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2.2 Financial risk management
Financial risk factors
As a result of its worldwide activities, Autoneum
is exposed to various financial risks, such as
fluctuations in exchange rates, interest rates and
stock market prices, credit risks and liquidity
risks. Autoneum’s financial risk management has
the aim to minimize the potential adverse impact
of the development of the financial markets on
the Group’s financial performance and to secure
its financial stability. This includes the use of
derivative financial instruments to hedge certain
risk exposures.
Financial risk management is carried out
centrally for the Group, in accordance with the
directives adopted by the Board of Directors
and the Group Executive Board. Financial risks
are identified primarily locally and evaluated
and managed centrally in close cooperation with
the Group’s legal units.
Foreign exchange risk
Foreign currency risks arise from investments in
foreign subsidiaries (translation risk) and from
transactions, assets or liabilities that are denom-
inated in a currency other than the functional
currency of a legal unit (transaction risk). In order
to hedge transaction risks that cannot be
reduced through offsetting transactions in the
same foreign currency (natural hedging), sub
sidiaries may use forward contracts and curren-
cy options, which are usually completed with
the Group’s headquarters and from the latter by
trading with banks.
The majority of the business transacted in
Autoneum’s foreign subsidiaries is in their
functional currency. Nevertheless, the Group
is exposed to foreign currency risks, mostly
against the euro. Assuming that the euro against
the Swiss franc as at December 31, 2015, would
have been 15% stronger, and all other parameters
remained the same, the profit before taxes
would have been CHF 2.3 million higher (2014:
CHF 0.9 million). In the opposite case, the profit
before taxes would have been reduced to the
same extent. This would mainly have been due
to exchange gains/losses on trade receivables
and payables.
The companies’ cash holdings with banks
are denominated mostly in the relevant
functional currency. The foreign currency risks of
cash positions in foreign currencies are reviewed
periodically.
Interest rate risk
The interest risk of the Group relates to interest
bearing assets and liabilities. Assets and lia
bilities with fluctuating interests result in cash
flow risks, while fixed interest bearing assets
and liabilities lead to a fair value interest risk if
measured at fair value. Autoneum maintains,
in consideration of seasonal fluctuations, a bal-
anced relation between fixed and fluctuating
interest bearing financial liabilities. The Group
analyzes the interest risk on a net basis. A 1%
higher interest rate would have reduced the profit
before taxes of the Group by CHF 1.3 million
(2014: CHF 1.2 million).
No hedging of the interest rate risk was
performed in the reporting period or in the prior
period.
Price risk
Holding marketable securities exposes Autoneum
to a risk of price fluctuation. Since Autoneum
held no significant shares (except for treasury
shares) or options at the end of the reporting
period, no sensitivity analysis of fair value risk
is prepared.
Credit risk
Credit risk arises from deposits and financial
derivatives held with financial institutions
and from trade receivable accounts, other receiv
ables and marketable securities and interest
bearing receivables. The maximum risk of these
positions corresponds to the book values and
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Autoneum
Financial Report 2015
Consolidated financial statements