STENA METALL AB - Stena Metall Group

Finance | Stena Metall Finans
Stena Metall Finans
During the fiscal year a number of assets
experienced substantial price fluctuations.
Raw materials such as metals rose
to historically high levels. This was particularly
true of petroleum products. The
stock market developed very well with
relatively low volatility. Compared to
recent years, the currency and fixed income
markets were comparatively stable.
Income for Stena Metall Finans was
satisfactory.
The Group’s internal bank
Stena Metall Finans serves as the Group’s
internal bank. The policy for managing
currency risks is distinguished by prudence.
Its areas of responsibility include:
• Active participation in analysis, quality
assurance of decision-making data and
financing of investment activities.
• Establishing routines for cash management,
capital procurement and account
structures, and actively working to
reduce the Group’s working capital.
• Contributing to the Group’s short- and
long-term earnings by efficiently managing
and trading liquid assets.
• Monitoring financial markets to keep
Group companies updated on developments.
• Weighing risk levels with regard to the
Group’s customer credits and managing
the credit portfolio.
• Ensure the Group’s access to long-term
financing.
Financial management and trading
The finance units in Sweden and Switzerland
achieved good results during the year
from short- and long-term trading, in
both cases primarily in the equity market.
Exchange rate effects on consolidated
income
The best possible balance is always sought
between assets and liabilities as well as
between revenue and expenses in foreign
currency. It is im portant that the Stena
Metall Group finances its operations in
the right currency. Other projected flows
are continuously hedged using forward
exchange contracts.
Increased access to information and
expanding trade across national and
currency boundaries have led to greater
transparency in scrap prices. The Group’s
earnings were previously affected more by
the exchange rate between USD and SEK
than they are today. When the dollar
changes in value against the krona, Swedish
purchasing prices are now adjusted
much more quickly.
Liquidity and financing
The Group’s external financing is secured
entirely through the banking system.
Bilateral credit agreements are in place
with a number of banks in the countries
where the Stena Metall Group is established
and has a need for banking services.
For financing purposes, the principal rule
CFO and Vice President
Stena Metall AB
John Lindqvist
is that no assets belonging to the Group’s
core businesses may be used as collateral.
We have reached agreement with our
banks on certain key financial indicators
and periodic information updates as a
condition for financing. These so-called
covenants are used by all our financial
sources.
Due to the highly volatile prices of our
basic assets such as scrap, ferrous and
non-ferrous metals and bunker oil, which
is immediately reflected in tied-up working
capital, we ensure that we have the
liquidity needed to manage organic and
acquisition-based growth.
Environmental insurance
Through environmental insurance, the
Group has as in previous years allocated
the necessary provisions to cover future
remediation costs of previously contaminated
soil.
Exchange rate, USD/SEK Key commodities Stockholm Stock Exchange OMX index
USD
12
10
8
6
4
2
Price index
300
250
200
150
100
50
1,600
1,400
1,200
1,000
800
600
400
200
0
2001 2002 2003 2004 2005
0
2001 2002 2003 2004 2005
0
2001 2002 2003 2004 2005
Copper, LME
Steel index
Oil, Nymex
Corrugated
Scrap, class 11
52