Market and Product Risks
The ongoing consolidation of
companies in the consumer goods industry poses a challenge of
concentrated buying power. This consolidation process offers us the
opportunity to gain market share from our competitors, but it can also
result in business being lost. Symrise addresses this competitive
pressure by exploiting its strengths and actively offering value added
options.
To guarantee profitable margins of some products manufactured in Europe and sold in weak currency countries, Symrise negotiates its prices in euro. While this copes with the currency risk, some customers may ask for price reductions and the risk of losing business to a competitor cannot be disregarded. Alternatives, including manufacturing in the same currency zone as well as developing business models that allow Symrise to protect existing business in a strong euro environment, are being developed to counter this risk.
Since most of our products are used by our customers in merchandise that consumers apply to their skin or ingest, the risks associated with their effects on the human health cannot be excluded. Internal safety mechanisms, modern analysis procedures, constant update of knowledge through scientific publications, and extensive quality controls at international standard are applied daily in our worldwide facilities to counter this risk. Based on our proven commitment to minimization of risk, we are also able to purchase insurance to further minimize the financial consequences in the event that any case claims arose.
Political events might result in trade embargos to relevant export countries and therefore interrupt our product deliveries. At the same time, payments of outstanding debts could be stopped due to bank boycotts. We counter this risk by maintaining a constant dialog with customers and banks, closely observing the development of political events and continuously optimizing our working capital.