Foreign exchange risk

Foreign exchange risk refers to the adverse effects of changes in foreign currency exchange rates on Husqvarna Group’s income and equity. In order to manage such effects, the Group covers these risks within the framework of the Financial Policy. The Group’s overall currency exposure is managed centrally. The major currencies to which Husqvarna Group is exposed are EUR, USD, CAD and AUD.

Transaction exposure from commercial flows

The Financial Policy stipulates hedging of forecasted sales and purchases in foreign currencies, taken into consideration the price fixing periods and the competitive environment. Normally, 75–100% of the invoiced and forecasted flows are hedged up to and including 6 months, while forecasted flows for 7–12 months are hedged between 50–75%. Group subsidiaries primarily cover their risks in commercial currency flows through Group Treasury. Group Treasury assumes the currency risks and covers such risks externally by utilizing currency derivatives, for which hedge accounting is applied. The table below shows the forecasted transaction flows (imports and exports) for 2017, hedges at year-end 2016 and comparative amounts for the previous year.

Commercial flows
  2016   2015  
Currency 2017 Forecast flow SEKm Total hedgeamount SEKm 2016 Forecast flow SEKm Total hedgeamount SEKm
EUR 3,833 -2,968 2,796 -2,260
CAD 995 -745 710 -521
AUD 495 -360 421 -304
CHF 468 -364 415 -304
NOK 460 -338 347 -264
RUB 455 -344 251 -185
Other 1,357 -782 707 -347
CNY -447 368 -393 341
USD -3,304 2,628 -2,408 1,984
SEK -4,312 2,905 -2,846 1,860
   


Annual Report 2016