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 construction industry
Renovations, which are performing steadily, account for a significant share of total sales. Consequently, the Geberit Group is well protected against fluctuations in construction activity. Given the low penetration of modern sanitary technology in many markets, there is also a considerable degree of long-term potential for sales growth – regardless of the economic climate.
Integration of the ceramics business into the Geberit Group
The key phases were completed by the end of 2017 (see also Sanitec Integration).
Availability of raw materials
Professional, institutionalised purchase processes and systematic global and dual sourcing help to ensure that raw materials are available for the production process.
Changes in the competitive environment
Innovative products as well as the comprehensive range of products since the integration of the ceramics business ensure that the Geberit Group is able to maintain its leading market position. Our partnership with the craft sector also plays a key role as part of the three-stage sales model.
The Geberit Group is continually working to improve the security of its IT infrastructure. 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.
Compliance with laws
The Geberit Group is exposed to various 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 this natural hedging strategy, currency fluctuations only have a minor impact on the 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:
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For more information on the management of currency risks, see also the Financial Statements of the Geberit Group, Notes to the Consolidated Financial Statements, 4. Risk Assessment and Management, Management of Currency Risks and the Financial Statements of the Geberit Group, Notes to the Consolidated Financial Statements, 15. Derivative Financial Instruments.