Market and industry risks
Industry and market risks involve external factors, events and changes on the markets where Balco is active which might have an effect on the possibility of achieving the targets established by the company.
Industry and market risks include, among other things, changes in demand as a consequence of a weaker economy or other macro-economic changes, changes in the pricing of raw materials central to Balco’s production, and changes in competition or pricing by competitors.
1. The effects of the economy and other macro-economic factors
Balco’s operations are affected by the general economic and political situation in the world. The company is primarily affected by events which impact the Nordic markets. A slower economy and political changes may create anxiety in the markets on which the company operates and thus affect demand for the company’s products.
2. Prices of raw materials
Balco’s profitability is affected by changes in the prices of aluminum, steel, glass and concrete. Changes in raw materials prices may affect the calculations for an individual project.
3. Competition and price pressure
The competition situation varies between the various geographic markets and within different product segments. Balco’s primary competitors consist of concrete renovators and other suppliers of balconies. Increased competition may affect the business and its earnings..
1. The impact of the economy and other macro-economic factors
Balco is active on the balcony solutions market which is a niche market in the construction market. The company has primarily focused on the renovation segment which is more controlled by the current need to renovate than new production which is more sensitive to the economy. Balco carries out project operations for which each individual project accounts for a small portion of the company’s sales and earnings.
2. Prices of raw materials
Every year, Balco secures the cost of materials to an extent based on anticipated needs. The company’s project operations entail each project is a new price negotiation. Long lead times and individual products provide an excellent opportunity to continuously adjust prices based on changes in the prices of raw materials.
3. Competition and pricing pressure
Balco competes primarily with concrete renovators who do not have a niche position in the balcony renovation market. Balco’s local presence and the company’s business model entailing assistance to the customer throughout the entire process mean that the company, to a great extent, contributes to creating its own market. Balco currently has a niche portfolio of products at the cutting edge of innovation and technology, creating a competitive advantage.