As part of the preparation and monitoring of its risk and opportunities profile, NORMA Group assesses risks and opportunities based on their financial impact and their probability of occurrence. The financial impact of opportunities and risks is assessed based on the effect on the Group’s earnings or liquidity. The following four categories are used to determine the potential maximum average annual impact in the period under review of the risk management system.
•Low: up to EUR 5 million effect on earnings or liquidity
•Moderate: more than EUR 5 million and up to EUR 15 million effect on earnings and or liquidity
•Significant: more than EUR 15 million and up to EUR 30 million effect on earnings or liquidity
•High: more than EUR 30 million effect on earnings or liquidity
The probabilities of occurrence used to assess opportunities and risks are quantified using the following four categories:
•Very unlikely: up to 5% probability of occurrence
•Unlikely: more than 5% and up to 25% probability of occurrence
•Possible: more than 25% and up to 50% probability of occurrence
•Probable: more than 50% probability of occurrence
The main areas of risk and opportunity related to NORMA Group’s business model are described below. Unless otherwise stated, the risk and opportunity profile represents the assessment of NORMA Group’s management as of the balance sheet date December 31, 2025. The financial effects and probabilities of occurrence are presented as net effects, i.e., taking into account countermeasures already initiated.
Financial risks and opportunities
NORMA Group is exposed to various financial risks, including default, liquidity, and market risks. The Group’s financial risk management focuses on identifying, assessing, and limiting risks and is designed to minimize potential adverse effects on the asset, financial, and earnings position. Derivative financial instruments are also used to hedge certain risk items. Financial risk management is performed by the Group Treasury & Insurance department
(Group Treasury). The areas of responsibility and necessary controls in connection with risk management are defined by the Group’s management. Group Treasury is responsible for identifying, assessing, and hedging financial risks in close coordination with the Group’s operating units. In this context, various processes and organizational structures work together to regularly measure and evaluate opportunities and risks and initiate appropriate measures where necessary. Group Treasury regularly analyzes default, interest rate, currency, and liquidity risks. The results are then discussed internally and appropriate measures are defined. Group Treasury also informs the managers of relevant departments about material risks in a committee that meets twice a month and discusses how to deal with these risks and their potential impact on NORMA Group. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Capital risk management
NORMA Group’s objective when it comes to managing its capital is primarily the long-term servicing of its debts and remaining financially stable. As of December 31, 2025, NORMA Group is not subject to the obligation to comply with a financial covenant in any of its financing agreements. Only the financing costs of the individual financing agreements depend on the level of the financial covenant total net debt cover (debt in relation to adjusted Group EBITDA). The level of this performance indicator is continuously monitored, as is the level of net debt and the maturity structure of financial liabilities. Changes in the value of the parameters included in this financial indicator are limited by employing long-term hedging strategies. Other financial covenants exist only as part of a syndicated bank loan negotiated in 2019 and are tested only in advance of possible M&A transactions without providing the creditor banks with grounds to terminate the loan.
Default risk
Default risk refers to the risk that NORMA Group’s contractual partners fail to meet their obligations arising from operations and financial transactions. Due to the nature of the respective assets and business relationships, as well as the soundness of its current banking partners, default risks with respect to deposits and other transactions concluded with credit and financial institutions currently do not represent a major risk category for NORMA Group. Nevertheless, the creditworthiness of the contract partners is continuously monitored and discussed at regular senior management meetings.
Relevant default risks can arise, however, with respect to business relationships with customers and relate to outstanding receivables and committed transactions. NORMA Group reviews the creditworthiness of new customers to minimize the risk of default on trade receivables. In addition, the Company generally requires advance payment when supplying customers whose creditworthiness does not meet the Group’s requirements or who are in arrears. A diversified customer portfolio also reduces the financial repercussions of default risks. The probability of default risks occurring is assessed as “possible” despite the aforementioned measures, particularly as it is still not possible to fully assess the future impact of economic and cyclical developments on potential insolvencies of individual customers ECONOMIC AND CYCLICAL RISKS. However, the potential financial impact of default risks is classified as “low,” as in the previous year, in view of the relevant factors, such as actual defaults on receivables in the past, and due to the countermeasures introduced.
Liquidity risks and opportunities
Prudent liquidity risk management requires holding sufficient cash funds or marketable securities, having sufficient financing from committed lines of credit, and being able to close out market positions. Due to the dynamic nature of NORMA Group’s business, Group Treasury seeks to ensure flexibility in financing by keeping committed credit
lines available. Therefore, NORMA Group’s primary objective is to ensure the uninterrupted solvency of all Group companies. Group Treasury is responsible for liquidity management and thus for minimizing liquidity risks. As of December 31, 2025, cash and cash equivalents amounted to EUR 85.3 million. (2024: EUR 127.1 million). In addition, NORMA Group has a high level of financial flexibility thanks to a committed revolving credit line with national and international credit institutions in the amount of EUR 100 million. As of December 31, 2025, the committed credit line was not drawn (previous year: EUR 0 million). In addition, NORMA Group launched a commercial paper program with a total volume of EUR 300 million in 2019, which can be used flexibly to cover short-term liquidity requirements. These money market papers, which are equivalent to bearer bonds, are issued on a revolving basis for a short-term period of 1 to 52 weeks and thus allow the Group’s own liquidity to be managed in line with requirements. As of December 31, 2025, the commercial paper program with a volume of EUR 0 million (2024: EUR 0 million) was used as a source of refinancing.
NORMA Group sees financial opportunities in its good credit rating as well as its solid asset, financial, and earnings position, among other things, which enable capital costs in line with the market. Accordingly, the financing concluded in 2019 is characterized by an increase in the committed degrees of freedom and lower interest costs. This bank loan of EUR 250 million also includes a sustainability component linked to an external rating. In 2025, NORMA Group achieved a corresponding sustainability scoring – as in the previous year – which made it possible to achieve partial savings in the external credit margin. Despite the current globally uncertain economic and business situation (see also ECONOMIC AND CYCLICAL RISKS AND OPPORTUNITIES), liquidity-related opportunities are considered “possible,” particularly in light of stable relationships with banking partners and the resulting reputation in the capital markets. After a phase of rising interest rates, which peaked in 2023, monetary policy began to be eased in mid-2024, leading to interest rate cuts. Interest rates have been on a stable sideways trend since mid-2025. Nevertheless, the chances of this interest rate trend leading to more favorable financing options are considered “unlikely” (previous year: “possible”), while the associated financial impact is assessed as “low”. FINANCIAL POSITION
The Group’s financing agreements do not currently contain any standard market financial covenants. Although such covenants form part of the financing agreements, they are relevant only in connection with the amount of the financing costs. This means that compliance with financial covenants due to a possible increase in interest rates only has a “low” financial impact and the risk is still assessed as “very unlikely” due to the current profitability and operating cash flow. Irrespective of the scope of the financial covenants, compliance with them is continuously monitored so that appropriate measures can be taken at an early stage if necessary and any deterioration in the terms can be avoided. NORMA Group uses rolling hedging transactions if necessary to hedge balance sheet items in foreign currencies whose valuation leads to fluctuations in the profit and loss account. Group Treasury ensures that sufficient liquidity or granted credit lines are available at all times to cover any possible cash outflows related to these hedging measures. This is continuously monitored by means of risk simulation and discussed in senior management meetings. It is “unlikely” that liquidity risks will have a negative impact on NORMA Group’s activities due to the high level of financial flexibility provided by committed and not yet fully utilized bank credit lines.
As a result of the sale of its Water Management business and the associated cash inflows, NORMA Group plans to repay loans and/or reduce its debt. Measures planned, initiated, or implemented after the balance sheet date are presented in the section EVENTS AFTER THE REPORTING DATE.
Exchange rate developments
As an internationally operating company, NORMA Group is active in more than 100 countries and therefore exposed to foreign currency risks. The US dollar, British pound, Swiss franc, Chinese renminbi, Polish złoty,
Swedish krona, Czech koruna, Singapore dollar, Indian rupee, Serbian dinar, and the Mexican peso are considered to be the main risk prone currency positions.
Foreign currency risks that cannot be offset against each other are hedged as required using forward contracts. The high volatility of many major currencies and the particular influence of the US dollar on the Group’s asset, financial, and earnings position represent a material risk that can only be hedged in part and only for a short-term period. In the medium term, NORMA Group counteracts the currency risk by increasing local production. PRODUCTION AND LOGISTICS
Because the Group’s subsidiaries operate in key countries with currencies other than the euro, it has sufficient cash-in and cash-out capabilities to absorb short-term exchange rate fluctuations via targeted income and expenditure management. Existing financing arrangements also provide for utilization in different currencies (e.g., US dollar and euro tranches). The remaining foreign currency risks are continuously monitored in the Group and, in the event that risk limits are exceeded, transferred to the euro on a rolling basis using derivative hedging instruments. Translation risks are continuously monitored by Group Treasury. Nevertheless, items in the Statement of Financial Position and the Statement of Comprehensive Income of subsidiaries in foreign currency areas inevitably result in translation effects when they are translated into euros.
The sale of the Water Management business and the associated cash inflows in US dollars after the balance sheet date exposed NORMA Group to a high gross exchange rate risk. These cash inflows were used both for currency-matched payment obligations (US dollar tax payments and US dollar loan liabilities) and hedged using derivative instruments, leaving a low net risk.
As in the previous year, the potential financial impact of opportunities and risks in connection with exchange rate changes is overall assessed as “low” on the basis of the sensitivity analyses carried out. Also as in the previous year, the occurrence of these opportunities and risks is assessed as “probable” with regard to the further development of the relevant exchange rates.
Interest rate changes
Changes in global market interest rates affect future interest payments for variable interest liabilities and can therefore have an adverse effect on the Group’s asset, financial, and earnings position. NORMA Group’s interest change risk arises in particular from long-term loans.
Borrowings are currently partly issued at fixed interest rates and are therefore not subject to any interest rate risk. FINANCIAL AND LIQUIDITY MANAGEMENT OBJECTIVES AND STRATEGIES
Loans that initially had variable interest rates were partly synthetically converted into fixed interest rate positions using derivative instruments. NORMA Group has hedged around 60% of the floating-rate USD loans with an equivalent value of EUR 60 million. The remaining USD floating rate loans are unsecured and continuously monitored by Group Treasury. On the other hand, variable rate loans denominated in euros in the amount of EUR 169 million are unhedged. Due to the Group’s internal interest rate expectations, this item is deliberately not hedged. In the event of an increase in interest rates, Group Treasury would limit the interest rate risk by using appropriate hedging measures.
In the eurozone, NORMA Group classifies the risk of interest rate hikes as “possible” in the short term (previous year: “very unlikely”) and also as “possible” in the medium term (previous year: “very unlikely”) due to the sideways trend on the interest rate market since June 2025. In view of the current interest rate level in the eurozone, the
chances of an interest rate cut are assessed as “unlikely” in the short term (previous year: “possible”) and also as “unlikely” in the medium term (previous year: “unlikely”). In the US dollar area, interest rate cuts are considered “possible” (previous year: “possible”), which could lead to corresponding opportunities for NORMA Group. NORMA Group assesses the risk of rising US interest rates as “unlikely” (previous year: “unlikely”). In light of the measures already implemented to optimize the financing structures, the financial effects associated with these risks and opportunities are assessed as “low”.
In summary, NORMA Group assesses the opportunities from interest rate changes as “possible,” while risks from interest rate changes are “unlikely” (previous year: “very unlikely”). The potential impact is classified as “low” (previous year: “moderate”) in all scenarios, particularly in light of the planned loan repayments and reduction in debt from the cash inflows from the sale of the Water Management business unit.
Economic and cyclical risks and opportunities
NORMA Group’s success depends to a large extent on the macroeconomic development of its sales markets and the sales markets of its customers. For this reason, important indicators for economic development worldwide are taken into account in planning as well as in risk and opportunity management. NORMA Group uses forecasts from generally recognized institutions such as the IMF, the German Bundesbank, and renowned economic research institutes to assess macroeconomic developments.
In the past fiscal year, economic development was significantly influenced by political and economic uncertainties and burdens. According to the IMF, global growth in 2025 amounted to 3.3%. ECONOMIC INFLUENCING FACTORS
For the current fiscal year, the overall economic development continues to be regarded as a significant risk factor for NORMA Group’s operations. Existing and potentially new geopolitical conflicts – in the Middle East, among others – and trends toward economic fragmentation as well as their potential impact on global value chains, such as the emergence of weak economic momentum, act as significant risk factors. For the 2026 fiscal year, renowned economic research institutes continue to expect weak overall economic growth of 3.3% globally. MACROECONOMIC AND SECTOR-SPECIFIC FRAMEWORK CONDITIONS
In its assessment of the possible macroeconomic consequences of these developments, NORMA Group has come to the conclusion that a negative development of the global economy compared to the planning assumptions is currently classified as “possible,” taking these risks into account. Should these factors lead to an impairment of global demand, the financial deviations compared to the planning are estimated to be “moderate.” A positive development of the global economy beyond the planning assumptions represents an opportunity for NORMA Group. The Company still considers it “unlikely” that the global economic situation and thus NORMA Group’s earnings will improve beyond the planning assumptions. In the overall view of the current macroeconomic climate and the prospects based on it, the potential financial impact of these opportunities is also considered “moderate,” as in the previous year.
Sector-specific and technological risks and opportunities
NORMA Group’s industry-specific and technological risks and opportunities are closely linked to the conditions and developments in the respective customer industries. PRODUCTS AND END MARKETS It should be noted that the customer industries in the EMEA, Americas, and Asia-Pacific regions relevant to NORMA Group sometimes have specific characteristics and challenges. In all segments, NORMA Group pursues the overarching goal of creating added value for customers through innovative products.
In the Industry Applications segment, the current global megatrends in many fields and areas of application and the resulting potential for opening up new sales markets in particular offer business opportunities. In the Industry Applications segment, NORMA Group sees significant opportunities in the development of additional markets and industries, the establishment of additional, customer-specific product solutions, and the use of new sales channels. With regard to new sales channels, NORMA Group sees particular opportunities in the expansion of project business with original equipment manufacturers (direct business). In particular, NORMA Group’s activities focus on digitalization, heating and installation technology, and stationary energy storage systems. In terms of markets, NORMA Group is planning to establish business activities in selected markets in Africa RESEARCH AND DEVELOPMENT. Business activities with OEMs for passenger cars and commercial vehicles, as well as customers in the aftermarket segment, continue to represent the most important end markets for NORMA Group in terms of sales. In this area, the increasingly strict global emissions regulations and the increasing use of more environmentally friendly drive technologies in particular represent a development that is associated with various opportunities and risks for NORMA Group. NORMA Group’s current product portfolio includes a wide range of product solutions that contribute to reducing emissions in passenger cars and commercial vehicles with combustion engines, including hybrid and electric vehicles, and thus support customers in meeting increasingly stringent emission standards.
NORMA Group is well positioned for the growth market of electromobility thanks to its future-proof product portfolio. Research and development activities relating to hybrid and electric vehicles – in particular for the thermal management of batteries and systems – are a strategic focus in which new product solutions are developed and existing products are continuously refined. Regulatory measures such as stricter emission standards and the associated increased demand for environmentally friendly technologies and products thus open up a wide range of opportunities for NORMA Group in the Mobility & New Energy segment. NORMA Group continues to systematically analyze market developments in the area of future technologies and consistently develops new products based on these. RESEARCH AND DEVELOPMENT
On the other hand, the ongoing discussion about compliance with emission standards for vehicles with combustion engines poses risks for NORMA Group in the Mobility & New Energy segment. In particular, high volatility in demand can still be observed in the market due to the uncertainties surrounding new regulations and technologies. Furthermore, declines in vehicle production due to the market environment could lead to lower sales for NORMA Group. Last but not least, increased competition among manufacturers can be observed in the Mobility & New Energy segment – especially in the APAC region – which could lead to an overall reduction in production and sales for established automotive manufacturers and the associated reduction in sales for NORMA Group customers.
A key factor mitigating this risk is NORMA Group’s broad customer diversification across different end markets. NORMA Group counters long-term sector-specific opportunities and risks with a consistent innovation policy and regular market analyses, which support the targeted identification and focusing of high-growth future markets in the best possible way.
In summary, the sector-specific and technological opportunities and risks are assessed as “possible” with a “moderate” financial impact.
Corporate strategy risks and opportunities
NORMA Group’s strategic goal is to sustainably increase the value of the Company and customer satisfaction. With this goal in mind, NORMA Group generally pursues a strategy of profitably expanding its operations through organic growth and selective value-enhancing acquisitions, while achieving broad diversification across products,
regions, and end markets in order to become less dependent on any one of them. This is accompanied by NORMA Group’s ambition to grow in existing end markets and open up new ones through innovations, superior product quality, and strong brands, while continuously improving the efficiency of its business processes in all functional areas and regions STRATEGY AND GOALS. NORMA Group continues to address sustainability issues such as climate change and water and resource scarcity with its strategic orientation and pursues corresponding activities as part of the company-wide CSR program. The resulting opportunities and risks are evaluated on a regular basis. CLIMATE CHANGE
In addition to the strategic activities for the organic development of the business, NORMA Group sees considerable opportunities to sustainably increase the Group’s financial result, particularly in the strategy of profitably expanding business activities through selective value-enhancing acquisitions. Based on this strategy, NORMA Group has repeatedly made acquisitions in the past. If, however, in individual cases, the development of the acquired companies falls behind the expectations at the time of acquisition or if integration progresses more difficultly than assumed, risks could also arise from acquisitions for NORMA Group. However, NORMA Group believes that the Company’s goals for the profitability of potential acquisitions, careful due diligence measures in advance of the acquisition, and well-coordinated integration plans form the basis for mitigating these risks accordingly. At the same time, the management continuously reviews all strategic options with an open mind in order to increase the value of the Company. The structural adjustment of the global production and distribution network is also being examined on an ongoing basis as one of the optional measures.
Even after the sale of the Water Management business, NORMA Group's business activities are broadly diversified in terms of products, regions and end markets, which creates opportunities for achieving financial targets. Should demand in individual regions and end markets or demand for individual products temporarily lag behind planning, NORMA Group still has the chance to compensate for this by turning to other regions, end markets, or products. However, the broad diversification in terms of products, regions, and end markets implies a certain complexity, the control of which can also be associated with risks for NORMA Group. Since NORMA Group’s diversification efforts are being implemented step by step, both in terms of regions and end markets and in terms of products, these risks can be appropriately limited by adapting the organization to changing circumstances. Accordingly, NORMA Group continues to focus on reducing complexity and streamlining its existing product portfolio.
With respect to the efficiency of its business processes, NORMA Group’s global orientation enables the Company to set up production processes that require more manual assembly work in countries with lower labor costs and thus secure or further increase its profitability. However, these types of decisions on the locations for sites and the related investments are inevitably associated with risks if key assumptions made at the time of the investment decision prove to be incorrect. This relates, for example, to additional costs resulting from operational delays in the implementation of relocations or from efficiency gains or cost reductions that were not fully achieved. NORMA Group addresses the respective risks by conducting careful analyses in advance of investment decisions and uses graded approval procedures. Risks from site decisions already made are evaluated across all regions and taken into account when taking decisions to optimize site capacities.
As a result of the initiated sale of the Water Management business unit and the operational problems that arose at the Maintal site in the course of fiscal year 2025, NORMA Group initiated and implemented extensive transformation measures in the past fiscal year. These measures are aimed, in particular, at minimizing avoidable additional costs and optimizing productivity at the Maintal site. As part of company-wide transformation activities, far-reaching organizational measures, an adjustment of the operational footprint, and cost reductions were also initiated, with full implementation planned by 2028. These activities carry the risk that the planned financial results may not be fully realized, for example, in the event of delays or increased costs during implementation, and that
further transformation measures may be necessary as a result. GLOBAL TRANSFORMATION To reduce the risks associated with the transformation project, NORMA Group has established structured management and monitoring measures – for example, within the framework of the "Step Up" program. GROWTH AND EFFICIENCY PROGRAM “STEP UP”
In the context of NORMA Group’s corporate strategy initiatives – and in particular taking into account the sharpening of the strategic orientation and focus on expanding the market position in the Industry Applications segment while strengthening the Mobility & New Energy segment – the financial impact of the opportunities associated with NORMA Group’s corporate strategy is assessed as “moderate” (previous year: “high”) and a positive deviation from the plan as “possible” (previous year: “probable”). The probability of occurrence of strategic risks – particularly with regard to the initiated transformation – is assessed as “possible,” while the potential financial impact of corporate strategy risks is classified as “moderate” (previous year: “high”).14
Performance-related risks and opportunities
Commodity pricing
The materials NORMA Group uses, in particular the raw materials steel and plastic, are subject to the risk of price fluctuations. The price trend is also influenced indirectly by the further development of the global economic situation, as well as by institutional investors. NORMA Group limits the risk of rising purchase prices through systematic material and supplier risk management. Thanks to a powerful global Group purchasing structure, economies of scale are being used to purchase the most important commodity groups as competitively as possible. This Group purchasing structure also enables NORMA Group to offset risks across individual segments. NORMA Group also constantly strives to secure permanently competitive procurement prices by continuously optimizing its selection of suppliers and applying the best-landed-cost approach. The Company also tries to reduce dependency on individual materials through constant technological advances and testing of alternative materials. NORMA Group protects itself against commodity price volatility by concluding procurement contracts with a term of up to 24 months, depending on the market situation, whereby material supply risks are minimized and price fluctuations can be calculated more accurately.
NORMA Group was able to achieve price reductions in many areas in fiscal year 2025. The details of the individual areas are described in the section PURCHASING AND SUPPLIER MANAGEMENT.
Taking into account NORMA Group’s procurement portfolio, the current global market situation, and the US customs policy, price increases or material price fluctuations for raw materials are considered “probable” overall. In particular, material price risks relate to steel products in the USA. Due to implemented measures, such as medium-term framework agreements and regular price monitoring, as well as the localization of procurement in the USA, the associated financial impact beyond NORMA Group’s planning assumptions is estimated to be “moderate.” The opportunities that may arise from falling commodity prices are classified as “moderate” in terms of their financial impact beyond the planning assumptions. Against the backdrop of the complete procurement spectrum and taking into account the prevailing volatility on the commodity markets , price reductions are considered “unlikely” overall.
14 In particular, the adjustment of the valuation of corporate strategy opportunities and risks results from the fact that the strategic orientation and corresponding financial effects have largely been taken into account in corporate planning.
Suppliers and dependencies on key suppliers
The loss of suppliers and dependencies on individual suppliers can lead to material bottlenecks and thus have negative effects on the Group’s operations. To minimize this risk, NORMA Group works exclusively with reliable, progressive suppliers who meet NORMA Group’s high quality standards. All main and strategically important suppliers are visited regularly and assessed as part of quality management. If there are indications of (possible) supplier failures, alternative options are evaluated immediately. Risks arising from the insolvency of key suppliers, lack of delivery reliability, and quality problems are also addressed by the established supplier monitoring system. In addition, the existing sourcing strategies and regular material risk analyses help reduce risks. In addition, NORMA Group has opportunities to reduce risks through the use of the operational risk management tool. This is based on artificial intelligence, which provides continuous information about external events and risks relating to suppliers, NORMA Group locations, and the associated supply chains and enables immediate action to be taken. Risks from supplier dependencies are considered “possible,” particularly as a result of the continued global increase and relevance of unforeseeable external events (e.g., geopolitical conflicts). Taking into account the measures taken, the potential financial impact is estimated to be “moderate”.
However, the proactive approach to both existing supplier relationships and the identification of new suppliers and raw materials also presents opportunities. As in the previous year, the resulting positive effects compared to planning are assessed as “unlikely” with a “low” financial impact.
Quality and processes
NORMA Group’s products are often mission critical with respect to the quality, performance, and reliability of the final product. Quality defects can lead to legal disputes, liability for damages, or the loss of a customer. A key factor in ensuring the Company’s long-term success is therefore reliably guaranteeing product quality so that NORMA Group’s products deliver decisive added value for customers. The tension between cost leadership and quality assurance represents a permanent challenge. The resulting risk is reduced by extensive quality assurance measures and uniform quality standards throughout the Group, as well as by focusing on innovative and value-adding joining solutions that are designed to meet prevailing customer requirements. The probability of occurrence of significant quality risks is therefore assessed as “unlikely,” while the potential financial impact is classified as “low” due to existing insurance against loss events.
NORMA Group consistently seeks to achieve cost advantages and thereby strengthen its competitive position, and generally expects to generate positive momentum from the relevant activities. This notably includes the continuous development and implementation of initiatives relating to cost discipline, the improvement of processes in all functions and regions, and the optimization of supply chain management and production processes PRODUCTION AND LOGISTICS. As NORMA Group pursues a continuous improvement process, this creates opportunities for positive deviations beyond the planning stage. The probability of cost reductions and efficiency improvements is rated as “possible” overall. Since planning already allows for continuous optimization of production processes, and NORMA Group’s processes are already extremely efficient, the short-term financial impact of a deviation from the plan as a result of improved production processes is estimated as “low”. The probability that planned cost savings and process improvements will not be achieved is assessed as “possible,” with potentially resulting financial impacts assessed as “moderate” (previous year: “low”).
Customers
Customer risks result from dependence on key customers that account for a material share of the Group’s sales. These customers could take advantage of their bargaining power, which could lead to increased pressure on the Company’s margins. Declines in demand or the loss of these customers could also have a negative impact on NORMA Group’s earnings. For this reason, both incoming orders and customer behavior are monitored as part of a continuous process in order to identify customer risks at an early stage. The financial repercussions of customer risks are reduced by its diversified customer portfolio. Accordingly, no more than 5% of sales were generated directly with any one customer in fiscal year 2025. Overall, the risk of customer risks having a negative impact on operations is assessed as “possible”. The potential financial impact is still considered to be “moderate,” particularly in light of volatile demand in the Industry Applications and Mobility & New Energy sectors.
Based on its strategy and objective of further expanding the relevant markets, NORMA Group was able to generate new business for its products in all regions through an attractive product range and innovative solutions. The opportunities for positive deviations from plan resulting from this new business are therefore assessed as “possible” overall, but with a “low” effect on planned earnings.
Risks and opportunities of personnel management
NORMA Group’s success depends largely on the commitment, innovative ability, expertise, and integrity of its workforce. The Group’s human resources work is therefore aimed, among other things, at developing and expanding these core competencies. The departure of employees with key skills and a shortage of suitable employees could have a negative impact on NORMA Group’s operations. Furthermore, NORMA Group, influenced by demographic change and the resulting shortage of skilled workers, is increasingly competing for talented employees. This affects both Western industrialized nations and, increasingly, the emerging markets relevant to NORMA Group.
With regard to the initiated transformation program, planned to run until the end of 2028, NORMA Group anticipates increased personnel risks. In particular, increased employee turnover and the loss of key knowledge holders and experts could negatively impact business operations.
NORMA Group counters these risks with far-reaching programs of measures aimed at increasing its attractiveness as an employer. In addition to the establishment and expansion of further education, training and development programs, as well as competitive remuneration systems, variable remuneration systems in particular aim to promote the focus of the workforce on the Company’s success. In return, NORMA Group’s employees contribute to its continuous further development by participating in employee surveys and improvement initiatives. Extensive personnel planning activities as well as a distribution of tasks that is geared toward interdisciplinary cooperation protect NORMA Group against risks that could arise if an employee leaves despite an efficient organizational structure. When identifying potential new employees who can make a crucial contribution to performance, NORMA Group also seeks the advice of external human relations advisors.
The probability of occurrence of personnel risks – especially against the background of the initiated transformation – is assessed as “probable” (previous year: “possible”) for NORMA Group overall, while the potential financial impact due to a sustainable personnel policy and countermeasures is considered to be “low”.
In addition, opportunities arise from the consistent further development of employees. Through education and training opportunities, as well as targeted talent identification within the Group, NORMA Group supports its
employees and creates incentives for them to continue actively developing their personal skills. NORMA Group also offers its employees flexible and family-friendly working time models. Through these measures, NORMA Group actively promotes knowledge retention and expansion within the Company, thereby creating opportunities for its future development. The likelihood of these opportunities materializing is assessed as “possible,” whereas the associated financial success is assessed as “low”.
IT-related risks and opportunities
The use of functional and high-performance IT systems is of key importance for an innovative and global company like NORMA Group with regard to the effectiveness and efficiency of its business processes. In this context, it is critical for the Company’s success to support NORMA Group’s business processes, some of which are organized across company and national borders, along the value chain with stable and high-performance IT systems that provide the management at all levels of the Company with the necessary information in a timely manner and allow for workflows to be organized efficiently. Tailored IT solutions connected to the respective ERP systems are also of fundamental importance for exchanging information with NORMA Group’s customers and suppliers. With regard to this business-critical IT infrastructure, there is a risk that a widespread failure of these systems, for example due to technical malfunctions of the systems or cyberattacks, could lead to serious disruptions to business operations. In particular, there continues to be a general increase in the threat of potential cyberattacks.
In addition, NORMA Group sees the risk that external parties could gain unauthorized access to sensitive Company information and make improper use of it. In this context, unauthorized access to information on production processes, financial, customer, and employee data in particular could have negative consequences for the Company.
In response to these risks, NORMA Group has implemented a number of measures that are embedded in the IT risk management process and continuously adapted to changing conditions. NORMA Group mitigates the identified IT risks, for example, through redundant provision of business-critical applications and databases via physically separate data center areas, decentralized data storage, and outsourced data archiving with a certified external provider, as well as the use of modern firewalls, email filters, and security monitoring by the dedicated Security Operations Center (SOC). Employee access to sensitive information is controlled by using authorization systems customized for the respective positions, taking into account the principle of segregation of duties. Finally, training courses for employees and awareness campaigns on aspects of information security are held on a regular basis. Furthermore, strategic cybersecurity models to protect the digital company infrastructure and digital services (e.g., private and public clouds, SaaS applications) are being gradually implemented. The gradual migration of old ERP systems to new Group-wide systems, which will continue in 2025, also harbors risks. During the necessary process changes at the respective plants and distribution centers, adjustment problems could arise at the process level that could result in additional shifts or special freight requirements, for example. Redundant internal and external resources are kept available to mitigate these risks, if necessary. Furthermore, delays in the individual implementation projects can possibly lead to higher implementation costs.
The probability of IT-related risks occurring – despite the existing countermeasures, but particularly in light of the generally high threat level for cyber risks – is generally assessed as “possible” and the potential financial impact as “moderate.”
The risks arising from the transfer of old ERP systems to new uniform Group systems are offset in the medium term by opportunities arising primarily from the potential for process standardization and optimization across all NORMA Group companies. NORMA Group sees further significant opportunities in the use of artificial intelligence
and associated efficiency potentials. The opportunities that could result from this standardization are considered “possible”. The associated financial impact is expected to be at a “low” level.
Legal risks and opportunities
Risks in connection with standards and contracts
Changes in laws and regulations relevant to NORMA Group, in particular in liability law, environmental law, tax law, and labor law, but also increasing requirements in the area of ESG and all associated changes in the legal and regulatory framework conditions relevant to NORMA Group, may have a negative impact on the development of operations. Violations of laws and regulations, as well as contractual agreements, can lead to penalties, regulatory requirements, or claims by injured parties. Conversely, NORMA Group may be harmed by violations of the law or breaches of contract by third parties. Risks in connection with claims for damages and legal disputes may arise in the event of defective products. Further risks may arise in connection with any findings of tax audits that result in additional tax payments, including penalties and interest claims.
As in the previous year, most of the legal disputes related to labor law issues. Other key areas of legal disputes with customers and suppliers related to purchase price claims or alleged product defects. In addition, NORMA Group conducted administrative legal proceedings due to the infringement of its own or third-party IP rights and customs proceedings, among other things.
The compliance and risk management systems in place are used to monitor adherence to the continuously changing laws and regulations. It is also ensured that contractual obligations are met. In particular, compliance with customs and commercial law requirements, such as sanctions in connection with the war in Ukraine, is ensured through continuous training and information measures as well as ongoing monitoring. NORMA Group counters the risk of product defects with its Group-wide quality assurance program. In addition, NORMA Group is also insured against claims arising from certain defective products.
Tax law risks for NORMA Group may arise in particular due to the significant changes currently being observed in international tax law (e.g., OECD BEPS initiatives), which in some cases give rise to unresolved legal issues, and due to the increased intensity of tax audits in many countries.
Overall, the probability of occurrence of risks in connection with standards and contracts is still assessed as “unlikely”. The extent of the potential financial impact of these risks is assessed as “moderate” due to the risk management measures in place.
Known legal risks to which NORMA Group is exposed and whose occurrence is sufficiently specified are adequately taken into account by provisions in the Consolidated Financial Statements.
Risks and opportunities in connection with ESG (environment, social, governance)
NORMA Group has implemented ESG as an integral part of the Group strategy. The focus here is on the production sites, as this is where the greatest potential for influence exists. Corporate decisions are made taking ESG criteria and the identified risks into account.
Among other things, NORMA Group has identified risks arising from emissions along the entire value chain and from extreme weather events. For the risks identified as material, there were no material financial effects on NORMA Group’s financial position, earnings position, and cash flows in fiscal year 2025. The probability of
occurrence of negative developments due to social and environmental risks is therefore still assessed as “unlikely” overall and their potential financial impact as “low”.
However, investments in the area of ESG do not serve exclusively to avert risks. The measures and initiatives are also seen as having the potential to positively impact both the business environment as well as NORMA Group and its stakeholders. Among other things, the high quality of NORMA Group’s products was identified as an opportunity within the upstream and downstream value chain. Overall, however, the opportunities in this area are still classified as “unlikely” and it is assumed that the measures and initiatives will have little impact on planning.
Further information on the risks and opportunities identified in connection with ESG can be found in the section MATERIAL IMPACTS, RISKS AND OPPORTUNITIES AND THEIR INTERACTION WITH STRATEGY AND BUSINESS MODEL.
Property rights
Violations of intellectual property rights could lead to lost sales and reputation. NORMA Group therefore legally protects its own technologies and innovations. The potential effects of the corresponding risks are additionally minimized by the high speed of innovation and the development of customer-specific solutions. At the same time, NORMA Group may also infringe the intellectual property rights of third parties. For this reason, developments and inventions are checked for potential patent infringements at an early stage. Despite these measures, there is still a risk of using third-party intellectual property. The probability of infringements of third-party intellectual property is therefore assessed as “possible”. However, the potential impact of IP-related disputes and other possible infringements is considered to be “low” as in the previous year. In addition, the consistent protection of intellectual property and the development of legally unique selling points are also seen as “unlikely” opportunities that can lead to a “minor” deviation compared to planning.
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These contents are part of the Non-financial Group Report and were subject to a separate limited assurance examination.