Business risks and uncertainties

Economic cycles, legislation or other regulation and political environment 

Changes in the global economy and financial markets may have a negative impact on Raute’s operations, performance, financial position and sources of capital.

Raute is subject to geopolitical and macroeconomic conditions, where high interest rates and inflation may give cause to economic downturn. Such a downturn would likely impact Raute’s operations and reduce underlying demand.

Legislation or other regulations, such as sanctions, may affect Raute’s business operations and products either directly or indirectly. Raute may also become a party to a dispute. At the end of 2023, Raute terminated all remaining contracts related to projects in Russia. At the moment, Raute is closing its subsidiary Raute Service LLC. However, Raute is still subject to changes in regulation, sanctions and payment transactions, which may prolong the closure process.

Operations, deliveries and technology 

The bulk of Raute’s business operations consists of project deliveries, which expose the company to risks caused by customer-specific customized solutions related to each customer’s end product, production methods or raw materials. At the quotation and negotiation phase, the company has to take risks relating to the promised performance figures and make estimates of implementation costs. Other significant short-term risks for Raute are related to the price inflation and availability of raw materials, components and freights. Trade union strikes are also a short-term risk for Raute.

Raute invests heavily in product development. The product development phase of new technologies involves a risk that the project will not lead to a technically or commercially acceptable solution. The functionality and capacity of the new solutions created as a result of the development work can only be fully verified in production conditions in connection with the first customer deliveries.

Raute’s goal is to grow its local business in emerging market areas, where operating involves not only opportunities but also risks typical of emerging markets.

Human resources 

Competence retention and development and ensuring the sufficiency of human resources are particularly important in cyclical business. Continuity is ensured by monitoring the development of the age structure, implementing systematic human resources management and investing in well-being at work.

Despite the human resources work and processes, Raute is exposed to the risk of losing key personnel, and difficulties in hiring new talent to address new business challenges.

Cyber and information security, payment fraud 

Raute’s operations are dependent on the security and stable operation of its information and communications systems and software. Successful cyberattack risk management is also important. These risks are managed in accordance with the information security policy.

Raute is repeatedly targeted by payment fraud attempts. The company has a risk that the fraud company will bypass the control points of payment transactions and cause financial damage to the company.

The reputation of the company 

Raute is at risk of unknowingly being involved in a business chain that involves corruption, bribery or money laundering, even though business partners are regularly audited, for example, in connection with international sanctions lists and export restrictions. The realization of these risks may have legal consequences, and the company’s reputation and financial position may suffer.

International supply chains may involve actors who do not respect Raute’s principles regarding human rights or the fundamental rights of employees. Such cases can lead to reputational damage and interruption of the supply chain if the violation is so significant that the cooperation has to be terminated.