1、March 2024Mastering the Challengesof Energy Costs in EuropeHow industrial companies survivethe deindustrialization in EuropeStrategy&Companies need to improve their energy resilience strategy to survive.To succeed in the long-term,a recalibration of the entire business strategy is requiredElevated e

2、nergy prices and increased market volatility not only caused profits to decline(-14%since 2018)but also pose a risk of deterring investments(-9%vs.pre-crisis)Energy prices have recovered after the peak in 2022.Gas spot prices recovered to 12/MWh above pre-crisis level1,while volatility of last 12 mo

3、nths is 4x the level of 2019Most firms have responded with short-term levers,while substantial levers have remained untouched.Inflation&volatility remain the top two concerns for CEOs in 2024The energy crisis has been a challenge to industrials,some of which were already suffering from supply chain

4、disruptions and lower demand(-13%output over last 5Y)1)Comparing average 02/2024 TTF price with average of 2019Sources:S&P,considering the change 2018 vs.2023 in the following sectors:chemicals/chemical products,non-mineral products,paper and paper products and basic metals;FT/Refinitiv,PwCs 27th Gl

5、obal CEO Survey;Strategy&analysisIs the storm really over yet?Uncertainty is accelerating at an unprecedented paceStrategy&Mastering the Challenges of Energy Costs in EuropeStrategy&March 2024The perception of market realities is mixed;some players believe that short-term actions are sufficientSourc

6、e:Strategy&Selected voices on rising energy cost“If manufacturers of materials needed by industry(such as steel or chemicals)were to leave the region due to high energy costs,you run the risk of losing the whole value chain of production”Executive,Steel Sector“The awareness is generally there.But mi