Report 2010 - Italcementi Group

2010 Annual Report
Presentation 6
Consolidated Annual Report Directors’ report 28
Corporate Governance Consolidated financial statements 68
Italcementi S.p.A. financial statements 158
Risks relating to availability of raw materials
The availability of raw materials is a strategic factor in investment decisions. The Group
generally sources its raw materials – limestone, clay, gypsum, aggregates and other
materials used in the production of cement, ready mixed concrete and aggregates – from
quarries it owns (the majority) or quarries rented from third parties. For these and other
significant materials, the Group has also reached specific agreements with suppliers to
guarantee continuous, stable procurement.
Risks relating to environmental policy
The section on Sustainable Development illustrates the measures taken by the Group to
manage environmental risks and control and reduce emissions. With regard to CO 2
emissions, the Group’s European companies are exposed to price fluctuations on emission
rights depending on its own rights surplus or deficit. The Group’s position is therefore
constantly monitored to ensure correct risk management (see note 22 in the notes).
Financial risks
The current period of crisis puts corporate cash flows at risk, endangering companies’ selffinancing
ability and creating growing difficulties for normal, orderly operations on the
financial market.
The Group procures sources of finance and manages interest rates, exchange rates and
counterpart risk, for all the companies in the scope of consolidation. The Group uses
derivative financial instruments to reduce the risk of fluctuations in interest rates and
exchange rates with respect to debt and its international operations. Detailed analysis of
this type of risk is provided in note 22 of the notes, on net debt.
Rating risks
The Group’s ability to compete successfully in the marketplace for funding depends on
various factors, including its credit ratings assigned by recognized ratings agencies. Its
credit ratings may change to reflect changes in its operating results, financial situation,
credit structure and liquidity profile. As a result, a rating downgrade may have negative
repercussions on the Group’s ability to raise funding.
Legal risks
Suitable provisions and write-downs have been applied with regard to existing risks and
their related economic effects. Estimates and valuations are based on available information
and are in any case regularly reviewed, with immediate recognition in the financial
statements of any variations.
Updates on the Calcestruzzi question and the other main disputes are provided in specific
sections of this report (Calcestruzzi and Disputes and pending proceedings) with further
details in the notes.
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