Risk management


The Group’s earnings are affected by fluctuations in exchange rates. Transaction exposure risk arises due to a significant portion of the Group’s sales income being in different currencies from costs. The translation exposure
risk arises from the translation of foreign subsidiaries’ assets, liabilities and earnings into Swedish kronor.

Transaction exposure. In order to reduce the impact on profit from changes in exchange rates, net flows are hedged using forward foreign exchange contracts. Net flows in euros, US dollars and pounds sterling for the coming four months are always hedged. These normally correspond to trade receivables and outstanding orders. The Board can decide to hedge flows for a longer period if this is deemed suitable in light of the products’ profitability, competitiveness and the currency situation. Currency exposure arising when investments are paid for in foreign currency is distinguished from other transaction exposure. Normally, 90–100 per cent of the currency exposure
associated with major investments is hedged.

Translation exposure. Hedging exposure that arises when subsidiaries’ assets and liabilities are translated into Swedish kronor (known as equity hedging) is assessed on a case-by-case basis and is arranged based on the value of net assets upon consolidation. The Group’s non-current assets are mainly Swedish, with the exception of the paperboard mill in the UK, which accounts for 2 per cent of the assets. The hedges take the form of foreign currency loans or forward foreign exchange contracts. Exposure that arises when the earnings of foreign subsidiaries are translated into Swedish kronor is not normally hedged.

For the next two years, expected flows in EUR/SEK are hedged at an average of 10.49. For other currencies, 4–10 months of flows are hedged.



Hedging of exposure to pounds sterling amounted to GBP 34 million at year-end. Net assets in other currencies are limited and are not usually hedged

Interest rates.

Changes in market interest rates affect the Group’s cost of borrowing.

The fixed rate period for the Group’s net financial debt varies over time and is decided by the Board of Directors. To limit the effects of a rise in interest rates, the interest rate on loans may be fixed, or an interest rate swap agreement may be entered into without changing the interest rate on the underlying loan.

The Group’s average borrowing rate in 2021 was 1.2 per cent.

In 2021 interest on loans of SEK 500 million was fixed for 5 years. The table below shows the Group’s fixed interest rate period by currency

Credit risk from financial counterparties
The risk of financial transactions giving rise to credit risks in relation to financial counterparties

The creditworthiness of Holmen’s financial counterparties is assessed using reputable credit rating agencies or, where a counterparty has no credit rating, the company’s own analyses. A maximum credit risk and settlement risk are established for each financial counterparty and are monitored continually. This calculation is based on the maturity and historical volatility of different types of
derivatives. For cash and cash equivalents and current investments, the maximum credit risk is assessed to correspond to the nominal amount.

At 31 December 2021, the Group had outstanding derivative contracts with a nominal amount of SEK 18 billion and a net fair value of SEK 946 million. The credit risk associated with outstanding derivative contracts is judged to be negligible.

Liquidity and refinancing

The risk of the need for future funding and refinancing of maturing loans being required
at a high cost.

Holmen’s strategy is to have a strong financial position in order to secure room for manoeuvre when making long-term commercial decisions. The target is for net financial debt not to exceed 25 per cent of equity. Holmen’s financing mainly comprises bonds and the issue of commercial paper. Holmen reduces the risk of future funding becoming difficult or expensive by using longterm contractually agreed credit facilities. The Group plans its financing by forecasting financing needs over the coming years base on the Group’s budget and profit forecasts that are regularly updated.


The financial position is strong, with net financial debt at 31 December 2021 amounting to SEK 4 101 million. Of these financial liabilities, SEK 736 million falls due in 2022.
The Group has unutilised committed credit facilities of SEK 5 billion, of which SEK 1 billion matures in 2025 and SEK 4 billion in 2027. Both facilities include a limit stipulating that they cannot be used if net liability in relation to equity exceeds 125 per cent. At year-end, the Group’s net liability
in relation to equity was 9 per cent.



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Operational risks

Sensitivity analysis