Changes in the macroeconomic and market context

Ansaldo STS operates internationally and is exposed to risks arising from macroeconomic/geopolitical changes and a reference market presenting the greatest opportunities in emerging nations and those with the highest growth rates. Moreover, the market has seen greater volatility in the acquisition of contacts, due partly to the fact that projects tend to grow in size and scope and there is an increasingly consolidated trend towards the standardisation of products and technological solutions, especially in the signalling business unit. This leads to tougher competition, with decreasing prices and market consolidation even though the market shows modest growth in the medium term. The clauses in new contracts are more complex and generate greater risks which include the greater resort to project financing due to the contraction in funding available to customers. This market situation could negatively impact the company’s competitive edge and performance, e.g., difficulties in obtaining new contracts, contracting margins on new orders and exposure to less advantageous contractual terms.

Macroeconomic and geopolitical factors that could impact the company’s operations include the growth rate in the reference countries and public spending on infrastructure. The current macroeconomic and financial uncertainty, low raw material prices, which reduces customers’ spending capacity in certain markets, political instability in some geographical areas of interest and plans to reduce public debt could generate delays or reductions in new orders, delays in payments and less favourable terms for new contracts, having a negative impact on Ansaldo STS’s performance.

The company’s strategy may not be immediately updated and adjusted in response to these many variables and uncertainties in the macroeconomic and market context, negatively impacting its competitiveness and performance.

A key element of the company’s strategy is to optimise its operating structure by standardising the solutions and products offered and greater efficiency/optimisation in the use of resources during project implementation.

Innovation: a competitive factor

The group’s business units feature a high level of technological innovation and this represents an important competitive factor.

Ansaldo STS group’s ability to anticipate technological changes and implement an efficient investment policy is therefore paramount. If it fails to accurately assess innovation requirements, the contents of innovation and development projects, their benefits and related priorities, the group runs the risk of delays in the availability of new products and technical solutions, instability of new products, additional development costs on projects and lost sales.

Processes to update the product portfolio and regularly assess products’ technical competitiveness are in place to mitigate these risks and ensure greater optimisation when making bids.

The features and degree of technological innovation of the group’s products and technical solutions generate a risk of obsolescence. There are specific processes in place to ensure its effective management.