the defensive in europe, while asia continues to gain market share thanks to vigorous domestic demand.

maRc livinec

+3%US chemical activityexpected to grow in 2014

sector Risk

United StatesBrazilGermanyUnited KingdomBelgiumRussiaJapan


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Breakdown of drugs spending

usd billions 2013 2014annualaveragegrowth

United States 323 340 1%

European Union 5 (1) 143 145 0.3%

Japan 114 115 0.2%

Rest of the world (China included) 370 500 8%

World 950 1 ,100 4%

(1) Germany, France, United Kingdom, Spain, ItalySources: IMS, estimations Euler Hermes


innovating more despite zerogrowth in R&D budgets

phaRmaceuticals

mature countries are inclined toreduce their spending on pharma-ceuticals: deflationary pressuresin europe and obamacare in theunited states.

Europe remains under pressure to reduce its budget deficits, com-pounded to a large extent by re-current losses in public health in-surance regimes. The time is for wholesale savings to be made in healthcare and, in particular, the pharmaceutical sector. For example, France has taken the same path as the United Kingdom and Germany and given preference to generics in overall medicine sales, in order to curb its greater consumption of pharmaceutical products (the prices of which tend to be higher the more recently they hit the market). The mechanism chosen is to authorize pharmacies to substitute a generic drug for a proprietary drug at their discretion. European laboratories felt the ef-fect on their revenues last year. For

example, the revenues of Britishcompany AstraZeneca are estima-ted to have fallen -9%, those ofFrance's Sanofi -6%. The choice toreduce healthcare spending is justas important in the United States,as its per capita spending on drugsis the highest in the world (USD985 on average compared withUSD 483 in the OECD in 2012). Yetthis is less visible because of theopacity of the US healthcare sys-tem resulting mainly from its pri-vate funding. In addition, the re-cent implementation of the ACAlaw or "Obamacare", giving theUnited States the system of uni-versal health coverage it previouslylacked, blurs the visibility over theeffectiveness of the two mecha-nisms that contribute to keeping alid on healthcare spending: thetight regulation of prices in the Me-dicare and Medicaid public pro-grams, and the strong competitionbetween private insurers, whichnegotiate each year with the labo-ratories discounts on the (dis-played) price of a medicine in re-turn for their choice to reimburseonly one within the same thera-peutic class. While Obamacareshould improve the access of Ame-ricans lacking health insurance to

the latest medical treatment underacceptable financial conditions, itsreal incidence is still not clear, apartfrom generating +5% of additionaldemand for drugs in 2014 as a re-sult of the expected 7 millionnewly-insured.

more efficient pharmaceuticalR&d and access to emergedmarkets as antidotes

The context of tighter control overhealthcare spending in maturemarkets has not changed the stra-tegy of laboratories to continue toinvest in medical advances. This isreflected in the USD 135 billion(once again) invested in 2013 inglobal pharmaceutical R&D, evenif this constitutes a -1.5% declinefrom 2012. They need to be moreselective in the R&D programs they

pursue, given the -1.6% decline insales of proprietary drugs alone atthe global level. This is a conse-quence of the expiry of the patentsof their former star drugs still in cir-culation. Pharmaceutical revenues"at risk" out to 2018 - to the benefitof generic makers - have been es-timated at USD 110 billion. As a re-sult, Big Pharma is hastening to in-vest in emerged markets, wheredemand for pharmaceuticals is ex-pected to grow by more than +8%in 2014, sometimes at the price ofdisappointment. In India, for exam-ple, the legal framework for patentprotection struggles to prevail. InChina, meanwhile, the public in-vestigation into GSK's marketingpractices has surreptitiously spreadto those of all Western laborato-ries.

Growing medical needs, but not all players are benefiting

◾ Global pharmaceuticals market estimated at usd 950 billion in 2013. ◾ medical advances and access to medicine among the middle classes in emerged countries is fuelling

growth in demand for medication. not all medicines are benefiting from this to the same degree, however, depending on whether they belong to the family of patented drugs (proprietary drugs), generics or otc drugs.

◾ positioned in proprietary drugs, the major laboratories are suffering from the expiry of patents for their flagship medicines to the benefit of generic competition. the trend in their revenues is forcing them to be more selective with their investments in R&d.

maRc livinec

+4%Global market up in 2014

sector Risk

United StatesGermanyFranceUnited KingdomSpainHungaryChinaJapan


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500,000

1,000,000

1,500,000

2,000,000

2,500,000

1312111009080706050403020100

USA work started for dwellings Level, cumulative 12 months

Source: OCDE

0

2,000

4,000

6,000

8,000

10,000

1312111009080706050403020100

Investment in real estateCNY billions

Source: National Bureau of statistics of China

new trends in 2014? didieR moiZo

constRuction

the recovery is consolidating innorth america while the situa-tion is more mixed in latinamerica.

In the United States, growth in hou-sing starts gathered pace in 2013 (924,000 in the 12 months to end-November 2013 compared with 759,200 over the same period one year earlier) although without an expansion in stocks. On the contrary, the number of houses available for sale stabilized at around 1.6 million, which is slightly less than during the decade from 1995 to 2005. The annual rate of growth in house prices is gradually increasing (+9%at end-October 2013).

In Canada, the slowdown in housing starts in 2013, after surging late in 2012, stabilized late in the year, benefiting from public investment in infrastructures. Prospects are more mixed in the rest of the American continent. For example, the construction sector in Brazil is boosted by sporting events in 2014 and 2016, with a few exceptions. But this growth could quickly come to a halt if inflation and the increase in interest rates were to trip up this temporary El Dorado. Real estate prices in Rio de Janeiro have grown by +27% per year on average since 2009. Building permits are stagnant in Chile, and were down -16% in residential

housing in Q4 2013 compared with Q4 2012, while excess supply in the Mexican construction sector led to a decline in building activity of -8% at end-October 2013 compared with October 2012.

asia and the Gcc countries,lands of opportunities and risks.

It is in Asia and the Gulf countries that the construction sector is the most buoyant and solid, underpin-

ned by structural needs of (re)buil-ding infrastructure and housing.

In Asia, the two regional engines (China and India) still occupy do-

minant positions. Real estate in-vestment in China picked up, with

growth of +19.8% in 2013 (com-pared with 16.3% in 2012). Accor-dingly, keeping a lid on soaring

prices remains a major difficulty: the price of new residential housing increased by +16% in Beijing in 2013, despite measures to control

their rise, which could prove to be

Numerous and persistent pressures, but more favorable regional and nationaltrends.

◾ Global revenue growth in the construction sector remains weak (+3% in 2013 to aroundusd 9.3 trillion).

◾ persistent difficulties in many countries. the contribution of the sector’s companies to insolvencies remains high, at up to 20% of the total, whereas construction accounts for 7% of Gdp on average.

◾ highly variable regional and national situations, between marked recovery, premonitory signs of housing bubbles and hopes of emerging from cycle troughs, at the mercy of numerous local vagaries, commodity prices and stimulus measures from public authorities.


▶

insufficient in 2014. In India, eco-nomic growth, demographic trends and increasing urbanization are fuelling investments, in particular in infrastructure. This idyllic vision is weakened by macroeconomic setbacks, the trend in purchasing power and the 2014 elections. The situation in Japan is very different, but we note that housing

United StatesBrazilMexicoSaudi ArabiaBahrainUAEChina JapanWestern Europe*

* on averageSource: Euler Hermes

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131109070503019997959391

GBR Work started for dwellings sa/indexBasis 100 = 2010

Source: OECD


starts are gradually increasing, in particular in Q4 2013 (+14% at end-November 2013). The construction sector in the Gulf countries also presents growth prospects. In Qatar, for example, the National Vision 2030 develop-ment plan will continue to boost the construction sector for several years to come.

european construction sectoron the road to recovery?

The persistent difficulties in the construction sector in Europe in 2013 affected the entire continent. Housing starts were down again in Spain (-28% in the 12 months to end-October) and Portugal (-21%at end-September) and continued to be in freefall in Greece. The sec-tor also struggled in Northern Eu-rope. This was the case in the Ne-therlands, but also in Belgium and Finland. 2013 was a bad year in Po-land, a country where construction is highly volatile. In Norway, the stagnation of activity was enough to trigger a jump in insolvencies despite the support coming from the renovation sector. All in all, pro-duction declined by -3% in 2013 (compared with -5% in 2012). The contraction in production in the sector lost its intensity from quarter to quarter (-2.5% in the EU

-28 in Q3 2013 compared with -7.1% in Q4 2012) and the low seems to have been reached in Eu-rope, where needs are growing as time passes: upkeep and upgrade of infrastructures, renovation of housing, housing shortfalls. Some countries are already in recovery. In the United Kingdom, the pro-duction index and, more particu-larly, housing starts have consoli-dated their uptrend on the back of targeted support measures. In Ger-many, despite a negative demogra-phic effect, building permits are in-creasing (+12% in the 12 months to end-November 2013). Altoge-ther, 2014 could be a pivotal year for the European construction sec-tor, with growth expected to be between -1% and +1%, although it will still not be enough to shelter all the sector's companies.

40countries Where the sector is very

fragile or in crisis▶

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0

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13110907050301999795

World semiconductor market USD billions

Source: World Semiconductor Trade Statistics

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120

130

140

150

160

13110907050301999795

World Gross Output Price,Computers & CommunicationsBasis 100 = 2 005



How to create value withoutpricesdidieR moiZo

inFoRmation and communicationtechnoloGies

needs in constant renewal. Like transport infrastructure, infor-mation and communication tech-nologies (ICT) are the bedrock of economic development. This situa-tion is becoming established and all countries have got the message, in particular South Korea, which sits above the Northern European countries, including the United Kingdom, on the ICT Development Index. There are still many needs to be met. Needs are growing by 8% in Africa and the Middle East, which represent only 6% of the market. While three-quarters of the population in developed countries own a computer or have internet access, this proportion is only 30%in developing countries, where growth is more rapid. At the same time, usage is changing. Fixed-line telephones declined in 2013 (ownership rate of 16.5%compared with 16.8%) in the world in subscription terms to the benefit of mobile telephones (96.2% compared with 91.2%) all regions combined. Craving new products, hopes in the electronic consumer goods sector are pinned on an increase in purchases in developing countries and on product connection.

massive investments needed.Investments need to be made tomeet needs, in particular in high-speed networks in order to offersufficient speeds to cover growinguse in terms of applications, ser-vices and content, and the connec-tion of things, the success of whichamong consumers has alreadybeen proven. South Korea, forexample, recently launched a pro-gram of more than EUR 1 billionto develop an ultra-rapid 5G net-work, at a time when not all Euro-pean countries have succeeded inputting 4G to widespread use.China and the United States are in-vesting large amounts of capital,while Europe is aiming to bring 5Gto the market in 2020. The cardsare evolving also in the area of

electronic components (+15% inthe Americas, but -11% in Japan, fora global market growing at +4% inwhich Asia has a 55% market share,compared with 23% for the Ameri-cas). Japan's decline is also appre-ciable in the area of electronicgoods: it became a net importer ofthese products in 2013, with a de-ficit of JPY 452 billion.

against a backdrop of wide-spread falling prices.Just like electronic consumer goods,whose prices have been on anunyielding decline, all ICT prices aresubject to this constraint. This hasbeen the case for many years forelectronic components, the priceindex of which in Taiwan is at one-

third of its value in 1987. The pricesof fixed-line broadband sufferedfrom strong downward pressurebetween 2008 and 2012, especiallyin developed countries. Today it isthe turn of mobile broadband ser-vices to feel this pressure. This pres-sure is all the more unavoidable astheir growth in volume terms is de-pendent on developing countries,where services are proportionallymore expensive relative to the in-comes of the population. The sameholds for IT equipment, whose ave-rage price index decreased a fur-ther -0.5% in 2013. As a result,spending on technological pro-ducts will fall by -2% in value termsin 2014.

A diffuse sector facing strong pressure on prices, requiring investment.

◾ Growth of +3% in information and communication technologies (ict) in 2013 with revenue of aroundeuR 3,300 billion, on the back of deployment in all countries despite very wide gaps.

◾ a grouping of disparate universes, from semiconductors to equipment manufacturers and service providers, but all with one common denominator: pressure on prices.

◾ Forced to innovate and to invest, for the time being companies in the sector are busy rolling out and securing networks, the cloud, big data, connecting things and developing related services.

6.8 billions

mobile phonesubscribtions

in 2013

sector Risk

ICT market*

* information and communicationtechnologySources: Idate, Euler Hermes

2013 euRbillions

North America 959

Europe 878

Asia-Pacific 961

Latin America 287

Africa Middle East 190

total 3,275

semiconductorsSwitzerlandFinlandSpainconsumerelectronicsSaudi ArabiaBahrainSpainFinland

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14f131211100908070605

Global index of pulp prices Index worldwide, basis 100=2005


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140

150

160

170

13121110090807060504030201

Textile production in volume terms in Europe (EU-17) Basis 100=2010

Sources: Eurostat, Global Insight, Euler hermes

Paper and cardboardproducers, whoseoutlets include packa-ging, is subject to theups and downs ofconsumption and thetroubles of printmedia in maturecountries. The sectoris dominated byChina.

Paper industry: prices maintained through capacity adjustmentmaRc livinec

Global revenue for the pulp and paper in-dustry, estimated at usd 910 billion, hasbeen driven by a slight increase of around+1.5% in volumes, led by asia. Global pro-duction of paper and cardboard is expectedto have passed 405 million tons in 2013.

China's vigor (+7% growth) is unrelentingand contrasts starkly with the decline in NorthAmerica and Europe (more severe in the for-mer than the latter). Asia is the most dynamicregion in terms of investment in the sector,to the detriment of South America and Africa.Europe, however, has maintained its positionas the largest exporting region, with 20% ofits production for export while its domesticdemand decreased by around -4% last year.Weak economic growth and structural pro-blems in the segment of paper for graphicuse, and more specifically in print and publi-shing (affecting the US also) are the maincauses of this decline in demand for paperproducts. With the rise of digital technologies,

the irreversible shift from paper to electronic media is no stranger to this new market order. The pulp and paper industry includes two types of products, pulp and paper/cardboard, the former making up 40%of the raw material for the latter. Total pulp production has grown slightly at the global level because production of market pulp has increased (in Finland for example), while this is not the case for integrated production, which includes production of pulp and en-amelled paper and cardboard, where there have been plant closures. Altogether, China is comfortably the leading producer of paper and cardboard. 2014 looks set to unfold along similar lines for the paper sector, which is continuing its adjustment with the shutdown of capacity on both sides of the Atlantic to adapt to changes in their respective demand. As a result, the benchmark pulp price is ex-pected to remain stable or possibly inch up slightly to around USD 900 per ton. *

Zoom

THE TExTILE INDUSTRY, WHOSEMAIN OUTLET REMAINS THE CLO-THING INDUSTRY, IS DIRECTLYSUBJECT TO THE UPS ANDDOWNS OF HOUSEHOLD CON-SUMPTION AND THE FOCUSREMAINS PREDOMINANTLY ONPRODUCTION COSTS.

Textile industry: Focus on costsyann lacRoiX

in clothing, an industry light in capital butheavy in labor costs, activity has movedmassively offshore to countries with lowhourly wages.

China is still the biggest producer and thebiggest exporter in the world, with 38% oftotal sector exports. However, after steepgrowth in wages (+25% in 2012 and +20%in 2013), which are between USD 300 andUSD 400 per month, it faces increasing com-petition from even lower-cost countries inSoutheast Asia. These include Bangladesh

(5% of global exports), with an extremely low wage of USD 68 per month - despite being raised in late 2013 following protests and incidents in that country - Thailand and Indonesia, or even, in Europe, Romania and Bulgaria, where wages are now fairly similar to those in China. The situation in Europe is downbeat, owing to listless household consumption: demand for clothing has de-clined for three years running in France (- 1.4% in 2013 after -2.1% in 2012 and -2.7%in 2011) and in Italy and Spain also. The textile industry has been a victim of globali-zation and cost competition; in this respect, it represents a symbol of the deindustriali-zation that has afflicted a number of developed countries, for instance in Europe where pro-duction in volume terms has practically halved since 2000! In spite of that, two sub-sectors remain for industrialized countries for which the notion of production costs is markedly less sensitive: technical fabrics and upmarket garments. Substantial spending on research and development is needed for the former, and in the brand and quality for the latter. The development of technical textiles makes

it possible to depart from household consump-tion, by developing products designed forsectors as diverse as construction, the medicalindustry or the environment. Both these sub-sectors are growing, but they cannot offsetthe structural decline in textile productionin industrialized countries. *

Zoom


20


1

Business Insolvency Worldwide

Economic Outlookno. 1200-1201october-november 2013

www.eulerhermes.com

Economic Research

Patching things upFewer insolvencies, except in Europe


EconomicOutlookseries

Already issued:

no. 1186 ◽ macroeconomic, Risk and insolvency outlookIn 2013, we take the same and start again

no. 1187 ◽ special ReportThe Reindustrialization of the United States

no. 1188 ◽ special ReportTransport: A two-speed world

no. 1189-1190 ◽ macroeconomic, Risk and insolvency outlookWorld heads for sixth year of crisis: something the Maya did not forecast! !

no. 1191 ◽ Global sector outlookNow where did global demand go?

no. 1192 ◽ special ReportTrade Routes: What has changed, what will change

no. 1193 ◽ macroeconomic, Risk and insolvency outlookEurope: still looking for a second wind

no. 1194 ◽ business insolvency WorldwideCorporate insolvencies: the true nature of the Eurozone crisis

no. 1195-1196 ◽ macroeconomic, Risk and insolvency outlookThe world at a crossroads

no. 1197 ◽ Global sector outlookReconciling economic (dis)illusions and financial risks

no. 1198 ◽ special ReportThe Mediterranean: Turning the tide

no. 1199 ◽ macroeconomic and Risk outlookHalf-baked recovery

no. 1200-1201 ◽ business insolvency WorldwidePatching things up: Fewer insolvencies, except in Europe

no. 1202-1203 ◽ macroeconomic and Risk outlookTop Ten Game Changers in 2014 - Getting back in the game

no. 1204 ◽ Global sector outlookAll things come to those who waitGreen shoots for one out of four sectors

To come:

no. 1205 ◽ special Report

Macroeconomicand Country Risk Outlook

EconomicOutlook no. 1199September 2013

www.eulerhermes.com

Half-baked recovery

Economic Research

Macroeconomicand Country Risk Outlook

EconomicOutlook no. 1202-1203December 2013-January 2014

www.eulerhermes.com

Top Ten Game Changersin 2014Getting back in the game

Economic Research

21


Back issues:◽China: 6 firms out of 10 managed toreduce their payment terms in 2013> February 17, 2014 (En)◽The Fragile 10: Turbulences but nocrash > February 6, 2014 (En)◽Frequently Asked Questions (FAQ) ondeflation risk in the eurozone> February 6, 2014(En)◽ Italian companies benefic from exportsbut continue to face high non-payments inthe domestic market >November 14, 2013 (En) ◽ Cracks in the U.S. Housing Market?>November 5, 2013 (En)◽ Construction boom in Qatar, betweenrisk and opportunities >October 30, 2013(En)

◽ Russia, a promising land for Agrifood>October 18, 2013 (En)◽ Major overcapacity in the global steelindustry >October 10, 2013 (En, Fr)◽ Hungary : despite overall economicfragility, some sectors have retainedstrength >September 2013 (En)◽ En France a fin juillet 2013, toujoursaucun signe d’amelioration du cote desdefaillances d’entreprises, bien aucontraire >August 29, 2013 (Fr)◽ China: Mini credit crunch for a megaeconomy? >August 19, 2013 (En, Fr)◽ The eurozone needs a credit policyt>July 31, 2013 (En, Fr)◽Transatlantic Free-Trade Agreement:More than just corn and foie gras?

>July 1st, 2013 (En, Fr)◽ Europe: The scarring effects of youthunemployment>July 1st, 2013 (En, Fr)◽ United States : structural unemploy-ment as a long-term impediment togrowth >25 June 2013 (En)◽ En France, la remontée desdéfaillances d’entreprises se diffuse à lagrande majorité du tissu économique>June 24, 2013 (Fr)◽ Défaillances : pourquoi cette crise est-elle différente de 2009?> 6 juin 2013 (Fr)◽ ‘Greecovery’: Is there enough light at theend of the Greek tunnel> June 4, 2013 (En)◽ Shale gas : One country’s meat isanother country’s poison? >May 29, 2013(En)

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> irelandEuler Hermes IrelandAllianz HouseElm ParkMerrion RoadDublin 4Tel.: +353 (0)1 518 7900

> israelICIC2, Shenkar Street68010 Tel AvivTel: +97 23 796 2444

> italyEuler Hermes Europe S.A.Rappresentanza generale per l’ItaliaVia Raffaello Matarazzo, 1900139 RomeTel: + 39 06 8700 1

> JapanEuler Hermes Deutschland AG, JapanBranchKyobashi Nisshoku Bldg 7th floor8-7, Kyobashi, 1-chome,Chuo-KuTokyo 104-0031Tel: + 81 3 35 38 5403

> kuwaitPlease contact United Arab Emirates

> latviaPlease contact Poland

> lithuaniaPlease contact Poland

> malaysiaEuler Hermes Singapore Services Pte Ltd.,Malaysia BranchSuite 3B-13-7, Level 13, Block 3BPlaza Sentral, Jalan Stesen Sentral 550470 Kuala LumpurTel.: +603 2264 8556 (or 8599)

23


> mexicoEuler Hermes Seguro de Crédito S.A.Torre PolancoCalzada Mariano Escobedo No. 476, Piso 15Colonia Nueva AnzuresDelegación Miguel HidalgoMexico DF C.P. 11590Tel.: +52 55 5201 7900

> moroccoEuler Hermes Acmar37, bd Abdelatiff Ben Kaddour20 050 CasablancaTel: + 212 5 22 79 03 30

> the netherlandsEuler Hermes Nederland NVPettelaarpark 205216 PD’s-HertogenboschTel: + 31 73688 9999

> new ZealandEuler Hermes New Zeland LtdLevel 1, 152 Fanshawe StreetAuckland 1010Tel: + 64 93542995

> norwayEuler Hermes NorgeHolbergsgate 21 P.O. Box 6875St. Olavs Plass0130 OsloTel: + 472 3256000

> omanPlease contact United Arab Emirates

> philippinesPlease contact Singapore

> polandTowarzystwo Ubezpieczen Euler Hermes S.A.ul. Domaniewska 50 B02-672 VarsovieTel: + 48 22363 6363

> portugalCOSEC Companhia de Seguro deCréditos, S.A.Avenida da República, nº 581069-057 LisbonTel: + 351 21791 37 00

> QatarPlease contact United Arab Emirates

> RomaniaEuler Hermes Europe SA BruxellesSucursala BucurestiStr. Petru Maior Nr.6Sector 1, 011264 BucarestTel: + 40 21302 0300

> RussiaEuler Hermes Credit Management OOOOffice C08, 4-th Dobryninskiy per., 8,Moscou, 119049Tel: + 749598128 33 ext.4000

> saudi arabiaPlease contact United Arab Emirates

> singaporeEuler Hermes Singapore Services Pte Ltd12 Marina View#14-01 Asia Square Tower 2Singapore 018961Tel: + 65 6297 8802

> slovakiaEuler Hermes Europe SA, pobokapoist’ovne z ineho clenskeho statu2012: Plynárenská 7/A82109 BratislavaTel: + 421 2582 80911

> south africaPlease contact Italy

> south koreaEuler Hermes Hong Kong ServicesKorea Liaison OfficeRm 1411, 14/F, Sayong - Platinum Bldg156, Cheokseon-dong,Chongro-ku,Seoul 110-052,Tel: + 82 2733 8813

> spainSolunionAvda. General Perón, 4028020 Madrid+34 902 400 903www.solunionseguros.com

> sri lankaPlease contact Singapore

> swedenEuler Hermes Sverige filialKlarabergsviadukten 90 - P.O. Box 729101 64 StockholmTel: + 46 855 51 36 00

> switzerlandEuler Hermes Deutschland AG,Sweigniederlassung ZürichTödistrasse 658002 ZürichTel: + 41 44283 65 65Tel: + 41 44283 65 85 (Reinsurance)

> taiwanPlease contact Hong Kong

> thailandAllianz C.P. General Insurance Co., Ltd323 United Center Building, 30 th FloorSilom Road.Bangrak, Bangkok 10500Tél. + 66 2638 9000

> tunisiaPlease contact Italy

> turkeyEuler Hermes Sigorta A.s.Maya Akar Center Buyukdere Cad. No:100 K :7, 34394, Esentepe / IstanbulTel: +90 212 2907610

> united arab emiratesEuler Hermesc/o Alliance Insurance (PSC)Warba Centre, 4th Floor - Office 405 - PO Box183957DubaiTel: + 971 4211 6005

> united kingdomEuler Hermes UK1 Canada SquareLondres E14 5DXTel: + 44 20 7512 9333

> united statesEuler Hermes North America InsuranceCompany800 Red Brook BoulevardOwings Mills, MD 21117Tel: + 1410753 0753

Euler Hermes UMA Inc. (Trade DebtCollections)600 South 7th StreetLouisville, KY 0201-1672Tel: +1 800-237-9386

> vietnamPlease contact Singapore

Euler Hermes Economic Outlookis published monthly by the Economic Research Department of Euler Hermes Group800 Red Brook Blvd., Owings Mills, MD 21117E-mail : [email protected] - Tel. : +877-883-3224

This document reflects the opinion of the Economic Research Department of Euler Hermes.

The information, analyses and forecasts contained herein are based on the Department's current

hypotheses and viewpoints and are of a prospective nature. In this regard, the Economic Research

Department of Euler Hermes has no responsibility for the consequences hereof and no liability.

Moreover, these analyses are subject to modification at any time.

www.eulerhermes.us

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