Currency exposure

The goal of currency management is to minimize the short-term adverse effects of currency exhange rate fluctuations on the Group's earnings and financial position.

As Husqvarna Group sells products in approximately 100 countries, the Group is exposed to such exchange rate fluctuations. They affect the Group's earnings in terms of translation of income statements in foreign subsidiaries, i.e. translation exposure, as well as the sale of products on the export market and purchase of materials in foreign currecies, i.e. tansaction exposure.

The table shows the forecasted transaction flows (imports and exports) for the 12-month period of 2012 and hedges at year-end 2011.

Commercial flows
Currency 2015 Forecast flow SEKm 31 Dec 2014 Total hedgeamount SEKm 2014 Forecast flow SEKm 31 Dec 2013 Total hedgeamount SEKm
EUR 2,834 -2,360 1,738 -1,426
CAD 883 -540 729 -522
AUD 459 -296 414 -283
CHF 419 -334 345 -269
NOK 324 -234 384 -274
DKK 294 -221 283 -200
Other 1,024 -261 1,697 -1,085
CNY -532 441 -667 557
USD -2,831 1,802 -1,578 1,193
SEK -2,874 2,003 -3,345 2,309
The hedging effect on operating income amounted to SEK -54m (-3) during 2014. At year-end 2014, the unrealized exchange rate result on forward contracts, all maturing in 2015, amounted to SEK 155m (-10).

Translation and transaction exposure

Translation exposure is related primarily to earnings in JPY, EUR, CNY, RUB and USD while transaction exposure is related primarily to EUR, USD, RUB, CAD and CNY. The Group's globally widespread production and sales enable the various exchange-rate effects to offset each other to some extent. 

Changes in exchange rates also affect Group equity. The difference between the assets and liabilities of foreign subsidiaries in foreign currencies is affected by such changes, which generate translation differences that impact equity. The Group does not normally hedge net investments in foreign operations. At year-end 2012, most foreign net assets were in USD and EUR. (For more information see note 2 in the Annual Report 2012)