Operational Risks
SinnerSchrader earns 20 % of its revenue with one customer; the five biggest customers have a joint share of almost 64 % of revenue. It will only be possible to compensate for the loss of the business of these important customers after some considerable time, if at all, during which it would not be possible to reduce costs correspondingly.
Since revenues in SinnerSchrader’s business are not secured by long-term contracts, but largely come about on the basis of individual orders for a limited period, revenue plans are subject to a high degree of uncertainty. The trend for SinnerSchrader’s customers to order whole projects in small single steps has not yet diminished, with the result that orders on hand do not extend beyond one quarter’s revenue.
SinnerSchrader processes a major part of its revenue within the framework of fixed price agreements. Because of the complexity and the high technical demands, the originally calculated costs may be exceeded, resulting in unplanned losses. Furthermore, SinnerSchrader assumes standard guarantee and liability obligations within the framework of project contracts, which result in considerable follow-up costs for individual projects.
The projects that SinnerSchrader undertakes for renowned customers are sometimes associated with a considerable effect in the public. Quality deficiencies in providing the service can therefore result in negative publicity, which would significantly impair the sale of services and, thus, the future business development.
