Financial Risk Management
Risk - Currency risk
In its operations, HEXPOL is exposed to various financial risks, of whichthe currency risk is the one that dominates. Exchange-rate fluctuations affect HEXPOL’s earnings, both when sales and purchases take place in different currencies (transaction exposure) and when the income statements and balance sheets of foreign subsidiaries are translated to sek (translation exposure).
HEXPOL’s global operations give rise to extensive foreign-currency cash flows. The key currencies in the Group’s payment flows are sek, usd and eur. Exchange-rate fluctuations have an impact on the Group’s earnings in the translation of foreign Group companies’ income statements to Swedish kronor. Since a considerable portion of the Group’s earnings is generated outside Sweden, exchange-rate fluctuations could have a significant impact on the consolidated income statement.
In conjunction with the translation of the Group’s investments in foreign subsidiaries to SEK, there is a risk that exchange rate fluctuations could have an impact on the Group’s balance sheet.
Risk management
HEXPOL’s business is local, which means that sales and purchases normally are made in local currency and thus limits the Group’s transaction exposure.
In a sensitivity analysis, the effect of a 10 percent change against all currencies in relation to the exchange rate for sek would affect sales by msek 1,827, operating profit by msek 258 and equity by msek 2,011.
Risk - Interest risk
Changes in the market interest rates affect HEXPOL’s net financial items.
Risk management
Excess liquidity and credit agreements are primarily managed at Group level and in accordance with the financial policy and at variable interest rate.
On December 31, 2024, external liabilities totaled msek 3,473 (2,683). A one percentage point change in the interest rate on the Group’s closing liabilities for 2024 would impact the full-year earnings by approximately msek 35 before tax.
Risk - Credit risks
The financial risks to which HEXPOL is exposed also include credit risks, meaning that a customer or business partner will be unable to fulfil their payment obligations or to settle receivables that HEXPOL has invoiced or intends to invoice. Financial credit risks are defined as the risk that counterparties with which the Group has invested cash and cash equivalents, has current bank investments or has entered into financial instruments will be unable to fulfil their obligations.
Risk management
HEXPOL conducts regular credit assessments of customers. HEXPOL has widely diversified customers in terms of both geographic areas and customer groups, which limits the risk of significant bad debt losses. HEXPOL’s excess liquidity is primarily used to repay external loans, and further surpluses are placed in wellknown banks.
Risk - Financing and liquidity risk
To enable corporate acquisitions or otherwise achieve strategic objectives, HEXPOL’s operations could ultimately require additional financial resources.
HEXPOL’s ability to ensure future capital requirements depends to a great extent on successful sales of the Group’s products and services. There are no guarantees that HEXPOL will be able to secure the necessary capital. In this regard, general developments in the share capital and credit markets are also of considerable significance. The liquidity risk is defined as the risk that the Group will be unable to entirely fulfil its payment undertakings when they fall due or will only be able to do so on highly unfavorable terms.
Risk management
HEXPOL has a strong balance sheet, providing a financial platform for future acquisitions.
HEXPOL has four major credit agreements with Nordic banks. For further information on these, see Note 15 in the annual report.
HEXPOL also has a program for issuing commercial papers with the possibility of these being issued within a limit of SEK 4 billion.
Risk - Insurable risks
HEXPOL’s operations, assets and employees are to some extent exposed to various types of risks that may affect the Group’s operations.
Risk management
HEXPOL has centrally procured insurance cover for property, liability, disruption, travel and transport insurance, etc., combined with local insurance policies where necessary.
