2009 - Jaarverslag

CORPORATE INFORMATIONRISK MANAGEMENTThere are risks associated with the business strategy. Externaleconomic factors, unpredictability of market developments, calamitiesand human factors can impede the achievement of business objectives.TenCate strives to control the achievement of strategic and operationalobjectives as effectively as possible. To that end, TenCate has accessto appropriate risk management and control measures. As a result ofthese:◾ The main risks are identified in time and remain limited to anacceptable level;◾ There is a reasonable degree of certainty that the financialreporting contains no material misstatements;◾ The applicable regulations and legislation are complied with.The market areas in which TenCate operates – protective fabrics,aerospace, antiballistics, geotextiles, synthetic turf and technicalcomponents – entail specific strategic and commercial risks. In mostcases, TenCate pursues these activities on four continents, each withits own dynamics. TenCate is therefore not part of a monoculture.Consequently, none of the risks detailed below will have a dominantinfluence.A number of specific significant risks applying to TenCate have beenidentified. The summary of the main specific risk areas below is notexhaustive. It is possible that risks which have not currently beenidentified or which are not seen as material will subsequently have asignificant negative effect on TenCate’s ability to achieve its businessobjectives. The risk management and control measures are aimed attimely identification of these risks.MARKET RISKSMarketThe market risks differ depending on the market segment. In somesegments, such as base fabrics for professional wear, there isintensive competition and high price elasticity. In addition, productionof less distinctive products is gradually shifting to Asia.In other market segments, such as safety fabrics, antiballistics,geotextiles and artificial grass, TenCate has a technological lead, inmany cases with associated market leadership. This provides noguarantee for the future. Products which reach the end of their lifecycle must be succeeded in good time by new, improved and distinctiveversions.Protection and patenting of intellectual property strengthens theunique positions of the products.End-user marketing provides pull effects, as a result of which the valuechain is controlled more effectively and distinctive ability is rewardedby the market.There are also markets which feature long-term developmentprogrammes, such as the aerospace market. Growth in revenues isprotected by qualification processes. A precondition is that TenCatecontinues to adhere to the quality guidelines specified by thecustomers.Macroeconomic developmentsMacroeconomic developments have a major impact on the level ofdemand for TenCate products. That was illustrated very clearly duringthe 2009 recession year. Sales in some market groups and productmarket-technologycombinations were directly impacted by the level ofeconomic activity of industrial customers and end-users. An importantfactor is government expenditure in the major countries. The demandfor protective fabrics and antiballistics is controlled by public sectorAnnual Report 2009 61