AT&S World

Marketing risks
Currently, the Group generates its revenue primarily in the areas
mobile devices, automotive and industry. A reduction in the future
volume growth in these three areas may have negative effects
on the quantities produced and, subsequently, on the Group’s
profit/loss for the year. Particularly the area mobile devices with
a share in total revenues of 56% (2009/10: 59%) has a relatively
large leverage.
In the past fiscal year, the Group supplied approx. 600 customers,
with the largest 5 customers indirectly accounting for 60%
(2009/10: 55%) of total revenues. Even though the Group establishes
business relations with new customers, it has to be assumed
that the customer concentration will remain high in the
near future. Thus, marketing risks arise particularly from declines
in volumes sold to major customers. Significant declines
in business at our major customers and deterioration of business
relations with our main customers may eventually result in a
reduction in sales volumes.
Apart from changes in quantity, price changes also have a direct
effect on the Group’s profit/loss for the year. The price level for
printed circuit boards primarily depends on global demand and
available production capacities. In particular, the demand for
printed circuit boards of the high-end segment in the area of
mobile devices, which had increased considerably in the past
year and which are used in so-called smartphones, had a positive
impact on the price level in the past year. A slowdown in
this trend toward high-end mobile phones might have a negative
impact on the profitability of the Group. Regarding the impact
of the nuclear reactor disaster in Japan on consumer behaviour,
the visibility is currently still low. However, changes may arise
particularly in the areas industrial electronics and automotive.
Consolidated Financial Statements as of 31 March 2011
Supply risks
Regarding supply, the Group is exposed to the supplier default
risk. The Group purchases its raw materials mainly from suppliers
in Asia. In order to minimise the risk of business interruptions
due to supplier defaults, the Group cooperates only with suppliers
who stand for high dependability, quality and innovation.
Moreover, the Group tries to spread risks by cooperating with
at least two suppliers for all key raw materials.
In addition to the supplier default risk, the Group is also exposed
to the purchase price risk. The economic recovery results in a
rise in demand for the Group’s key raw materials – gold, copper
and oil. The Group tries to anticipate as far as possible the price
level of raw materials and to consider it in the product calculation.
However, unexpected changes in raw material prices may
have negative as well as positive effects on the Group’s profit/
loss for the year.
Risk management system
In the risk catalogue defined at the group level, the company-wide
risk and opportunity management system contains additional
risk categories, which most notably relate to strategic risks, environmental
risks and operating as well as organizational risks.
The risk catalogue, which represents a guideline for the corporate
segments in the identification of risks, is dynamically adjusted
to the changing situation of the Group. Main objective of the
groupwide risk and opportunity management is the optimization
of the overall risk position, while at the same time making use of
opportunities arising. Regular reporting is made to the Executive
and Supervisory Board of the Group.
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