Annual report 2008 - Munters

Risks and risk management
33
Financial risk management
In its business operations, Munters is exposed to many different
financial risks: market risk (primarily currency and
interest risk), credit risk and liquidity risk. Munters’ management
and control of financial risks are regulated by a policy
established by the Board of Directors.
The tables below show the proportions of foreign currencies
in sales and operating costs and the sensitivity of earnings
for currency fluctuations during 2008.
Currency Proportion of sales, % Proportion of costs, %
EUR 36.4 36.3
USD 31.0 29.6
NOK 7.2 7.3
GBP 5.1 5.0
SEK 5.1 8.6
Other currencies 15.2 13.2
Total 100.0 100.0
Estimated effect on operating earnings
SEK +10% compared with SEK M %
EUR –12.4 –4.0
USD –18.9 –6.1
NOK –1.8 –0.6
GBP –2.4 –0.8
AUD –0.8 –0.2
JPY –1.6 –0.5
For further information regarding financial risks, see Note 3.
Insurable risks
Sound risk management and understanding identify the
areas in which insurance is effective. Insurance protection
is regulated by central guidelines. Several insurance policies
are managed at the Group level to enable coordination
gains. This insurance comprises several different areas, such
as general liability, product liability, property, interruptions,
cargo, crime, Directors and Officers Liability and Employment
Practice Liability.
Legal processes
Munters is involved in a small number of commercial disputes.
None of these disputes is deemed to have any negative
effect on the company’s financial positions or earnings.
The most significant legal processes are attributable to
Munters’ subsidiary in the US. As of December 31, 2008,
the company was named co-respondent in 52 (51) asbestosrelated
cases. To date, none of the plaintiffs have claimed
to have been exposed to any specific Munters product. In
the past few years, Munters Corporation has won four cases
through summary judgments, meaning that these cases are
now closed. Munters Corporation is of the firm opinion that
the remaining claims are unfounded, and it will strongly
dispute every claim. Munters Corporation has protection for
the asbestos-related claims by having taken out several insurance
policies. Under the condition of certain reservations,
the insurance companies have confirmed that, until further
notice, they will pay a significant portion of the defense
expenses.
For a period of time, a product within the Dehumidification
division in the US suffered from a specific component
fault. The reason for the fault was identified during 2008 and
was attributable to a component supplied by a third party.
Munters has initiated legal proceedings against the third
party and is confident that it will be able to obtain compensation
for a large part of the guarantee costs that arose due to
the fault.
Munters does not believe that any of the claims mentioned
above will have any significant negative impact on the Company’s
financial position or operating results.
Munters Annual Report 2008