Saint Gobain - Registration document 2016

166 / 330

7 RISKS AND CONTROL
1. Risk factors
166 SAINT-GOBAIN - REGISTRATION DOCUMENT 2016
Risk factors 1.
significant risks to which the Group believes it is exposed, as of the date of this Registration Document.
The Saint-Gobain Group conducts its affairs in a constantly evolving environment. It is therefore exposed to risks, the occurrence of
which could have a material adverse effect on its businesses, financial position, results and outlook. This chapter presents the
businesses, financial position, results and outlook.
or the occurrence of which has not been considered as of that date as being likely to have a material adverse effect on the Group, its
However, there are other risks which may exist or arise, of which the Group is not aware as of the date of this Registration Document,
RISKS ASSOCIATED WITH THE GROUP AND ITS OPERATIONS 1.1
cycles
Risks associated with economic 1.1.1
economic conditions of the geographic zones, both at
Consequently, the Group’s results are sensitive to the
regional and local levels, where the Group is active.
significant portion of revenues depends on the level of
Most of the Group’s markets are cyclical in nature. A
closely follows the cyclicity of economic trends.
investment in the construction market, which generally
affected the construction industry and the Group’s
The recent global economic slowdown has negatively
operations, particularly in Europe.
effect on the Group’s sales, results, cash flow and outlook.
in financial markets conditions could have a material adverse
Further deterioration in the global economic environment and
international operations
Risks associated with the Group’s 1.1.2
Europe and North America. Specifically, it is active in Eastern
The Group is active worldwide, including outside Western
investment levels in that country’s construction sector, and
economic or regulatory environment in which the Group
consequences of political instability, or of an unstable
its products, could have a material adverse impact on
operates, in a country in which the Group is active or markets
economic and political instability, as well as greater exposure
certain countries located in these regions, there is greater
the more mature markets. Thus, the direct and indirect
to social disruption and infrastructure malfunctions than in
Europe, Asia and emerging countries, particularly Brazil. In
results or outlook.
consequently on the Group’s businesses, financial position,
the various countries in which it is active, or limit its ability to
environment) could significantly increase the Group’s costs in
adverse impact on its businesses, financial position, results
freely transfer its capital, and consequently have a material
other things, taxation, restrictions on capital transfers,
Moreover, legal or regulatory changes (involving, among
licenses, the employment system or health, safety or the
customs duties, intellectual property and import and export
and outlook.
Risks associated with innovation 1.1.3
with these changes and integrate these new technologies into
some of the Group’s markets. The Group has to keep pace
its product offerings, in order to respond effectively to
remain competitive and maintain a high level of performance
strategy and sustainable development policy, in order to
technologies and new markets is driving rapid change in
and operational excellence. The emergence of new
The Group has made research and innovation the focus of its
customers’ needs.
This innovation policy requires significant spending on
research and development, with no guaranteed impacts.
rapidly bring new products to market, or if competing
affected if it fails to invest in appropriate technologies or to
adequately address customer needs.
products are introduced or the Group’s new products do not
The Group’s sales, operating margins and results could be
Intellectual property risk 1.1.4
Development of the Group’s business relies on protecting its
manufacturing secrets, patents, trademarks and models and
results.
obtain, protect and preserve its intellectual property rights,
other intellectual property rights. If the Group was unable to
technologies and processes, with a material adverse effect on
this could result in the loss of its exclusive right to use
guarantee the level of protection that will be accorded to its
Since the Group’s activities are, in part, in countries where the
as in Western Europe or North America, the Group cannot
protection of intellectual property rights is not as developed
counterfeiting of its products, and the appropriation or illicit
portfolio of patents and brands, and must address risks of
use of its intellectual property rights.