Page 20 - Annual Report 2019

Supervisory Board Report
Group Management Report
Consolidated Financial Statements
Annexes

4.1. Strategic and market-driven risks and opportunities

HOFTEX GROUP AG depends on dynamic markets in a range of industry sectors. In terms of
customers, the most important sectors are the automotive industry and the household textile
industry. In terms of suppliers, HOFTEX GROUP AG directly depends on the fibre production industry.
A downturn in these industry sectors could pose a risk to the Hoftex Group in general. We are
continually adapting our sales and marketing strategy to the current conditions in an attempt to
win new markets and customers to counteract the risks mentioned above and further diversify
our sales strategy.

We face strong competition in the textile industry worldwide, with the most imminent threat
coming from Chinese competitors making inroads into the European market. A further increase
in competitive pressure, exacerbated by rising raw material prices and growing price pressure
from customers, could have a significant impact on our results of operations and net assets.
As a countermeasure, we always strive for close, positive customer relationships and constantly
analyse the markets that are relevant to us.
Digitalisation is another global economic driver that should not be underestimated and is thus also
important both in the textile industry and especially for us. Our aim is to remain one step ahead of the
rest of the industry with digitalisation initiatives in production, administration and sales. We view this
as a crucial, forward-looking opportunity to keep pace with market trends and take on a pioneering
role in the industry.
More and more digitalised processes and technologies could enable us to more fully leverage our
quality assurance systems and tools along our entire value chain, which in turn could help reduce
the risk of complaints. Moreover, we are constantly seeking potential new suppliers and will strive
for new developments with our suppliers in the future to increase loyalty and find new types of raw
materials for our products and customers.
The spread of novel coronavirus (SARSCoV-2) poses risks to the Hoftex Group both in terms
of procurement and sales. The measures devised by governments around the world to combat
coronavirus have brought customer and supplier production to a halt. The actions impact the entire
value chain, from the availability of raw materials to the sale of finished goods to continuing
investment projects all the way to maintaining production amid staffing constraints. The global
sourcing methods developed over the years enable the Hoftex Group to switch to alternative supply
sources. Production facilities in various regions and countries enable us to produce goods for local
markets, thereby reducing international transport routes. Nonetheless, this pandemic will have
a negative impact on the Hoftex Group’s business and earnings situation.

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