Interim Report January - March 2013 | April 24, 2013
Principal short-term risks and uncertainties of the Group derive from a potential renewed downturn in the world economy due, for example, to the sovereign credit crisis. A decrease in the demand for Konecranes’ products and services may have a negative effect on the Group’s pricing power and may result in a decrease in profits, possible impairment of goodwill and other assets, or in inventory obsolescence.
A renewed shortage of credit may cause difficulties for Konecranes’ customers, suppliers and financial and other counterparties. The risk may be realized as a shortage of supplies or defaulting liabilities. A growing share of Konecranes’ business is derived from the emerging markets. This has had a negative impact on the aging structure of accounts receivable, and may increase the need for higher provisions for doubtful accounts.
Challenges in financing may force customers to postpone projects or even to cancel existing orders. A renewed downturn in the world economy could increase postponement of deliveries and cancellations of orders. Advance payments are an integral part of the Konecranes’ project business and they have played a crucial role in mitigating the adverse effects from postponements of certain deliveries and minor cancellations. Konecranes intends to avoid incurring costs of major projects under construction in excess of advance payments. However, it is possible that in some projects cost-related commitments may temporarily exceed the amount of advance payments.
Group’s other risks have remained unchanged and the pivotal risks are presented in the Annual Report.