Volvo 2014 Annual Report Download - page 129

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SEK
8.3
GBP 2.9
CNY
10.8
INR 0.8
EUR
21.0
KRW 3.4
OTHER 11.6
INTEREST-RATE RISKS VALUTARI SK ER CREDIT RISKS
FINANCIAL RISKS
OTHER PRICE RISKSLIQUIDITY RISKS
The Volvo Group’s
net assets in different
currencies (SEK bn) =
Currencies Market value
Millions CNY/
SEK1USD/
SEK USD/
KRW USD/
CNY SGD/
SEK AUD/
SEK GBP/
SEK
Due date 2015 (5,510) 302 236 39 13 16 31
Due date 2016 –––9–1731
Due date 2017 –––––910
Total local currency (5,510) 302 236 48 13 42 71
Average contract rate 1.24 7.35 1.068 6.38 5.77 5.91 11.85
Market value of outstanding forward contracts, SEK M 119 (139) (54) 4 (2) (11) (15) (98)
1 The outstanding forward contracts in CNY/SEK is the hedging of future cash fl ow of the acquisition of Dongfeng Commercial Vehicles.
Volvo Group’s outstanding derivatives hedging commercial currency risks Dec 31, 2014
CURRENCY RISKS B
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 fl ows
(commercial currency exposure), changes in the value of loans and invest-
ments (fi nancial currency exposure) and changes in the value of assets
and liabilities in foreign subsidiaries (currency exposure of equity).
4:2
POLICY
The aim of the Volvo Group’s currency risk management is to secure cash
fl o w f r o m fi rm fl ows through currency hedges pursuant to the established
currency policy, and to minimize the exposure of fi nancial items in the Volvo
Group’s balance sheet. Below is a presentation on how this work is con-
ducted for commercial and fi nancial currency exposure, and for currency
exposure of equity.
INTEREST-RATE RISKS CURRENCY RISKS CREDIT RISKS
FINANCIAL RISKS
OTHER PRICE RISKSLIQUIDITY RISKS
4:1
Risk net fi nan-
c i a l p o s i t i o n
Dec 31, 2014
SEK M
Net fi nancial
position excl.
pensions
Impact onearnings before
tax if interest rate rises 1%
A (Interest-rate risks)
Impact on Net fi nancial
position if SEK appreciates
against other currencies 10%
B
(Currency risks)
SEK (4,643) (41) –
JPY (13,216) (116) 1,322
RUB (1,723) (15) 172
EUR 4,961 43 (496)
CNY (178) (2) 18
USD 9,142 80 (914)
Other (4,267) (37) 427
Total C (9,924) (87) 528
Read more about the Industrial Operations net fi nancial position on page 114 –115.
JPY 3.8
125
FINANCIAL INFORMATION 2014