Plastic Omnium // 2021 Universal Registration Document
RISK FACTORS AND MANAGEMENT Main risk factors
CREDIT AND/OR COUNTERPARTY RISKS
In 2021, Compagnie Plastic Omnium SE had no major supplier failures that had a significant impact on its own operations or those of its customers.
RISKS RELATED TO CUSTOMERS Identification of risk
MARKET RISKS
Due to its business as an automotive supplier, Compagnie Plastic Omnium SE has a limited number of customers and cannot rule out the possibility that one of its customers might find itself in financial difficulty, thus preventing it from respecting certain commitments. Risk management The balanced division of revenue by carmaker has improved in recent years. In all the Group’s businesses, review procedures are carried out before the results of bids are issued, in particular to ensure a balanced portfolio of customer receivables, in line with a target profile defined and continually monitored by Compagnie Plastic Omnium SE’s Senior Executives. In terms of risk management, the Group’s business lines have set up structured customer risk monitoring and debt collection processes. The average DSO was 47 days in 2021. Receivables over six months past due amounted to €10.7 million net of provisions. At December 31, 2021 the risk of non-recovery was low and involved only a non-material amount of receivables more than twelve months past due (see Note 6.3.1 to the consolidated financial statements page 268). Default by a major supplier, in particular a supplier of specific components, for which rapid substitution is difficult, given the work and time necessary to accredit a new supplier, could disrupt Compagnie Plastic Omnium SE’s production. This default could also generate additional investments or costs impacting Compagnie Plastic Omnium SE’s operating margin. The principal failure scenarios are a supplier’s bankruptcy, the supplier’s failure to meet quality specifications, a raw material or component shortage, or even a fire, natural disaster, strike or pandemic, which could impact a supplier’s plant, causing reductions or disruption to its production over the long term. Risk management With a view to reducing these risks, all suppliers of specific automotive components must be accredited according to meticulously defined operational, financial and non-financial criteria. For approved suppliers, these criteria are then regularly monitored by the Purchasing and Quality Departments. At-risk suppliers are subject to special monitoring and when necessary safety stocks are put in place. Lastly, operational departments are especially vigilant in this area. They focus on effectively anticipating and managing breakdowns in the supply chain that, while infrequent, can ultimately develop rapidly. RISKS RELATED TO SUPPLIERS Identification of risk
Disclosures about market risks are also provided in the notes to the consolidated financial statements.
RISKS RELATED TO COMMODITY PRICES Identification of risk
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Compagnie Plastic Omnium SE’s business requires the purchase of large quantities of raw materials (particularly plastic and paints) subject to price variations that could have an impact on its operating margin. Risk management To limit the impact of price fluctuations, Compagnie Plastic Omnium SE has implemented at least partial price indexation clauses with most of its customers or, failing that, regularly renegotiates selling prices.
LEGAL RISKS
Compagnie Plastic Omnium SE’s Legal Affairs Department is supported, as needed, by local advisors and a network of correspondents in the main countries. The department helps operational and functional departments, in all their on-going and exceptional operations, to prevent, anticipate and manage legal risks relating to the business, as well as being responsible for claims and litigation. At the date of this report, there is no dispute or lawsuit and no governmental, legal or arbitration proceeding (including all proceedings of which Compagnie Plastic Omnium SE is aware, which are pending or with which the Group is threatened) that might have, or has had during the past twelve months, a negative material effect on the financial position or profitability of the Plastic Omnium Group.
RISKS RELATED TO COMPETITION LAW Identification of risk
The main markets in which Compagnie Plastic Omnium SE operates are only accessible to a limited number of players (regional or global) due to the expertise required and the investments needed in research, product development and industrial facilities. This specific market context is likely to increase the risk for Compagnie Plastic Omnium SE of non-compliance with competition law regulations by one of its employees (in particular, an agreement with a competitor regarding the fixing of sales prices, sales conditions or the sharing of markets) with, as a consequence, penalties that could be imposed on it by the competition authorities.
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PLASTIC OMNIUM UNIVERSAL REGISTRATION DOCUMENT 2021
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