Before making an investment decision, potential investors should carefully consider all information available in this website, especially the risks mentioned below. Heringer´s businesses, financial status, and operating results can be adversely and materially affected by any of these risks and, thus, have a negative impact on the securities issued by the Company. The risks described below are those Heringer is aware of, and which Heringer believes can affect the Company in a relevant manner. Additional risks not known by Heringer, or which are irrelevant, can also affect the Company´s businesses.
1) Risks related to the Fertilizers Industry in Brazil
- Heringer´s operating results strongly depend on the economic conditions and government policies related to the fertilizers industry in Brazil, and can vary based on them.
- The seasonality of the activities of the Company´s customers can have an impact on Heringer´s financial conditions, adversely affecting its revenues, costs, operating margins, and the payment of its bills. As Heringer cannot precisely foresee the future demand for fertilizers, it can face issues like excess of inventory or lack of products, which can adversely affect its financial conditions and activities.
- Exchange Variation: approximately 70% of the raw material used by Heringer is imported. In a scenario of a stable economy, the exchange rate is passed through naturally to the fertilizer prices, where the stock works as a natural hedge. However in possible currency devaluation, in an unstable economy, this may not happen.
- The agricultural sector in Brazil is cyclic, which can result in significant variations in demand for the Company´s products from one year to another, causing variations in its results and operating margins.
- The industry in which the Company operates depends on investments in agricultural supplies, and is subject to factors that affect the expenses with such supplies.
- Weather conditions can adversely affect the demand for the Company´s products, as well as the price of its products and services, and the financial status of its customers.
- Raw-materials, including some supplies Heringer imports, and energy sources that are necessary to the productive process of its suppliers were subject last year, and might be subject in the future, to volatility in prices, which can adversely affect their activities.
- The Company operates in a competitive market, and an increase in competition might reduce its profitability
- Heringer´s outstanding position in the market might be negatively affected in case it cannot expand its businesses, participate in the continuous consolidation of the industry, or develop new products in a quick and effective manner.
- The construction, expansion, and operation of production and distribution facilities involve significant risks, which can result in reduction in revenue or increase in expenses.
- The Company is subject to the vast environmental and health regulation. In the future, they can become more restricted, and cause an increase in the Company´s liabilities. Also, the Company might need to invest more in order to comply with the laws in force.
2) Risks Related to Heringer´s Activities
- Heringer might not be able to establish and maintain successful relationships with its sales representatives, which can be a negative influence on its sales.
- Heringer‘s operational results are highly dependent on economic conditions and government policies related of the fertilizer sector in Brazil, and may vary based on them.
- The ability of the Company to maintain its low level of debt and other financial obligations and its ability to contract fund can affect the performance of its roles.
- The transportation of the Company´s products is outsourced, and any issue the Company faces with the carriers it contracts, or any fail or delay in the railway, road or maritime transportation might cause customer dissatisfaction, loss in sales, and high costs with equipments.
- Inappropriate handling and transportation of some products might cause damage to third parties or to third parties´ property, which is subject to law suits.
- Heringer´s insurance coverage might not be enough to cover its losses.
- The Company might be negatively affected by adverse legal and/or administrative decisions.
- Heringer´s incapacity of protecting its intellectual property might limit its capacity to compete in an efficient manner, once its competitors might take advantage of its patents and property rights.
- The interests of the Company´s majority shareholder might conflict with investors´ interests.
- The loss of top management members, or the Company´s incapacity to attract and maintain professionals to be part of the group might have a relevant adverse effect on Heringer´s financial status and operating results.
- The construction, expansion and operation of facilities involve significant risks that may result in a reduction on income or increase in costs.
- The Company is subject to extensive environmental regulations that may in future become more restricted and generate an increase on itsrestriction
3) Risks related to Brazil
- The Brazilian Federal Government has had a significant influence on the country´s economy. This influence, as well as the Brazilian economic and political conditions, might have a relevant adverse effect on the Company´s activities.
- Inflation and government measures to fight it might significantly contribute to increase uncertainties about the Brazilian economy, harming Heringer´s activities and the market value of its shares.
- Exchange instability and the devaluation of the Brazilian currency, the real, might have a negative impact on the Company´s operating results and financial status, as well as on the market price of its shares.
- Mechanisms to control exchange rates, and restrictions upon offshore remittances might adversely affect the Company´s shareholders.
- The perception of risk in emerging countries, especially in Latin America, might harm the market price of the Brazilian securities, including Heringer´s shares.
- Changes in the Brazilian fiscal policies might adversely affect the Company.
4) Risks Related to Heringer´s Shares
- Heringer´s shares might not have an active and liquid market.
- The sale of an expressive amount of the Company´s shares might have an adverse effect upon its shares´ market price.
- Heringer might need additional capital in the future, which can be done by means of securities issuances, resulting in the dilution of the investors´ interest in the Company´s capital stock.
- The Company´s shareholders might not receive dividends or interests on equity capital.