Currency exposure

The goal of currency management is to minimize the short-term adverse effects of currency exhange rate fluctuations on the Group's earnings and financial position.

As Husqvarna Group sells products in approximately 100 countries, the Group is exposed to such exchange rate fluctuations. They affect the Group's earnings in terms of translation of income statements in foreign subsidiaries, i.e. translation exposure, as well as the sale of products on the export market and purchase of materials in foreign currecies, i.e. tansaction exposure.

The table shows the forecasted transaction flows (imports and exports) for the 12-month period of 2012 and hedges at year-end 2011.

Commercial flows
Currency 2014 Forecast flow SEKm 31 Dec 2013 Total hedgeamount SEKm 2013 Forecast flow SEKm 31 Dec 2012 Total hedgeamount SEKm
EUR 1,738 -1,426 2,416 -1,878
RUB 741 -544 808 -517
CAD 729 -522 709 -455
AUD 414 -283 547 -343
NOK 384 -274 388 -243
CHF 345 -269 304 -236
Other 1,446 -888 1,182 -522
JPY -207 147 -302 220
CNY -667 557 -569 264
USD -1,578 1,193 -1,163 970
SEK -3,345 2,309 -4,320 2,740
The hedging effect on operating income amounted to SEK -3m (129) during 2013. At year-end 2013, the unrealized exchange rate result on forward contracts, all maturing in 2014, amounted to SEK-10m (4).

Translation and transaction exposure

Translation exposure is related primarily to earnings in JPY, EUR, CNY, RUB and USD while transaction exposure is related primarily to EUR, USD, RUB, CAD and CNY. The Group's globally widespread production and sales enable the various exchange-rate effects to offset each other to some extent. 

Changes in exchange rates also affect Group equity. The difference between the assets and liabilities of foreign subsidiaries in foreign currencies is affected by such changes, which generate translation differences that impact equity. The Group does not normally hedge net investments in foreign operations. At year-end 2012, most foreign net assets were in USD and EUR. (For more information see note 2 in the Annual Report 2012)