The good prospects are based on the all-embracing ... - ALNO AG

50 sinGLE-Entity and GRoup manaGEmEnt REpoRt | Risks / oppoRtunitiEs and FutuRE pERspECtivEs
servICes
Risks exist in particular with regard to the development
of transport costs due to the sharp rise in fuel prices and
the foreseeable shortage of carriers' capacity. ALNO is
planning to reorganize its logistics sector in 2012 so that
it can once again operate cost-efficiently and counter the
risks arising in conjunction with market developments.
MarKeT rIsKs
In the kitchen furniture sector, the ALNO Group operates
in a market characterized by fierce competition. <strong>The</strong> pressure
on margins is increasing constantly due to fiercely
competitive prices, especially in the lower price segments,
and simultaneously squeezing less competitive manufacturers
out of the market. <strong>The</strong> activities of competitors and
the trade could lead to distinctly lower sales revenue and
earnings for the ALNO Group.
<strong>The</strong> ALNO Group's customers <strong>are</strong> primarily retailers, the
vast majority of whom belong to purchasing associations.
If major purchasing associations were to reduce their order
volumes, terminate blanket agreements or be compelled
to file for insolvency, and if the ALNO Group were unable
to win new customers of comparable magnitude or were
unable to obtain a commensurate increase in the volumes
ordered by existing customers, this would lead to a tangible
reduction in capacity utilization and sales revenue,
as well as to the loss of receivables for the ALNO Group.
<strong>The</strong> process of repositioning the ALNO Group brands
must also be continued and the new sales structure must
become more firmly established. <strong>The</strong>se processes also
entail risks.
Germany is the ALNO Group's main market, accounting
for more than 70% of the total sales revenue. Other major
markets include the United Kingdom, France, Austria,
Switzerland, Spain, Italy and the Benelux countries. <strong>The</strong>se
markets have developed differently in the past. ALNO
AG presumes that the individual markets will continue to
develop differently in the future too, depending on the influence
of economic factors. For this reason, the ALNO Group
will step up its sales activities in selected foreign markets
in order to minimize the risks.
IT rIsKs
A large part of the ALNO Group's production, w<strong>are</strong>house
management and accounting is essentially <strong>based</strong> on computers.
Failure of the computer or production systems could
bring production to a halt and thus lead to a considerable
financial loss for the company. What's more, ALNO AG has
outsourced its IT systems almost entirely. Any disruptions in
the contractual relationship governing services throughout
the IT sector at ALNO AG would impair all work processes
in the company's data processing.
sTraTeGIC rIsKs
To stabilize the net assets, financial position and results of
operations of the ALNO Group, the company considers it
necessary to take steps to boost efficiency in administration
and sales, to cut costs and ensure profitable growth,
in particular by repositioning the brands. <strong>The</strong>se measures
require investments and corresponding funds. In the year
under review, the reorganization concepts were adjusted in
the light of changed market conditions and new priorities
within the Group. Instead of standardizing administration
processes almost simultaneously throughout the Group,
it is now planned to harmonize processes in stages. This
gradual implementation at different times gives rise to the
risk of delays in reducing administration costs.
opportunities
voluMe aNd value of sales
Series production of the product "WELLMANN new" presented
at the company exhibition in 2010 started in 2011.
This product was more favourably received by the market
than originally planned and series production of the product
"WELLMANN old" was discontinued in summer 2011
instead of at year-end as originally planned. Particularly
the new lacquer fronts have been very well received by
the market. For a large number of customers, the logistics
service was improved together with the change of product,
in that the accuracy of delivery schedules was improved
when confirming orders. In other words: the so-called
"two-week logic" was eliminated in Germany.
For the ALNO brand, the upward trend in volume of sales of
the "glass kitchens", i.e. high-price ranges with glass fronts,
has continued. On the basis of this success, a new front
made from ceramic material was presented at the company
exhibition. This front is resistant to scratching and was very
well received by both trade visitors and customers. Since
then, the new kitchen has already won several innovation
awards. This product will help considerably in strengthening
the position of the ALNO brand.