Risk management

Risk profile

Nutreco’s management acknowledges that managing risks is an essential element of entrepreneurship. In fact, accepting a certain level of risk is a prerequisite for achieving the Company’s strategic objectives and financial targets.

In general Nutreco adopts a prudent attitude with respect to the acceptance of significant business risks. A risk’s significance is determined by the likelihood of it occurring and its potential impact on strategic objectives and financial targets.

As a result of the global financial crisis, in the management’s opinion, credit risk arising from supplies to customers is a major risk.

Secondly, the high volatility of raw material markets in the last two years has intensified the management’s focus on the operational and financial risks resulting from this situation. In the first half of 2009 this risk, related to (the volatility of) commodities, did materialise. Nutreco’s compound feed business in the Netherlands reported an operating loss of approximately EUR 20 million related to purchase positions in raw materials. Measures have been implemented to prevent that this could happen again in the future: management has been changed, risk limits have been tightened and monitoring has improved and intensified.

Thirdly, in countries in which Nutreco has invested, or has planned to invest, management has to evaluate risks in relation to both the composition of its portfolio and the selection of acquisition targets carefully.
    
Nutreco’s general risk management and its control systems for monitoring the various risks with which the Company is confronted are described below.

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