Navigating Risk: SecoWarwick's Vulnerabilities in Business Cycles and Currency Fluctuations
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Risk factors
1. High sensitivity of results to business cycles. Historically, SecoWarwick's sales and results have been highly dependent on business cycles (capital goods market). A pronounced downturn could lead to a drastic decline in sales revenues and consequently financial results (see 2009).
2. Strengthening of PLN against USD. The strengthening of the zloty against foreign currencies is one of the biggest challenges for SecoWarwick from the point of view of competitiveness and the profitability of the contracts executed. The plants in Poland are most exposed to currency risk (Europe ~30% of sales; 30% of sales in EUR, 20% in USD). The company hedges 60% of the net contract exposure at the time of contract conclusion. Companies in the US contract in USD and those in China mainly in CNY
