59
Exposure to raw material price risk, December 31, 2017
(Thousand tons) Inventory Sales contracts Purchase contracts Net exposure
Oils and fats 255 -1,512 1,261 4
Exposure to raw material price risk, December 31, 2016
(Thousand tons) Inventory Sales contracts Purchase contracts Net exposure
Oils and fats 209 -1,250 1,047 6
Sensitivity analysis – raw materials (excluding exotic raw materials)
With the stocks and commercial contracts hedged by raw material hedge contracts, leaving a very limited net exposure, changes
in raw material prices have no significant effect on the Group’s profit margin. A 10 percent change in all raw material prices would
therefore have a negligible effect on Group operating profit.
Gross contribution for rapeseed
As explained above, our policies and procedures for risk management in general imply that our profit margin is not affected by
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crushing. The crushing margin (oil plus meal value less seed price) can vary over time and can thereby directly affect profitability
within the Technical Products & Feed business area.
Exposure to foreign currency
A significant portion of the Group’s buying and selling of raw materials is denominated in foreign currency. Moreover, most of the
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Sales contracts and raw material contracts in foreign currency give rise to transaction risk.
Profits for our foreign subsidiaries are affected by changes in currency rates, when they are translated to SEK.
The Group’s equity is affected when equity in our foreign subsidiaries is translated to SEK.
AAK hedges all its currency transaction risks. Payment for all sales contracts is thus hedged in the local currency of the
subsidiaries that have entered into such sales contracts. Exchange rate risk related to translating equity and profit/loss in
our foreign subsidiaries to SEK is not hedged.
Exposure to transaction risk, December 31, 2017
SEK million Assets Liabilities
Sales
contracts
Purchase
contracts
Currency contracts Net
Sold Bought exposure
USD 3,326 -4,791 -558 16 -1,509 3,539 23
EUR 1,564 -786 1,392 -188 -2,395 417 4
GBP 45 -461 40 -2 -444 824 2
Other 468 -1,049 440 -231 -2,350 2,724 2
Total 5,403 -7,087 1,314 -405 -6,698 7,504 31
Exposure to transaction risk, December 31, 2016
SEK million Assets Liabilities
Sales
contracts
Purchase
contracts
Currency contracts Net
Sold Bought exposure
USD 2,491 -4,274 1,012 -1,255 -1,586 3,600 -12
EUR 1,601 -1,048 876 -41 -1,887 509 10
GBP 74 -615 43 0 -445 949 6
Other 1,057 -237 333 -178 -5,979 5,051 47
Total 5,223 -6,174 2,264 -1,474 -9,897 10,109 51
Sensitivity analysis – Currency
With all foreign currency transaction risk hedged by currency hedge contracts, leaving a very limited net exposure, changes in
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relative to SEK do affect Group profit when the profit of each foreign subsidiary is translated into SEK. A 10 percent change in the
exchange rates of all foreign currencies relative to SEK would have an effect of ± SEK 140 million (130) on Group operating profit.
Furthermore, a 10 percent change in the exchange rates of all foreign currencies relative to SEK would affect Group net sales by
SEK 1,800 million (1,600) and Group net working capital by SEK 350 million (300).
Interest rate risk
AAK’s policy on interest rate risk management is to minimize volatility in cash flow and net profit caused by fluctuations in interest
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In order to protect the Group’s interest costs against such abnormal scenarios, the interest rate on part of the Group’s net interest-
bearing debt can be fixed or capped.
At year-end 2017, the Group’s interest-bearing net debt, including pensions, amounted to SEK 2,666 million (2,620).