2011 Annual Report - Italcementi Group

2011 Annual Report
Presentation 4
General information 15
Annual Report Consolidated Annual Report Directors’ report 150
Extraordinary session Italcementi S.p.A. Annual Report Separate financial statements 239
The Asset Protection Program continued in 2011; 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, can vary significantly as a result of factors beyond the Group’s control. The
Group has adopted measures to mitigate risks for certain energy factors by entering into
medium-term 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 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” and the section on Sustainable Development in the
consolidated annual report illustrate 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 and Italcementi S.p.A.’s
positions are constantly monitored to ensure correct risk management (see note 19 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
derivatives 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 the notes, specifically in note 19 dedicated to net debt.
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