2012 Annual Report - Italcementi Group

The Group checks that its protection and prevention programs are consistently applied to
all personnel in production sites (employees and other) and to all operations in its
companies.
Regulatory limits and Group sustainable development goals and initiatives are examined in
a special report (Sustainability Report) and also summarized in a specific section in the
consolidated annual report.
The Asset Protection Program continued in 2012; it qualifies the importance of risks and
develops a suitable prevention and protection policy, thereby limiting damage to assets and
consequent operating losses. The program is now a consolidated Group process.
Risks relating to the general economic and industry situation
The economic and financial situation represents an element of risk for the Group, also in
relation to its specific area of business, which is sensitive to changes in the economic
situation. Household and business propensity to invest in construction is affected by the
uncertainty and constraints of the general scenario.
Risks associated with energy factors
The cost of energy factors, which represents a large portion of Group variable costs of
production, has varied significantly in the past and may continue to do so in the future as a
result of external factors beyond the Group’s control. The Group has adopted measures to
mitigate risks relating to the availability of certain energy factors by entering into mediumterm
supply contracts. Furthermore the centralized procurement organization enables the
Group to benefit from more efficient relations with suppliers and to obtain competitive
conditions.
Risks relating to the 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.
Environmental risks
The “Sustainability Report” 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 and Italcementi S.p.A. positions
are constantly monitored to ensure correct risk management (see note 20 in the Italcementi
S.p.A. notes).
Financial risks
The current period of crisis puts corporate cash flows at risk, endangering companies’ selffinancing
ability and creating difficulties for normal, orderly operations on the financial
market.
The Group procures sources of finance and manages interest rates, currency and
counterparty risk, for all the companies in the scope of consolidation. The Group uses
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