Saint Gobain - Registration document 2016

7 RISKS AND CONTROL 1. Risk factors

1.

Risk factors

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,

1.1

RISKS ASSOCIATED WITH THE GROUP AND ITS OPERATIONS

1.1.1

cycles Risks associated with economic

adverse impact on its businesses, financial position, results freely transfer its capital, and consequently have a material

and outlook.

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. 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 significant portion of revenues depends on the level of Most of the Group’s markets are cyclical in nature. A Europe and North America. Specifically, it is active in Eastern The Group is active worldwide, including outside Western Europe, Asia and emerging countries, particularly Brazil. In economic and political instability, as well as greater exposure certain countries located in these regions, there is greater investment levels in that country’s construction sector, and its products, could have a material adverse impact on operates, in a country in which the Group is active or markets results or outlook. consequently on the Group’s businesses, financial position, 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 economic or regulatory environment in which the Group consequences of political instability, or of an unstable the more mature markets. Thus, the direct and indirect to social disruption and infrastructure malfunctions than in the various countries in which it is active, or limit its ability to environment) could significantly increase the Group’s costs in international operations Risks associated with the Group’s 1.1.2

1.1.3

Risks associated with innovation

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 technologies and new markets is driving rapid change in and operational excellence. The emergence of new customers’ needs. This innovation policy requires significant spending on research and development, with no guaranteed impacts. The Group’s sales, operating margins and results could be remain competitive and maintain a high level of performance strategy and sustainable development policy, in order to The Group has made research and innovation the focus of its 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 1.1.4 Development of the Group’s business relies on protecting its manufacturing secrets, patents, trademarks and models and 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 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. Intellectual property risk results. guarantee the level of protection that will be accorded to its

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SAINT-GOBAIN - REGISTRATION DOCUMENT 2016

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