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Risk Report
conSoliDateD MANAGEMENT REPORT / PERFORMANCE OF PALFINGER
Quality, price and supply reliability are of the essence in procurement. Suppliers are actively supported
when it comes to making further improvements so as to counter the risk of supply shortages.
PALFINGER has implemented special supplier selection procedures, risk management and supplier
management systems to monitor its suppliers’ performances.
At present, energy costs constitute a small percentage of PALFINGER’s operating expenses. In the
medium term, this percentage may, however, rise slightly due to the upward trend in prices in
connection with growing global demand and the politically uncertain situation in some petrolproducing
countries. Moreover, it is expected that taxes on fossil fuels will go up, especially in
Europe. PALFINGER has therefore attached great priority to energy efficiency within the scope of
its facility management project. In 2011, energy-optimization measures were implemented at
European sites, and additional sites are expected to follow suit.
ProDUction
For PALFINGER, the most important value-creation phases are the manufacturing and assembly
of its products. The risk of an interruption of operations and the related direct impact on the Company’s
results was identified in a risk analysis. This risk has been constantly minimized by these analyses
and the resulting measures taken, such as the renewal of machinery, the introduction of Total
Productive Maintenance processes and the optimization of the PALFINGER ProductionSystem.
PALFINGER promotes its position as market leader by upholding the top-notch quality of products
and services. PALFINGER has implemented an ISO 9001 certified quality management system.
Notwithstanding this systematic approach within PALFINGER, it is not possible to fully exclude the
risk of product liability. Defects in quality, if any, are remedied in line with customer requests. The
Company has insurance cover for potential losses; however, any detriment to PALFINGER’s image
would represent a considerable risk for the Company.
There are risks relating to breakdowns such as interruptions of energy supply, technical failure, fire,
explosions and other possible disruptions. The Company has taken out adequate insurance cover
for losses caused by such interruptions of operations.
Internal risks relating to supporting processes
Accounting and finance
Due to the ongoing financial crisis in Europe and the USA, it is essential for PALFINGER to have a
flexible capital structure. Raising capital is something that may become more difficult in the near
future. The option of financing relevant growth projects from the Company’s own resources may
prove to be a competitive advantage.
The uncertainty in market development that has been growing over the past few months has also
confronted PALFINGER with new challenges. The consistent pursuit of long-term strategic goals is a
fundamental factor of success; short-term adjustments and decisions are made on the basis of the
Company’s rolling forecast. All relevant information provided by market players on the customer
and supplier side goes into this forecast to create a data base that is as valid as possible. Nevertheless,
there is a limit to the transparency of future business performance, which may lead to significant
deviations in practice. Decisions that have a material financial effect, such as investments in
site expansions, may turn out to be not so profitable afterwards. Thanks to steering committees
operating in a timely manner, efficient controlling and short decision-making processes, PALFINGER
is in a position to respond to changes in the market environment at all times.
palfinger Annual Report 2011
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