Home » Investors » Risk management » Market risk

Market risk

Foreign currency risk

As the Group operates internationally, Sogefi in particular, it is exposed to the risk that fluctuations in exchange rates could affect the fair value of some of its assets and liabilities. The Sogefi Group produces and sells mainly in the Euro Area, but it is subject to foreign currency risk, especially versus the GB pound, Brazilian real, US dollar, Argentine peso, Chinese renminbi and Canadian dollar.

Regarding the exchange rate risk associated with translation of the financial statements of international subsidiaries, the operating companies generally have a high degree of convergence between the currencies of their sourcing costs and their sales revenues, are active both in their own domestic markets and abroad and, if necessary, can arrange funding locally.

The following chart shows the results of the sensitivity analysis for exchange rate risk:   
Sensitivity analysis on the EUR/USD exchange rate 31.12.2015 31.12.2014
Shift in the EUR/USD exchange rate -5% +5% -5% +5%
Effect on income statement (EUR/thousand) 364 364 1,933 1,933
Effect on equity (EUR/thousand) (663) (663) (1,544) (1,544)