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.