Saint Gobain - Registration document 2016

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7 RISKS AND CONTROL
1. Risk factors
168 SAINT-GOBAIN - REGISTRATION DOCUMENT 2016
infrastructure and applications, data backups and business
To minimize the impact of this type of malfunction, the
information systems governance and security, relating to
Information Systems Department has set strict rules for
by the Internal Audit and Control Department.
continuity plans, rolled out at the Group level and controlled
operations, the protection of its know-how and its financial
These malfunctions may adversely affect the Group’s
results.
Customer credit risk 1.1.9
section 1). Nevertheless, changes in the economic situation
Note 3 to the Consolidated Financial Statements, chapter 9,
could lead to an increase in customer credit risk.
its wide range of businesses, worldwide presence and very
The Group’s exposure to customer credit risk is limited due to
analyzed and provisions are booked whenever necessary (see
large customer base. Past-due receivables are regularly
GROUP STRUCTURAL RISKS 1.2
Cost reduction and restructuring risks 1.2.1
than expected, or the cost savings may be less than expected
restructuring operations and other initiatives may cost more
restructuring costs and/or the Group’s inability to achieve the
or take longer than expected to achieve. An increase in
there is no guarantee that the forecast reductions will be
restructuring initiatives. While further savings are planned,
higher than originally budgeted. In particular, certain
achieved or that the related restructuring costs will not be
The Group has undertaken a variety of cost-cutting and
expected savings could have a material adverse effect on the
Group’s results and outlook.
commitments
pension commitments and similar
Risks associated with the Group’s 1.2.2
Netherlands and the United Kingdom) and in North America
Western Europe (particularly France, Germany, the
new entrants. At December 31, 2016, total commitments
(United States and Canada). Most of these plans are closed to
pension and other post-employment benefit plans, mainly in
The Group makes significant accounting accruals to cover
under pension and other post-employment benefit plans
were €12.7 billion.
higher inflation, or a fall in the market values of plan assets,
measure future commitments, a change in life expectancy or
consisting mainly of equities and bonds.
2016) may be affected by adverse changes in the actuarial
consolidated balance sheet (€3.5 billion at December 31,
obligation, by a reduction in the discount rates used to
assumptions used to calculate the projected benefit
The provision for pension plans recognized in the
Risks associated with goodwill and 1.2.3
equipment and intangible assets
impairment of property, plant and
impairment periodically and whenever there is an indication
intangible assets with indefinite use lives are tested for
Group’s intangible assets, representing €2.1 billion and
Brands and goodwill make up a significant proportion of the
Group accounting policies, goodwill and certain other
€10.7 billion, respectively, at December 31, 2016. In line with
adverse effect on consolidated net income.
recognition of impairment losses on goodwill could have an
impaired as a result of worse-than-expected Group
Goodwill and other identified intangible assets may become
legal or regulatory changes or many other factors. The
performance, unfavorable market conditions, unfavorable
that their carrying amount may not be fully recoverable.
become impaired in the event of adverse development of the
2016) represent roughly one-third of total assets and may
Property, plant and equipment (€11.7 billion at December 31,
business.
representing 27% of total assets (26% in 2015), which were
December 31, 2016 (€11,587 million at December 31, 2015),
December 31, 2015).
€43,767 million at December 31, 2016 (€44,856 million at
Property Plant and equipment totaled €11,654 million at