Plastics (granulates and films) are one of the basic raw materials of the Flexible Packaging Segment and represent about 75% of the value of the purchased raw materials. Polypropylene granulate is purchased both on the spot market and based on contracts. Polyester films and polyethylene granulate are purchased on spot market. The prices of the materials depend on the global market situation. The Flexible Packaging Segment implements the procurement policy by way of buying acceptable quality materials at the lowest possible price. Sales to the Films Business are based on spot market and every growth of raw materials prices translates into the product price. In the Packaging Business, half of the transactions are based on index models, which enable the pass of raw material price changes to customers. In most of the index models, prices are updated once a quarter, based on the raw materials price indexes on the European market. In case of sales covered with raw-materials indexation, the risk that changes in raw materials prices will not be passed to customers is eliminated, we only observe a shift in time. The spot part of the Packaging Business operates in the same way as the Films Business.
