Risks and business uncertainties
Valmet’s operations are affected by various strategic, financial, operational and hazard risks. Valmet takes measures to exploit emerging opportunities and to limit the adverse effects of potential threats. If such threats materialized, they could have material adverse effects on Valmet’s business, financial situation and operating result or on the value of shares and other securities.
Threats related to global economy and markets
Financial uncertainty in the global economy, coupled with fluctuations in exchange rates and tightening financial market regulations could reduce the investment appetite of Valmet’s customers. Furthermore, if global economic growth weakens, it might have adverse effects on new projects under negotiation or on projects in the order backlog. If economic growth slows significantly, the markets for Valmet’s products may shrink, which may lead to, for example, tougher price competition. Changes and uncertainty in future regulation and legislation can also critically affect especially the energy business. In addition, changes in labor costs and the prices of raw materials and components can affect Valmet’s profitability.
Project business risks
An important part of Valmet’s business consists of project business. Pulp business projects in particular are large, thus project-specific risk management is crucial. Key risks related to projects are project cost estimation, scheduling, project risk management, quality and performance risks, and materials management risks. Project business risk management is based on careful planning and on continuous, systematic monitoring and evaluation. Project risks are managed by improving and continuously developing project management processes and the related systems.
Most significant risks
In 2018 annual risk assessment Valmet’s risk management identified the most significant threats and opportunities being customer industry cycles, product cost competitiveness, customer interface management, company’s mergers and acquisition target availability and utilization.
Valmet’s management estimates that the company’s overall risk level is currently manageable in proportion to the scope of its operations and the practical measures available for managing these risks.
Read more on risks and business uncertainties in the latest result publication.