Note Financial risk management and hedge accounting
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.
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 Group’s operational subsidiaries are located outside
Sweden. Changes in exchange rates therefore affect AAK in
several ways:
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.
Exposure to transaction risk, December 31, 2019
SEK million Assets Liabilities Sales contracts Purchase contracts
Currency contracts
Sold Bought Net exposure
USD 3,402 -4,181 -2,333 1,174 -1,508 3,362 -84
EUR 2,292 -994 1,687 -327 -3,214 511 -45
GBP 39 -676 68 0 -359 929 1
Other 1,577 -201 417 -281 -2,934 1,386 -36
Total 7,310 -6,052 -161 566 -8,015 6,188 -164
Exposure to transaction risk, December 31, 2018
SEK million Assets Liabilities Sales contracts Purchase contracts
Currency contracts Net
Sold Bought exposure
USD 3,265 -3,999 -759 170 -2,105 3,332 -96
EUR 1,768 -717 2,172 -699 -3,222 681 -17
GBP 37 -474 45 0 -452 845 1
Other 382 -251 554 -332 -3,032 2,692 13
Total 5,452 -5,441 2,012 -861 -8,811 7,550 99
3
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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 risks related to translating equity and profit/
loss in our foreign subsidiaries to SEK are not hedged.