The purpose of financial risk management is to secure efficient and competitive funding for its operations and to reduce the negative impact of financial market fluctuations on its operations.
On December 31, 2017, the Group’s interest-bearing liabilities amounted to EUR 805.0 (959.9) million. The average capital-weighted loan maturity was 4.5 (5.1). A total of 69.0% (56.7%) of the Group’s interest-bearing liabilities were either interest rate hedged or fixed-rate loans. Group’s interest fixing period was 4.6 (4.6) years, including forward starting hedges in 2019–2021. A one percentage point increase in market rates would cause a EUR 2.5 (2.7) million increase in interest costs per annum.
The Group is exposed to foreign exchange rate fluctuations in the Norwegian krone, the Russian ruble and the Swedish krona. The direct impact of changes in exchange rates on the Group’s operating profit, balance sheet, and equity ratio as of December 31, 2017 are presented below.
In Russia, Norway and Sweden, the Group only had liabilities in the local currencies and therefore, it is only vulnerable to translation differences in equity. At the end of the year, the Russian subsidiary had equity of RUB 5.29 billion, the Norwegian subsidiaries’ equity totaled NOK 790.6 million, and the Swedish subsidiaries’ equity was SEK 494.0 million.
The sensitivity of changes in exchange rates in the Group’s net sales and EBITDA as of December 31, 2017 are presented below:
More information on financial risks in the Financial Statements 2017 (Note 22).