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frThe company has performed a review of risks potentially having a substantial unfavourable impact on its business, financial situation and profits. The different risks are classified according to their potential impact and probability of occurrence. This risk mapping reflects Thermador Groupe’s exposure and therefore includes control measures introduced so as to limit probability and impact.
4.1.1 Risks linked to the business
Unforeseen weather events
| Risk identification and description A rainy spring would inevitably lead to poor sales of irrigation pumps, a market in which we are a significant player in both the professional and consumer channels. Drought during the summer would lead to a fall in sales of irrigation pumps. |
Potential impact on the group Decline in turnover. In 2013, which featured a very rainy spring, we lost approximately €2.5m turnover in the first half of the year. 2022 and 2023 saw water shortages and hose-pipe bans in France. However, sales of irrigation pumps in the professional channel (Jetly) recovered very well in the second half of the year. |
| Risk control and limitation Our bestsellers are stable products on their respective markets. Unsold products from a very bad season can be sold the following one. Rainy springs are very often followed by drier summers, which has always allowed us to make up some of the turnover lost through the springtime to the end of June. Conversely, the heightened risk of drought in France will lead to the emergence of markets in which we are well represented: rainwater harvesting, waterproofing of networks, wastewater recycling. Over the last 10 years, the good years have more than compensated for the bad ones. In this respect, our high stock levels mean that we can take full advantage of years when demand is robust. |
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Dependency on the cyclical new-build housing market in France
| Risk identification and description We are somewhat vulnerable to the cyclical construction market, and more specifically to the number of new-build housing starts. 45.9% of our consolidated turnover is generated by fluid circuits in buildings. Only 20% of that is for new housing, the remaining 80% for the renovation market. 7.2% of our consolidated sales are generated by our public works activities. Only 10% of that 7.2% is for new housing. |
Potential impact on the group Our exposure to the new-build market is limited to 10% of our consolidated turnover. Our most exposed subsidiaries (PBtub and Thermacome) saw their turnover fall by 8.6% and 12.8% respectively in 2023. For example, in 2009, during the last major crisis in this sector, our consolidated turnover fell by 5.5%. In 2019 and 2022, we even saw organic growth in the business field of the subsidiaries concerned, despite the proven decline in housing starts. |
| Risk control and limitation The share of our turnover devoted to the construction market has fallen since 2009 from 55% to 45.9%. This rebalancing was mainly achieved through strong growth in the industry sector, which now involves six of our subsidiaries. The arrival of DPI in 2022 has not changed this dependency, since we estimate that it is 10% reliant on the new housing market. |
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Concentration of our major customers in the DIY market
| Risk identification and description Like the ADEO group (Leroy Merlin) and Kingfisher (Castorama), our major customers in the DIY market now have very substantial market shares. They have strong positions with Dipra, Rousseau, Mecafer and Domac. |
Potential impact on the group Only quite recently, a discontinued range may have caused a loss of €700k of gross margin in a single year. |
| Risk control and limitation Every year we win and lose tenders. The secret is to win more than we lose. Odrea, Mecafer and Domac are present in several ranges and departments. Any delisting is only partial. We regularly launch new products and sometimes enter new markets. We are diversifying our customer base by targeting alternative trade networks that are looking for differentiated, high-quality consumer products. We also target food superstores, car dealerships, garden centres and agricultural distribution. We are constantly improving our service and brand awareness to build customer and user loyalty with more than just price. We create specific products dedicated to e-merchants and marketplaces. |
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Dependency on the domestic market
| Risk identification and description We do 83.3% of our business in France. We therefore run the risk of growing at the same pace of the country’s economy, i.e. slowly. |
Potential impact on the group Stagnation of turnover, as in 2013, 2014 and 2023. |
| Risk control and limitation Our market share in France ranges from 0 to 30%, the latter being for certain ranges that we have sold for several decades via our oldest subsidiaries. 0% is for recently-launched products where our development focus lies today. Thus, our organic growth in France is often greater than the growth of the market itself. Numerous ideas on market niches still have to be developed. We even often have to make choices and discard certain projects to avoid becoming dispersed. In addition, we made 12 acquisitions between 2015 and 2022, representing approximately €213.7m turnover in 2023, of which €47.7m for export. |
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The emergence of e-commerce giants in our businesses
| Risk identification and description The major e-commerce players have very quickly turned some business sectors upside down. Could they become new competitors for the subsidiaries of Thermador Groupe, or even render our business models obsolete? Can these platforms allow users to by-pass middle-men? |
Potential impact on the group Greater pressure on margins due to Europe-wide price transparency. The emergence of new competition in the form of web merchants or market-places, which could do us a disfavour. The share of sales of our products via the web is between 0% and 40%. We cannot be more precise, as some of our major customers are multi-channel players who choose not to communicate the breakdown of their sales. |
| Risk control and limitation Many of our products target niche markets that are unattractive to the giants of e-commerce. In addition, advice and after-sales service on those products eat up a lot of human resources. For simpler products, we have accelerated the integration of this new distribution channel into our strategy over the past few years. leroymerlin.fr, Amazon and Cdiscount, for example, are customers of some of our subsidiaries that operate in the retail market. On the other hand, we support our long-standing customers who wish to sell on the web, or to become players in major marketplaces such as ManoMano. We provide them with qualified product data and the necessary logistics. We are training our teams to become more competent in data exploitation and digital marketing. We are testing new logistics solutions, investing in modern websites and regularly scanning the web to keep our pricing policies under control. We are fine-tuning our after-sales service, which is a key element in building user loyalty and improving brand awareness. Over the past five years, we have measured the growth of our e-merchant and market-place customers. We choose not to communicate turnover information achieved with these customers. |
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4.1.2 Operational risks
Difficulties integrating recently-acquired companies
| Risk identification and description Since 2015, we have made 12 acquisitions of very different sizes. Experience shows that it is more difficult to onboard companies whose turnover is more than €15m (six of the 12). We run into difficulties because of divergent views with the management, different cultures, geographical distance, and different IT systems. |
Potential impact on the group Failure to achieve expected synergies, failure to achieve business plans, loss of productivity. The operating results of these six companies (€10.1m in 2023) could have a negative impact on the consolidated operating result and reduce the return on capital employed. The Group’s assets include goodwill worth €70.5m. Poor recurring results could lead us to write down this asset.. |
| Risk control and limitation Our Board is balanced: 5 independent Board members, 5 not free of interests, and two employees. None of the six major acquisitions made since 2015 have been decided without a majority vote in favour. The operational managers of the Group are personally implicated in the integration processes. The Group's operational managers are personally involved in the onboarding process. Two managers of the acquired companies have been replaced. We have strengthened our IT and internal control teams. Our monthly reporting gives us the means to react quickly. |
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4.1.3 Social risks
Loss of knowledge and recruitment difficulties
| Risk identification and description Greater instability amongst staff and difficulties in filling certain posts could be an obstacle to our growth. The average length of service in the Group fell from 11 years in 2016 to 9.6 years in 2023. |
Potential impact on the group We believe that a complete and highly experienced team delivers a 3% better performance. The opposite would therefore lead to a loss of performance of the same magnitude. On average, that could represent €1m turnover episodically for one or two of our subsidiaries. |
| Risk control and limitation Responsibility for the social relations climate and managing human resources is delegated to executives from the subsidiaries which are themselves human-sized companies. We constantly work to improve quality of life at work by testing with anonymous questionnaires. We implement very practical initiatives to protect the environment, which is very important to the younger generations. We accompany long-term illness employees with a great deal of attention. We promote and practise transparency of salaries within our subsidiaries. We are working on our employment contracts to empower managers and teams in terms of compulsory rest times and effective working times. We are transparent as to financial results and share them within each of our subsidiaries. We have createsd a collaborative platform designed to be accessible to all Group employees. Job vacancies are published internally on the collaborative platform. We promote and facilitate access to capital. We promote respect, conviviality and simplicity in our labour relations. In 2024, we are planning a free share allocation plan reserved for employees (page 195). We encourage and help managers and supervisors to improve their management skills. We diversify recruitment channels enormously: agencies, social media, APEC (job agency for managers), personal networks, etc. |
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4.1.4 Financial risks
Euro-Dollar exchange rate
| Risk identification and description The Group sells in euros in France and abroad. We buy from all over the world: around 29% of our merchandise is purchased in US dollars. This exposes us to the volatility of the Euro-Dollar exchange rate. |
Potential impact on the group Currency variations against the Euro (primarily $US) can increase the price we pay for merchandise and thereby hurt the Group’s profits. The actual purchase price is incorporated into our cost price and passed on as much as possible to the customer. Mathematically, a 10% variation in the US dollar rate would have a €12m impact on our sales margin. |
| Risk control and limitation Since January 1, 2018, Thermador Groupe has had centralised Dollar cash management to cover the needs of all its subsidiaries. This ability to keep ahead of the exchange rate gives those subsidiaries greater visibility in terms of selling price, and better control over their margins. |
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4.1.5 Geopolitical risks
Temporary blockage of the Chinese and Italian economies
| Risk identification and description 29% of our purchases of finished products come from China and Taiwan, 39% from Italy. A political, social or health crisis could temporarily block one of those country’s economies. |
Potential impact on the group In the face of such events, we could be confronted with stockouts. It is today however impossible to assess this risk since we have not recently experienced this type of situation. |
| Risk control and limitation Our stock levels are generally higher than those of our competitors. We have stable and even-handed relationships with our suppliers. This makes decision-making easier in crisis situations and makes us a priority customer for them. Despite supply difficulties in 2021, we managed to replenish our stocks at the end of the year (187 days of purchases consumed). We are active in seeking and developing suppliers in France, Spain, Germany, Belgium, Brazil, Greece, Turkey, Luxembourg, India, Poland, Bulgaria, Hungary, Finland, Slovakia, South Korea, Thailand, Sweden, Holland, Indonesia and United States of America. |
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4.1.6 Pandemic risks
Temporary economic blockage in the wake of a pandemic
| Risk identification and description A global pandemic like the COVID-19 crisis in the first half of 2020 could bring the economy to a standstill. |
Potential impact on the group Large numbers of the Group’s employees falling ill, in all countries. Loss of productivity due to home-working. Blocking of supplies. Sharp drop in sales. Difficulties controlling stock variations. Weakening of certain customers and suppliers. Longer customer payment periods. Insufficient cash to finance the business. Loss of shareholder confidence and collapse of share value. We believe that in 2020, we lost an opportunity for 4% organic growth, or approximately €15m in revenue. |
| Risk control and limitation Our devolved organisation, consisting of small structures, enables us to take health safety measures extremely quickly and to react as closely as possible to the realities on the ground. 75% of our workforce can work remotely. The remaining quarter, our logistics teams, showed their resilience and commitment in 2020 and 2021. Our suppliers are spread around the world and our stocks are traditionally high, which protects us from shortages. In addition, our long-standing relationships and regularity of settlement make us a priority customer from the outset. Each subsidiary monitors its receivables and communicates payment incidents in real time. Our very solid financial structure reassures our bankers. Our rapid and effective communication with our shareholders reassures all stakeholders. |
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4.1.7 Climate change risks
Impact of climate change on certain assets or markets
| Risk identification and description Rising water levels in coastal areas and risk of flooding. Ban on the sale of certain polluting products. Increase in the per-tonne cost of CO2. Water stress causes difficulties for our industrial partners. |
Potential impact on the group Our suppliers’ factories flooded and port traffic disrupted. Temporary production stoppages at some of our industrial partners' sites. Our warehouses flooded. Need to finance alterations, repairs or removals. A drop in turnover. A reduction in the Group’s profit to compensate for our CO2 emissions. |
| Risk control and limitation In December 2023, using the ECLR tool developed by EcoAct and marketed by Eiffel, one of our investors, we mapped the exposure of our sites (offices and warehouses) as well as our suppliers, who account for 47.2% of our goods purchases, and key port areas. This analysis is based on the IPCC's SSP5-8.5 scenario for the period 2021-2040, covering 12 types of risk (cyclones, water stress, soil erosion, heat waves, frost, etc.). This gives us a clearer picture of the potential risks. Our work in 2024 will, through dialogue with our partners, consist of translating these potential risks into real vulnerabilities, then checking the mitigation measures taken by countries, local authorities and the businesses themselves. None of our strategic ranges is currently threatened by a ban. Moreover, we are constantly on the lookout for ways to comply with the regulations in force. We regularly develop our products and services to offer solutions that contribute to energy savings and the preservation of water resources. With a degree of uncertainty of 30%, Thermador Groupe emitted 256 kTCO2 e in 2022 and 242 kTCO2 e in 2023 (page 88), 94% of which is related to product life cycle (PLC). Thus, if we were to compensate financially for the totality, a hypothetical operating deficit would be recorded on the basis of a per-tonne-of-CO2 cost of €320 (2023 operating profit excluding DPI = €78.7m). However, we remain sceptical about this simplistic approach, since the responsibility for PLC must be shared between the various stages of the product’s life: extraction and transformation of raw materials, manufacturing, assembly, transport, storage, installation, use, repair and recycling. |
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4.2 Insurance and coverage of risks
All the Group’s companies are covered by an overarching insurance policy against the following risks: damage and operating losses, civil liability and transport. All subsidiaries adhere to the guarantees set up and negotiated at Group level, with the exception of DPI, which joined us on November 1, 2022.
Group-negotiated insurance policies provide a high level of cover and seek first and foremost to guard against the biggest possible incidents that could have a substantial negative impact on the Group’s financial situation.
45.8% of our warehouse space is equipped with sprinklers 56,463m2
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Group-negotiated insurance policies provide a high level of cover and seek first and foremost to guard against the biggest possible incidents that could have a substantial negative impact on the Group’s financial situation.
Cover for damage and operating losses risks was renegotiated on January 1, 2020. In 2021, all our sites in Saint-Quentin-Fallavier (Isère) were visited by our insurer as part of an audit on preventative maintenance and protection procedures. In 2022, our insurer revisited two of our largest sites. The outcome was ‘highly satisfactory’ for the insurer.
Cover for transport risks was also renegotiated on January 1, 2020 and maintained for 2023. Our transport insurance covers both buying and selling transport. It covers us for up to €1.5m, whatever the mode of transport (sea, land, air, etc.).
The civil liability contract was renegotiated on January 1, 2023 for a period of two years on the basis of a flat-rate premium, not linked to turnover as was the case previously. This premium was reduced given the substantial decline in claims.
The guarantees signed up to as part of the product civil liability programme are as follows:
✣ €10m per claim and per year.
✣ €2m per claim and per year for recall costs and disassembly / reassembly expenses.
Our operations civil liability guarantees are:
✣ €10m per claim and per year.
✣ €6m for inexcusable error.
✣ €1.5m for sudden accidental impacts on the environment. The Group has also taken out an employee mission insurance policy to cover all professional travel for our staff, nationally and internationally.
Group insurance policies are updated at least every two years to follow changes to Group scope and to control industrial risks.
The Group’s policies are with major insurance companies with a global profile.
2023 Annual Report
Download the 2023 Universal Registration Document
