Exposure to foreign currency risk
HEINEKEN's transactional exposure to the British pound, US dollar and euro was as follows based on notional amounts. The euro column relates
to transactional exposure to the euro within subsidiaries which are reporting in other currencies.
Trade and other receivables
Cash and cash equivalents
Interest bearing borrowings
Trade and other payables
Gross balance sheet exposure
Estimated forecast sales next year
Estimated forecast purchases next year
Net notional amount forward exchange contracts
Profit or loss
Included in the US dollar amounts are intra-HEINEKEN cash flows. Within the net notional amount forward exchange contracts, the cross-currency
interest rate swaps of Heineken UK forms the largest component.
A10 per cent strengthening of the euro against the British pound and US dollar or in case of the euro a strengthening of the euro against all other
currencies as at 31 December would have increased (decreased) equity and profit by the amounts shown above. This analysis assumes that all other
variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2010.
A10 per cent weakening of the euro against the British pound and US dollar or in case of the euro a weakening of the euro against all other currencies
as at 31 December would have had the equal but opposite effect on the basis that all other variables remain constant.
Interest rate risk
In managing interest rate risk, HEINEKEN aims to reduce the impact of short-term fluctuations on earnings. Over the longer term, however,
permanent changes in interest rates would have an impact on profit.
HEINEKEN opts for a mix of fixed and variable interest rates in its financing operations, combined with the use of interest rate instruments. Currently
HEINEKEN's interest rate position is more weighted towards fixed rather than floating. Interest rate instruments that can be used are interest rate
swaps, forward rate agreements, caps and floors.
Swap maturity follows the maturity of the related loans and borrowings and have swap rates for the fixed leg ranging from 1.0 to 8.1 per cent
(2010: from 2.0 to 8.8 per cent).
Heineken N.V. Annual Report 2011