PDF (2.63 MB) - Geberit International AG

Financial risk management
General
Risk Management is ensured by the central Treasury of the Geberit Group which acts in line
with the directives of the Treasury Policy issued by the Group’s management bodies. Risk
management is concentrated on recognizing, analyzing and hedging foreign exchange and
interest rate risks, with the aim of limiting their effect on EBITDA and net income.
The counterparts to financial instruments are major financial institutions and the Group does
not have significant exposure to anyone counterpart. Management believes that the risk of
loss from these contracts is remote. The Group does not hold any financial instruments for
trading or speculative purposes.
The Group invests its cash in deposits with major banks throughout the world. The Group has
a policy of making investments only with major credit-worthy commercial institutions. These
investments generally mature within three months and the Group has not incurred any related
losses.
Management of foreign exchange risk
In order to manage risks associated with fluctuations in foreign currencies, the concept of
currency cashflow-matching is considered the primary hedging strategy. For the remaining
transactional risk derivative financial instruments such as forward exchange contracts and
foreign exchange options are negotiated with third parties. Intercompany invoicing is done in
the currency of the invoiced company. This minimizes the number of subsidiaries exposed
to transactional risk, thus guaranteeing their margins in local currency. Subsidiaries with significant
foreign currency exposure can subscribe to hedging contracts with Group Treasury.
Management of interest rate risk
Interest Rate Risk is managed in order to minimize the effects resulting from adverse movements
of interest rates on financial expenses. Geberit considers its interest rate exposure
as neutral, if the split between fixed and floating rates is 50 %. This means that the effect of an
interest rate movement on the floating rate portion is offset by an opportunity gain or loss in
the fixed rate portion.
Credit risk
The Group sells a broad range of products in the sanitary engineering field throughout the
world, but primarily within continental Europe. Ongoing credit evaluations of customers’ financial
conditions are performed and, generally, no collateral is required. Concentrations of credit
risk with respect to trade receivables are limited due to the large number of customers comprising
the Group’s customer base. The Group records allowances for potential credit losses.
Such losses, in the aggregate, have not exceeded management’s expectations.
Geberit Group 61