compared to the previous year, but the assessment of the
probability of occurrence decreased in comparison. Overall,
the magnitude of the risk assessed continues to be classi-
fied as high.
Risks from Business Combinations, Participations,
and Other Investments
Apart from operating growth, acquisitions of companies,
business activities, and individual technologies play a key role
in the implementation of the strategy for sustainable 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 addition, a business performance that is worse
than what was expected when the acquisition was made can
lead to impairments of assets with a negative impact on
To minimize the effects of the risks from business combinations,
we examine our acquisition targets systemati-
cally and comprehensively and analyze them in detail in a
multistage approval process.
Impairment losses recognized in the past fiscal year further
reduced the impairment risk reported as an individual
risk, both in terms of amount and probability of occurrence.
Therefore, compared to the previous year, the assessed risk
for impairment of assets from acquisitions is now only classified
as a low risk (previous year: medium).
To implement its strategic goals, ALTANA is constantly
expanding and renewing its development, production, and
other facilities. The projects, some of which are very complex,
are always subject to certain risks regarding adherence
to the budgeted schedules, costs, and the realization of
the expected goals. The projects regularly undergo extensive
approval and monitoring routines. Due to the high volume
of these projects, the potential losses have also increased
compared with the previous year, although the probability
of occurrence has decreased slightly, so we now classify risks
from capital expenditures as medium risks.
Among the main procurement risks are a restriction in the
availability of individual raw materials and transport ser-
vices as well as significant price increases for raw materials
and logistics, which we cannot or can only partially pass
on to the markets in the short term and which may thus have
a negative influence on the Group’s earnings situation.
We continually analyze the situation on the raw-materials
markets that are relevant for ALTANA. By doing so,
we can identify price trends and structural shifts on the part
of suppliers at an early stage and devise suitable measures.
We take this knowledge into account when we arrange supply
contracts. In addition, we bear in mind the volatility of
raw-materials prices in our customer relations. To be able to
pass on price increases to the markets in the short term,
we use the flexibility of price mechanisms and price lockup
An increased probability of occurrence of procurement
risks and a further rise in the level of losses in the area of
raw material procurement due to pandemic-related disruptions
to supply chains led to an increase in the risk rating
in this risk group from medium to high.
Financial Market Risks
Financial market risks primarily concern short-term and significant
changes in exchange-rate relations and interest
rates, as well as default risks and the covering of financial
Due to exchange-rate fluctuations, the translation of foreign
currency positions into the Group currency, the euro,
can have a negative effect on the Group’s sales and earnings
performance (translation risks). Such negative effects can
also result from business conducted in a foreign currency
(transaction risks). Interest-rate changes influence financ-
80 Expected Developments