Page 21 - Annual Report 2019

Supervisory Board Report
Group Management Report
Consolidated Financial Statements
Annexes

Operating risks and opportunities
Research and development
Our research and development activities span a wide range of products and applications in the world
of textiles. Major investments could increase the risk of losses, which in turn could have an impact
on our net assets and results of operations. Nevertheless, our research and development team’s
innovative and creative work presents a tremendous opportunity for the entire Group and is
absolutely indispensable in maintaining our competitive edge.
Furthermore, close development partnerships with customers and suppliers help us leverage
synergies and explore opportunities that can extend to the purchasing/procurement and sales teams.
Moreover, our research and development team is always exchanging ideas and information with
its internal customers in the Group. This offers us the opportunity to network and transfer knowledge
within the Group and target the relevant markets, products and solutions to ensure the future success
of all of subsidiaries.

Purchasing/Procurement
The Hoftex Group is highly dependent on raw materials procurement and is therefore exposed to some
risks in the procurement market. Fluctuations in quality and price generally pose the greatest risk.
In the Hoftex Group’s divisions, commodity prices are subject to regular fluctuations. The general
increase in the global demand for raw materials means that prices tend to rise over time.
HOFTEX GROUP AG hedges its risk of quality fluctuations by continually monitoring its suppliers.
The procurement team works closely with the respective suppliers and is always looking for
development opportunities to minimise procurement risks on both sides.

The close collaboration between our procurement team and our suppliers enables us to take
advantage of the future opportunities afforded by the growing trend towards transparency as it
relates to sustainability in the value chain.

Production
HOFTEX GROUP AG production depends on detailed, forward-looking planning. Deviations from the
plan due to internal or external forces such as supplier delivery delays or change requests received
from customers on short notice can lead to the risk of production delays. This in turn can result in
overproduction or underproduction in selective cases. Close communication between the respective
production facilities and through our international positioning enable us to shift production capacities
within the Hoftex Group as needed. This allows us to respond swiftly to problems in order to mitigate
the risks mentioned above. Furthermore, production must always anticipate continuous quality, safety
and environmental risks. We have the right management systems, occupational and environmental
safety training courses and corresponding insurance policies to counteract these risks.

New production technologies made even more effective by digitalisation are an incredible opportunity
for us. Connecting our production across all of our sites could enable us to use data analysis
techniques to produce in an even more efficient manner, improve quality and achieve cost savings.

Sales/Marketing
There are many demand-related opportunities and risks that could be significant for the Hoftex Group.
Negative reports on textile industry activities in general and the automotive industry in particular
could dampen our customers’ buying behaviour. At the same time, positive reports in the media could
present opportunities for subdivisions and the entire HOFTEX GROUP AG.

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