PDF, 3.2 MB - Pfleiderer AG

Pfleiderer operates production plants which are running mainly continuous lines manned on a
multi-shift basis. The high level of organization and technical complexity involved means that
production stoppages can occur, as well as harboring risks with regard to quality control, environmental
pollution and industrial injury. All this can represent a break in the value added
chain. An active system of preventative maintenance is applied to prevent stoppages and downtime.
Plant is carefully maintained and employees are trained how to operate it. Wood processing
contains an inherent risk of fire and explosion that cannot be entirely excluded. Damage
to machinery and plant, as well as losses due to down-time, have been insured against where
this is economically meaningful. Additionally, all necessary technical and organizational avoidance
measures are applied to prevent such breakdowns occurring, and the Company has also drawn
up contingency and emergency plans to deal with such incidents.
As a matter of corporate policy, the Company is not dependent on any one supplier as a wide
range of raw materials is needed for operations. A multi-source procurement policy has been set
up to safeguard supply. However, in the case of a certain raw materials and pre-products only
a few suppliers exist. The failure, delay, or poor quality of supplies, could result in production
stoppages, having a negative effect on earnings. Pfleiderer has offset these risks by entering
into longer-term supply agreements, as well as setting up a procurement organization which continuously
monitors that raw materials are delivered on time, and are of suitable quality. Price
increases for certain raw materials are currently expected, but this has already been taken into
account in planning. Dependence on the way energy costs develop in future has been specifically
reduced by the use of co-generation plants.
Personnel Risks
Pfleiderer is limiting personnel risks such as fluctuation or loss of know-how, demotivation, poor
qualification and competition for specialists and senior managers through modern personnel
instruments. Attractive systems of compensation, as well as training and updating schemes are
offered in order to bind employees closer to the Company. Potential assessment procedures
ensure that there is an internal supply of successors and that positions are occupied. Close contact
to selected universities supports the recruitment of qualified junior management.
Financial Risks
Pfleiderer understands financial risks to include those risks relating to liquidity and market prices
arising from transactions in the course of normal business and their hedging, as well as risks
arising from financing the Group. As a matter of principle, all financial risks are monitored by the
treasury department using appropriate financial control and monitoring instruments. Debtor
management, which remains the responsibility of the individual operating segments, is also overseen
by the treasury department in this work, ensuring that limits imposed by credit insurance
are maintained – an increasingly important aspect in view of increasing insolvency in the economy.
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MANAGEMENT REPORT RISK REPORT