Plastic Omnium - 2018 Registration Document

1 PRESENTATION OF PLASTIC OMNIUM AND ITS BUSINESSES Risk factors and control PLASTIC OMNIUM 2018 REGISTRATION DOCUMENT 33 Finally, the Group has recently set up scientific and technological partnerships in the fuel cell and plastronics segments. A development project in partnership with the German automotive equipment manufacturer Brose, has also just been announced to develop a door design offering new functionalities, innovative styling and assembly facilities. Lastly, in January 2019, a strategic partnership with the German parts manufacturer, Hella, with regard to an innovative concept that combines exterior coach work systems and lighting. RISK FACTORS AND CONTROL 1.7 AFR PRINCIPAL RISK FACTORS 1.7.1 Compagnie Plastic Omnium has reviewed the risks that could have a material adverse effect on its business, financial position, or results, and considers that there are no significant risks other than those listed below. OPERATIONAL RISKS Risk related to automotive programs Identification of risk Each automotive program has risks which could reduce its profitability from that initially expected. The risk in particular affects programs incorporating innovations, which could necessitate higher levels of investment and/or expenses by Compagnie Plastic Omnium than initially forecast, in order to reach the level of quality required. In addition, each automotive program is subject to risks in terms of manufacturing volumes, which depend on a wide range of factors, some of which are regional in nature, such as economic activity, carmaker production strategy, consumer access to credit and the regulatory environment, but also on factors specific to each vehicle, such as the attractiveness of its design. Risk management Compagnie Plastic Omnium’s commitment to diversifying its businesses and increasing the number of automotive programs represents a key component of its strategic vision that significantly reduces exposure to geographic and other risks. Compagnie Plastic Omnium has 83 customer brands, comprising nearly all of the world’s major carmakers and serving different market segments and three distinct product families. It has continued to diversify its exposure to global automotive production markets with its businesses spread across 26 countries and with the launch of 178 new programs in production in 2018. In terms of commitments, all new projects are subject to a highly detailed approval process. The largest projects must be authorized by Compagnie Plastic Omnium’s senior management. Once a project has been accepted, a structured operational and financial monitoring system is set up to track it. Risk related to acquisitions Identification of risk Compagnie Plastic Omnium periodically carries out external growth operations through acquisitions that may be of a significant size across the Group. These acquisitions are decided on the basis of assumptions, notably, objectives relating to synergies and future results, which may not be achieved in the timescales or to the extent initially expected. In particular, Compagnie Plastic Omnium could encounter difficulties integrating the companies acquired, their technologies, product ranges and employees. Compagnie Plastic Omnium may also be unable to retain or develop strategic clients of the acquired companies. Risk management Compagnie Plastic Omnium takes great care to put resources in place dedicated to integrating acquired companies and sets detailed objectives for these, broken down into action plans. Particular care is taken to ensure the swift implementation of Plastic Omnium’s systems in acquired entities, in order to effectively manage these action plans and measure the achievement of objectives. Information technology risk Identification of risk The day-to-day activities of Compagnie Plastic Omnium’s business lines and support services could be affected by the unavailability of critical IT systems, mainly due to system breakdown, network failure, damage to infrastructure or internal or external malicious acts. Risk management The Information Systems Department, with the support of senior management, has placed increased emphasis on systems standardization and consolidation, and continues to upgrade IT and network production infrastructures, business applications and workstation services. Management pays special attention to the incorporation of new technologies and to the availability and integrity of Company data. The security of technical systems, applications and networks is addressed at the outset of projects. It is constantly monitored and regularly audited. INDUSTRIAL AND ENVIRONMENTAL RISKS Health, Safety and Environment Risk Identification of risk Like any industrial activity, Compagnie Plastic Omnium’s sites are exposed to risks such as workplace accidents, occupational illnesses, environmental damage (pollution), non-compliance or the tightening of regulatory requirements applicable in the area of HSE. Such events may generate additional costs or investment expenses for Compagnie Plastic Omnium in order to remedy the situation, comply or in respect of any sanctions.