Risk Management

Our risk management strategy involves different departments and includes a series of policies and strategies aimed at allocating the most efficient resources considered suitable by our Management.

Our policies and strategies were designed and are followed by our Management team, according to the Company’s bylaws.

The details containing the description and additional details about each risk can be reviewed on our Reference Form, available in Portuguese version. Additional details, questions and other inquiries can be directed to our Investors’ Relations team.

Risks relating to the Company
  • We may be unable to successfully implement our growth strategy, which could adversely affect us;
  • We could be adversely affected by fluctuations in the prices of, and other events relating to, our raw materials;
  • Reliance on one sugar supplier and a decreased offer of sugar may adversely affect us;
  • The identity and reputation of our brands are fundamental for the success of our business. We may be unable to maintain our reputation and brand recognition or successfully develop our brands, which could adversely affect us;
  • A significant portion of our revenue from sales and services derives from revenue generated by a limited number of large retail chains. Any increase in the concentration of the retail market may lead these large retail chains to pressure us to lower our prices, which could adversely affect us;
  • Interruption or loss in certain of our or third party plants may adversely affect us;
  • A significant portion of our debt matures in coming years and if we are unable to timely repay our debt, comply with the contractual covenants in our financing agreements or obtain additional funds for our future growth, we may be adversely affected;
  • The loss of members of our senior management and/or our inability to attract and retain qualified personnel may adversely affect us;
  • Unfavorable decisions in lawsuits and arbitrations, investigations and administrative proceedings could adversely affect us;
  • Health risks related to the food industry could materially and adversely affect the sale of our products. We could be liable for incidents involving consumers and we could be subject to consumer complaints and product recalls. This could negatively affect our image, increase our costs and adversely affect us;
  • Failures in our technology systems could adversely affect us;
  • Losses not covered by our insurance policies or above the contracted limits may adversely affect us;
  • A portion of our results of operations relies on the business, financial condition and results of operations of certain subsidiaries, which may deteriorate, adversely affecting us;
  • We are subject to risks relating to the countries where we operate and to which we export;
  • Interruption in transportation and logistics services or insufficient investments in public infrastructure may adversely affect us;
  • We operate in a highly competitive industry and the consolidation trend of the food industry may enhance competition;
  • If our tax benefits are suspended, canceled or not renewed, we may be adversely affected;
  • We may suffer material and adverse effects as a result of changes in Brazilian tax law or conflicting interpretations;
  • We are subject to environmental regulation;
  • Failure to obtain, or delay in obtaining, required licenses, authorizations, permits and registrations could have an adverse effect on our operations.
Market Risks

The Company is exposed to market risks derived from our activities and businesses, as described below. These risks involve changes in prices of raw materials, risk of purchase of sugar, fluctuations in interest rates and exchange rates, risk of inflation, credit default risk and liquidity risk, which may adversely affect the value of financial liabilities or future cash flow and our results of operations. Our financial condition and results of operations may be adversely affected by these market risks. In order to mitigate the market, credit and liquidity risks to which we are exposed, we adopt specific control risk practices, as described below.:

  • Risk of Prices of Raw Materials;
  • Risk of Purchase of Sugar;
  • Risk of Inflation;
  • Interest Rate Risk;
  • Exchange Rate Risk;
  • Credit Risk;
  • Liquidity Risk.
Risks relating to Brazil
  • The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This influence, as well as Brazilian political and economic conditions, may materially adversely affect us;
  • Ongoing political instability has adversely affected the Brazilian economy and us;
  • Brazilian government efforts to curb inflation may slow down the Brazilian economy, which could adversely affect us;
  • Exchange rate instability may adversely affect the Brazilian economy, and, consequently, us;
  • Any further downgrading of Brazil’s credit rating may adversely affect us;
  • Developments and the perception of risk in other countries, particularly in the United States, Europe and emerging markets, may adversely affect the Brazilian economy and the market price of Brazilian securities, including ours.

Updated at 03/08/2018 at 06:32 pm

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