For information on risk management, see also Corporate Governance, 3.7 Information and control instruments vis-à-vis the Group Executive Board, third paragraph.
As part of the process of risk identification, risk analysis and risk management, the following risks have been rated as significant for the Geberit Group:
Performance of the European building construction industry
Renovations, which are less cyclical, account for a significant share of total sales. Consequently, the Geberit Group is less exposed to fluctuations in construction activity. Given that modern sanitary technology still has relatively low levels of penetration in many markets, there is also a considerable degree of long-term potential for sales growth – regardless of the economic climate.
Availability of raw materials
A prudent procurement strategy with a strong regional and local orientation, institutionalised purchase processes and a strong focus on cooperative relationships with suppliers help to ensure that raw materials are available.
Changes in the competitive environment
Innovative products and the comprehensive product range ensure that the Geberit Group is able to maintain its leading market position. The company’s strong partnership with the craft sector, sanitary engineers and investors, and its constructive collaboration with wholesalers also play a key role as part of the three-stage sales model.
The Geberit Group is continually working to improve its IT (information technology) security. This includes taking defensive measures against cyberthreats as well as detecting and dealing with any cyberattacks efficiently. Extensive measures have been established in the interests of business continuity.
The company’s IT systems undergo a comprehensive and detailed security check – including the ongoing assessment of newly emerging risks – involving the input of external specialists on a regular basis. The latest checks confirmed a good level of security. All in all, Geberit is thus comparable to industrial companies of a similar size and complexity.
Compliance with laws
The Geberit Group is exposed to certain legal risks that arise from normal business activity. Comprehensive compliance processes are in place for the purpose of preventing violations of the law or regulations.
Management of currency risks
In general, the effects of currency fluctuations are warded off as far as possible with an efficient natural hedging strategy. This entails making sure that costs in the various currency areas are incurred in the same proportion in which sales are generated. As a consequence of the natural hedging strategy, currency fluctuations have no significant impact on operating margins. Gains and losses result mainly from the translation of local results into Swiss francs (translation effects). In terms of a sensitivity analysis, the following changes can be assumed if the Swiss franc should be 10% weaker or stronger than all other currencies:
- Net sales: +/-9%
- EBITDA: +/-9%
- EBITDA margin: +/-0 percentage points
For more information on the management of currency risks, see also Consolidated Financial Statements Geberit Group, Note 4 and Note 15.