Volvo 2013 Annual Report Download - page 131

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LIQUIDITY RISKS
Liquidity risk is defi ned as the risk that the Volvo Group would be unable
to fi nance or refi nance its assets or fulfi ll its payment obligations.
POLICY
The Volvo Group assures itself of sound fi nancial preparedness by always
having liquid funds and committed facilities to cover the Volvo Group’s
expected liquidity needs for a period of 12–18 months in a scenario with
no access to capital markets.
The adjacent graph J discloses expected future cash-fl ows including deriv-
atives related to fi nancial liabilities. Capital fl ow refers to expected payments
of loans and derivatives, see note 22. Expected interest fl ow refers to the
future interest payments on loans and derivatives based on interest rates
expected by the market. The interest fl ow is recognized within cash fl ow
from operating activities.
In addition to derivatives included in capital fl ow in the adjacent graph J
there are also derivatives related to fi nancial liabilities recognized as
assets, which are ex pected to give a future capital fl ow of SEK 0,5 billion
and a future interest fl ow of SEK 2,4 billion.
The predominant part of expected future cash-fl ows that expires within
2014 is an effect of the Volvo Group’s normal business cycle , with shorter
duration in the Customer fi nance portfolio compared to Industrial operations.
POLICY
Changes in commodity prices are included in the product cost calculation.
Increased commodity prices is therefore refl ected in the sales price of the
Volvo Group’s fi nal products. Purchasing agreements with commodity
suppliers may also be long term in nature or structured in a way that short
term volatility in commodity prices have less direct effect on Volvo Group’s
cost base. Financial hedging is performed in order to reduce short term
volatility electricity cost in Sweden.
Future cash-fl ow including derivatives related to non-current
and current fi nancial liabilities
Capital flow, SEK bn
Interest flow, SEK bn
2019
(3.2)
(0.2)
2020
(2.3)
(0.3)
2016 2017
(16.8)
(0.9)
2018
(4.6)
(0.3)
2015
(30.9)
(1.5)
2014
(25.5)
(2.3)
(51.7)
(3.9)
(50)
0
(40)
(30)
(20)
(10)
J
INTEREST-RATE RISKS CURRENCY RISKS CREDIT RISKS
FINANCIAL RISKS
OTHER PRICE RISKSLIQUIDITY RISKS
INTEREST-RATE RISKS CURRENCY RISKS CREDIT RISKS
FINANCIAL RISKS
OTHER PRICE RISKSLIQUIDITY RISKS
OTHER PRICE RISKS
Commodity risks
Commodity risks refer to the risk that changed commodity prices will
affect the consolidated earnings within the Volvo Group. Procurement of
commodities such as steel, precious metals and electricity are made on a
regular basis where prices are set in the global markets.
Read more about the maturity structure of bond loans and other loans, as
well as granted but unutilized credit facilities in Note 22.
Read more about contractual term analyses of the Volvo Group’s future
payments from non-annullable fi nancial and operational lease contracts in
Note 14.
127127