Our reputation is a central risk and it is of utmost importance that customers, business partners, investors and consumers associate our operations and our brands with positive values, with both a favourable
reputation and credibility being essential for business value and sales success.
Reputation and credibility can easily be damaged if we, a supplier, or a partner, for example, harm the environment, exploit labour or our suppliers’ labour, produce harmful products or otherwise behave, in our operations, contrary to the Company’s values and brands, with negative sales trends
and negative business value as a result.
Production facilities, production equipment and others assets can be damaged
by fire, power outages or other physical hazards due to environmental and climate changes, such as flooding. Insufficient insurance protection can cause negative effects on the Group’s financial position in the event of an injury. An unplanned production interruption can directly affect deliveries to customers, because we have relatively few days of finished products in stock.
The operations are dependent on a wellfunctioning and secure IT infrastructure. Disruptions or faults in critical systems have a direct impact on our production and distribution, as well as on our financial reporting. It can be caused by system overload, low competence, external influences
in the event of burglary and hacking or physical damage to the infrastructure.
Sophisticated data infringement and deficiencies in the handling of customer and employee information can damage financial capacity and reputation.
Skills and training – a critical resource
The operations require both business and product expertise. The Group’s development is affected by the availability of competent and motivated employees, as well as the knowledge, experience and commitment of management and other key individuals.
Development could be negatively affected if one or more of these key individuals were to leave the Group or if, for lack of training, the Group is unable to recruit and retain qualified employees.
Suppliers and delivery capacity
Purchases of raw materials, packaging and packaging materials, as well as of finished goods, are sourced mainly from suppliers in Europe, South America and Asia. There is a risk that suppliers cannot deliver ordered
quantities on time as a result of production disruptions, capacity shortages or other causes, which can in turn negatively impact commitment to the relationship to our customers.
Production technology risk
The Group maintains eight production facilities, five for organic products, one for healthfoods and two for consumer health products. These are located in Sweden (1), Denmark (2), Finland (1), Germany (2), France (1), and Spain (1). At the production facilities in Denmark (1), Germany (1), France (1) andSpain (1), significant volumes of certified organic products are produced for our priority brands. The risk of unplanned interruptions to production could cause deliveries to customers being directly affected, as we keep relatively few days of finished goods in stock. Accordingly, shortcomings in production technology or production disruptions due to external influences, such as fire, extreme weather and chronic climate change, constitute a core physical risk.
Sustainable products and brands are cornerstones of the operations. There is always a risk of serious product liability incidents. Content documentation and information on how the products are manufactured is
of utmost importance in assuring sustainable products. A lack of such documentation and information could have major negative consequences for Midsona. Handling foods imposes rigorous demands on traceability, hygiene and handling. Poor safety checks can lead to contamination, allergic reactions, personal injury or other types of injuries.
Product management deficiencies could impair our reputation and our stakeholders’ confidence in our products, and may require defective products to be recalled or bought back.
Recalls can damage our overall reputation and can be costly. Product liability claims can also be made if a product is considered to have caused personal injury.
Inspections, permits, certifications and licences
Midsona’s operations requiring permits and such permits must be renewed at regular intervals. We also have a number of important certifications and licences for the operations that must be maintained, with inspections to handle. Operations could be adversely affected in the event that we fail
to meet the set requirements in inspections by the authorities or other organisations, with permits, certifications and licenses being revoked as a result.
Structure and organisational changes
In connection with acquisitions, there are risks in the selection and valuation of possible target companies, as well as in the acquisition and integration process. An integration of an acquired business is a complicated process, which is not always successful. The integration costs can be higher than expected and synergy effects can be less than expected or take more time to realise. Acquired intangible assets with indefinite useful lives are subject to
annual impairment testing and if they are not considered to be correctly valued, it may result in an impairment, which negatively affects the Group’s earnings.
Large organisational changes can entail a risk of higher costs or lower income than expected, that key individuals quit, or that estimated
savings are lower that set targets. Furthermore, insufficient caution with
regard to sustainability, purchasing and quality issues can harm the Group and affect its sustainability governance.