Risks related to the industries in which the Group operates

Cyclicality
The industries in which the Andritz Group operates are cyclical.  This is especially true of the Pulp and Paper and the Rolling Mills and Strip Processing Lines Business Areas, and, to a lesser extent, of the Environment and Process and Feed Technology Business Areas.  The industries that these Business Areas deal with are directly dependent on economic development and the frequent fluctuations in demand for their products that come with it.  The price level for these products is in part directly dependent on the prevailing relationship between supply and demand.  Possible price fluctuations are therefore apt to have a direct influence on capital investment decisions of Andritz Group customers, with subsequent influence on Sales and the ability to cover the Group’s fixed costs.  

Customer concentration
There is a trend toward company mergers in the buyer industries of the Andritz Group, especially in the pulp and paper and the steel industry.  This might result in a reduction of the number of customers in the future and in the Group having to face corporations with greater purchasing power.  Customer dependence might increase, which could have direct consequences on the Group’s business activities.

Uncertainty of future contracts
The Group’s future performance depends on, among other things, whether and when it will receive certain new contracts.  It can sometimes be difficult to predict at which point in time an order which the Andritz Group has applied for will actually be awarded.  Contract awards are often affected by events outside the control of the Group, such as prices and demand, and general economic conditions.  This can cause difficulties in matching workforce with contract needs.  Although Andritz has so far been able to successfully implement its strategy of reducing the extent to which it outsources non-essential components in periods of Sales decline in order to minimize the risk of overcapacity, this may change in the future.

Environmental matters
The Group’s operations are subject to numerous national and supranational environmental regulations.  The Group uses and generates hazardous substances and waste in its manufacturing operations.  In addition, many of the Group’s current and former properties are or have been used for industrial purposes, and disposal of waste at disposal sites has been arranged for.  It cannot be excluded that the Group may in the future be subject to liabilities relating to the investigation and clean-up of contaminated areas.