An investment in securities involves a high degree of risk. All investors should carefully consider the following factors in addition to the other information in this investor relations website before investing in Randon’ s securities. In general, investing in the securities of issuers in emerging market countries, such as Brazil, involves a higher degree of risk than investing in the securities of U.S. issuers or issuers in other countries with highly developed capital markets. Randon’s business, financial condition, results of operations and prospects may be materially adversely affected by any of these risks.
The risks briefly described below are those that the Company currently believes most likely may materially affect its performance.
1. Risks Relating to Brazil
- The Braziliangovernment has exercised, and continues to exercise, significant influenceover the Brazilian economy. This involvement, as well as Brazilianpolitical and economic conditions, may adversely affect Randon and themarket price of its shares.
- Inflation andgovernment efforts to combat inflation may contribute significantly toeconomic uncertainty in Braziland could harm the Company and the market price of its shares.
- Exchange rateinstability may adversely affect the Brazilian economy and the marketprice of its shares.
- Developments and theperception of risk in other countries, especially emerging marketcountries, may adversely affect the market price of Brazilian securities,including the Company’s shares.
2. Risks Relating to the Industry
- Steel is the principal raw material that we use to manufacture our products, and fluctuations in the international market price of steel significantly impact our costs of goods sold and the prices that we are able to charge our customers for our products.
- The performance of the capital goods industry in which we operate is highly influenced by volatility in the level of economic activity.
- Changes in environmental laws and regulations may adversely affect the trailer and auto parts industries and consequently, our company´s operations and profitability.
3. Risks Relating to Randon
- We depend on our joint ventures with Arvin Meritor and Jost Werke.
- The Company operates in high competitive markets.
- The number of clients in the automobile industries is limited.
- We are exposed to downturns in the economic development of the countries to which we export our products.
- Our insurance coverage may be insufficient to cover losses from certain risks and hazards involving damages.
- We are subject to risks related to the concentration of our production to one geographic location.
- We may be obliged to indemnify damages caused by malfunctioning of our products.
- We are subject to risks related to the quality of Brazilian transportation infrastructure.
- We are highly dependent on certain members of our management.
4. Risks Related to Randon’s Shares
- An active and liquid market for Randon’s shares may not develop.
- Our preferred shares have limited voting rights.