Volvo 2012 Annual Report Download - page 109

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SEK
15.9
GBP 2.5
CNY 8.0
INR 3.3
EUR
21.3 JPY 2.0
KRW 4.0
OTHER
12.9
Currencies Other
currencies Market value
Millions USD SGD Net SEK
Due date 2013 509 (41) 8
Due date 2014 6 (41) –
Due date 2015 – (13) –
Total local currency 515 (95) 8
Average contract rate 6.76 5.33
Market value of outstanding forward
contracts, SEK M 112 31 (2) 141
The Volvo Group’s outstanding forward contracts and options contracts for hedging
of commercial currency risks
CURRENCY RISKS B
The content in the balance sheet may be affected by changes in different
exchange rates. Currency risks in the Volvo Group’s operations are related
to changes in the value of contracted and expected future payment flows
(commercial currency exposure), changes in the value of loans and invest-
ments (financial currency exposure) and changes in the value of assets
and liabilities in foreign subsidiaries (currency exposure of equity).
POLICY
The aim of the Volvo Group’s currency risk management is to secure cash
flow from firm flows through currency hedges pursuant to the established
CURRENCY RISKS
D
Currency Net financial
position incl.
pensions
Impact onearnings
before tax if interest rate
rises 1%
A (Interest-rate risks)
Impact on Net financial
position if SEK
rises 10%
B (Currency risks)
SEK M
JPY (19,954) (150) 1,995
USD (8,902) (67) 890
BRL 1,027 8(103)
CNY 3,165 24 (317)
EUR 3,199 24 (320)
Other (1,513) (11) 39
Total C (22,978) (172) 2,184
Read more about the Volvo Group’s net financial position on page 95.
F
cont. >>
currency policy, and to minimize the exposure of financial items in Volvo
Group’s balance sheet. Below is a presentation on how this work is con-
ducted for commercial and financial currency exposure, and for currency
exposure of equity.
Commercial currency exposure
Transaction exposure from commercial flows
Volvo Group uses forward contracts and currency options to hedge the
value of future payment flows in foreign currencies. Volvo Group only
hedges firm flows, most of which are realized within six months. The hedged
amount of firm flows for all periods fall within the framework of Volvo
Group’s currency policy.
The Volvo Group’s
net assets in different
currencies (SEK bn) =
105