There are a number of risks, both specific to Orica and of a more general nature, that may affect the future financial performance of Orica. A summary of key risks is outlined below.
(i) Changes to industry structure and competition
Orica operates in highly competitive sectors and has a broad range of competitors across its global operations. Competition can arise from existing as well as new competitors, often with different operating models. If Orica does not adapt in the correct manner it may result in a loss of market share and revenue.
Orica’s strategy is to retain and grow its market share through the use of its global technical services network of mining engineers, blasting technicians and product support specialists focused on improving the efficiency, productivity and safety results of customers’ operations. In addition, it enhances its relationships with customers, suppliers and governments.
(ii) Adapting to global economic movements and market conditions
Orica’s operating and financial performance is influenced by a variety of general economic and business conditions across the range of countries in which Orica operates. These include economic growth and development, the level of inflation and government fiscal, monetary and regulatory policies. Future weakness in economic conditions may generally decrease demand for Orica’s products and may result in an adverse impact on Orica’s operating and financial performance. Orica recognises the need to adapt its operating model to align with structural changes in the market place and continually
reduce its cost base to remain competitive. To achieve this goal it continues to seek sustained process improvement initiatives and develop and provide differentiated products, services and solutions which enhance value for customers.
(iii) Regulatory matters
Orica operates in a number of highly regulated industries and is subject to a range of industry specific and general legal and other regulatory controls. These requirements may change over time and Orica’s ability to comply with these obligations may be impacted by factors within and outside of Orica’s control.
Orica operates within hazardous environments, particularly in the areas of manufacturing, storage and transportation of raw materials, products and wastes. These potential hazards may cause personal injury and/or loss of life, damage to property and contamination of the environment, which may result in the suspension of operations and the imposition of civil or criminal penalties, including fines, expenses for remediation and claims brought by governmental entities or third parties that have the potential to adversely impact Orica’s financial performance.
Orica is committed to its ongoing focus on the safety and health of its people, visitors and
communities through its safety culture based upon visible leadership and in encouraging employees and contractors that no work be undertaken if it is not safe to do so. Also by embedding an uncompromising focus on hazard identification, risk identification, risk assessment and risk management processes across all work