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 well protected against 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
Professional, institutionalised purchase processes help to ensure that raw materials are available.
Changes in the competitive environment
Innovative products as well as the comprehensive range of products in place since the integration of the ceramics business ensure that the Geberit Group is able to maintain its leading market position. The company’s partnership with the craft sector 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 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.
The company’s IT systems undergo a comprehensive and detailed security check involving the input of an external specialist on a regular basis. The last security check was made in 2018 and confirmed that the company’s IT systems have an adequate level of security. Another security check is planned for 2021, with the goal of examining whether the IT systems are also adequately prepared and protected against newly emerged risks.
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 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:
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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.