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DFDS annual report 2009 Risk Factors 49
consumption is related to passenger shipping, of which about 24 % is
hedged. The majority of the remaining consumption by freight ships is
hedged by commercial bunker surcharge agreements.
All in all, it is estimated that a price change of 1 % compared to the
price level at the end of 2009, which was approximately USD 450 per
ton, will entail a profit impact of approximately DKK 2.4 million.
Financial risks
The most important financial risk factors for DFDS are currency and
interest-rate fluctuations, both of which are managed by DFDS’ central
finance department, in accordance with the policies adopted by the
Supervisory Board.
BUNKERPRICE 2009/10 (HFSO 3.5%)
USD PER TON
500
400
300
200
100
DKK PER TON
3000
2500
2000
1500
1000
500
Currency risks
Around 80 % of DFDS’ revenue is invoiced in foreign currency. The
most important net income currencies are SEK, NOK, EUR and
GBP while USD is the principal net expense currency related to
the purchase of bunker.
DFDS actively seeks to reduce currency exposure by matching the
currencies for assets and liabilities, and by taking out futures contracts,
options and swaps. Hedging of cash flows in currency is evaluated and
adjusted on an ongoing basis. At this point in time, no hedging has
been entered into for 2010.
0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB
2009
2010
DKK
USD
0
Interest-rate risks
DFDS’ interest-rate risks stem primarily from interest-bearing debt.
The loan portfolio at the end of 2009 amounted to DKK 4.200 million
and the average loan period was approximately 3.7 years. Around
40 % of the loan portfolio is denominated in foreign currencies, mainly
EUR, SEK and NOK.
The management of interest-rate risks is based on a proportion of
fixed interest loans at a minimum level of approximately 40 %, including
the use of rate swaps. Fixed interest loans accounted for approximately
37 % of the portfolio at the end of 2009, including rate swaps.
A 1 % rise in interest rates compared to the level at the start of
February 2010 would raise interest-rate costs by around DKK 27 million
in 2010.
Liquidity risks
DFDS improved its minimum cash pool in 2009 through several initiatives.
An agreement was entered into for the sale and leaseback of
transport equipment for about DKK 60 million. Liquidity was released
through a guarantee agreement and an internal ship sale. The latter
released liquidity of DKK 55 million. In addition, committed money
market lines have been extended to DKK 100 million. Further initiatives
are expected in 2010.
For further information about the management of financial risks,
including credit and liquidity risks, please refer to Note 28 on page 93.