Transaction flows have the greatest impact on currency – when costs for sourcing or production are in one currency, and sales are conducted in another. The Group uses currency derivatives to hedge a portion of the currency exposure that arises. Currency hedging means that the impact of currency movements occurring today will be delayed to some extent. Nobia is also affected by translation differences when consolidated sales and operating income are translated into SEK. For a more detailed description, refer to Note 2 Financial risks on pages 67-69.
Sensitivity analysis and transaction effects of currencies
The diagram shows the major currency pairs and the trend since 2010. The impact of a weak EUR and DKK, and a strong NOK and GBP, on Nobia’s earnings is generally favourable.
A significant portion of the UK operation’s components are purchased in EUR, while finished products are subsequently sold in GBP. The net effect of this currency pair means that a strong EUR against the GBP is negative for the Group.
A proportion of the Swedish operation’s costs for material purchases are conducted in EUR. A strong SEK against the EUR is therefore positive for the Group. A significant portion of the Swedish production of components and finished products is sold in Norway. A weak SEK against the NOK is therefore positive for the Group.
The Danish unit conducts a significant portion of its sales in Norway, but also in Sweden. A weak DKK against the NOK and the SEK is therefore positive for the Group.
For a more detailed description and a sensitivity analysis, refer to Note 2 Financial risks on pages 67–69 .
|Currency pair||Change||Effect on operating profit|
|EUR/GBP||+/-5%||+/- 55 SEK m|
|EUR/SEK||+/-5%||+/- 24 SEK m|
|NOK/DKK||+/-5%||+/- 21 SEK m|
|NOK/SEK||+/-5%||+/- 16 SEK m|
Changes in value in balance sheet
In addition to the financial risks that are regulated in the finance policy adopted by the Board, there is also a risk for changes in value in the balance sheet.
A structured work model is applied to test the value of assets and liability items in the balance sheet.