Group Management Report Products Safety and Health Environment Human Resources Social Commitment Consolidated Financial Statements 71
innovative ability. In the process, it is decisive that we coop-
erate closely with our customers at an early stage of devel-
opment work to adapt to market needs. With our innova-
tion strategy, we can counter increased competition in
our markets.
A loss of, mergers of, or backward integration of cus-
tomers can lead to major changes in the customer structure.
Due to our very diversified customer structure, however,
these risks are limited. In addition, we cooperate closely with
our core customers within the framework of our key ac-
count management.
In the year under review, we only slightly changed our
assessment of the probability of occurrence and loss potential
from sales risks.
Risks from Company Acquisitions and Investments
Apart from operating growth, acquisitions of companies, busi-
ness activities, and individual technologies play a key role
for the implementation of the strategy for profitable growth at
ALTANA. Depending on the size of the activities acquired,
inadequate integration can place a burden on the Group’s
earnings situation and limit its financial headroom. In ad-
dition, a business performance that is worse than what was
expected when the acquisition was made can lead to im-
pairments of assets with a negative impact on earnings.
To minimize the effects of the risks from company acqui-
sitions, we examine our acquisition targets systematically
and comprehensively and analyze them in detail in a multi-
stage approval process.
In 2017, we assessed the risk of impairments of assets
from acquisitions, which we classify as a medium risk, as
being slightly higher than in the previous year. This resulted
from increased loss potential – due to the high number of
acquisitions we made in the past fiscal year – with a decreased
probability of occurrence.
In addition to general economic risks, there are market-
related sales risks concerning individual product groups or application
areas. Particularly medium- to long-term trends
that structurally lead to a decrease in demand in our target
markets can mean that we will not achieve our growth
and profitability targets. We try to control industry-related
sales risks by broadly diversifying our offer. We supply many
different industries, which in turn sell their end products in
various markets. Therefore, our dependence on the under-
lying consumer segments is limited. We estimate that no
single consumer segment (e. g. the automotive industry)
accounts for more than 20 % of our sales.
The analysis of our industry-specific and application-re-
lated sales is a component of our annual strategy process.
In addition, we examine changes in future growth potential
arising from demand trends and technological develop-
ments, and adjust our strategic orientation in the divisions if
necessary.
The occurrence of a global economic crisis or the
emergence of regional economic crises are two significant
economic and industry risks that are rated as “high” or
“medium” risks. In the 2017 fiscal year, we changed our as-
sessments of the probability of these risks occurring and
of the potential damages. We assess the risk of both of these
things to be lower than in the previous year.
Sales Risks
Sales risks result mainly from intensified competition or shifts
in customer structure. They include sales risks for individual
products or product groups due to specific demand trends.
This can lead to decreasing sales revenues, which can
be caused by declining sales volumes or falling prices. Since
in many cases we cannot adjust the cost structure in the
short term, this can lead to a drop in profitability.
We counter sales risks by continually optimizing our
product and service portfolio, above all on the basis of our