Financial risks

Financial risks

Metsä Board is focusing on the active development and growth of its paperboard business. Increasing sales at the global level also involves cost and exchange rate risks.

Financial risks

As a result of increasing regulation in the financial market, the operations of credit and bond markets may become more difficult, which may impact the company’s ability to acquire long-term debt financing at a competitive price. The financial risks are managed in accordance with the treasury policy approved by Metsä Board’s Board of Directors. The purpose is to hedge against considerable financial risks, balance cash flow and give the business units enough time to adjust their operations to the changing conditions.

FX sensitivities
Metsä Board sells its products in several countries and is therefore susceptible to fluctuations in exchange rates. The US dollar strengthening by 10 per cent against the euro would have a positive impact of approximately EUR 65 million on Metsä Board’s annual operating result. Correspondingly, the Swedish krona strengthening by 10 per cent would have a negative impact of approximately EUR 40 million. The British pound strengthening by 10 per cent would have a positive impact of approximately EUR 8 million. The impact of weakened exchange rates would be the opposite. The sensitivities do not include the impact of hedging.

Credit risks
The management of credit risks related to commercial operations is the responsibility of Metsä Board’s executive management and Metsä Group’s centralised credit control. Metsä Board’s management determines the limits on credit extended to customers and the applicable terms of payment in cooperation with the centralised credit control. Nearly all credit risks are transferred by means of credit insurance contracts. Metsä Board’s customer credit risk was at a normal level in 2018. The main principles of credit control are defined in the credit guidelines of the risk management policy approved by the company’s Board of Directors.

Metsä Board’s financial risks and their management are described in more detail on pages 59–64 of the 2018 Annual Report.

Hedging policy: 100% of balance sheet position and 50% of annual net FX flows.

The tables below will be updated half-yearly. The data in the below tables is from Metsä Board's 2019 half-year financial report published on 1 August 2019.

Created with Highcharts 4.1.5The total packaging market Roughly USD 850 billion 55.0 % 36.0 % 7.0 % 2.0 %USDSEKGBPother currencies1/2

FX sensitivities excluding hedges


10% strengthening of foreign currency vs. EUR will have an impact on Metsä Board’s EBIT of

Currency Next 12 months
USD, $ EUR +65 million
SEK
EUR -40 million
GBP, £ EUR +8 million
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