Kongsberg Automotives ASA`s AnnualReport 2018 from the Board of Directors is showing in an interestingway the Financial Risks for Nordic companies and industries singeneral. Due to this Group’s capital structure and the nature ofits operations, Kongsberg is exposed to the following financialrisks: market risk (including foreign exchange rate risk, rawmaterial price risk and interest rate risk); credit risk andliquidity and capital management risk, reports Kongsberg Automotivehe Annual Report 2018. The share is up almost six per cent last week,backed 10 per cent in three months, and is up fifty per cent in five years. CEO Henning Eskild Jensen (Photo: Kongsberg Automotive)
Up and down for Kongsberg
Kongsberg Automotive ASA, formerly Kongsberg Automotive Holding ASA, is a Norway-based company active within the automotive industry. The Company operates five business areas, namely Actuation and Chassis, which manufactures operator-control systems for commercial and industrial vehicle markets; Driveline, which supplies complete shift systems, such as shifter modules, shift cables, custom-engineered cable controls and shift towers; Fluid Transfer, which designs and manufactures fluid-handling systems for the automotive and commercial vehicle markets; Interior, which manufactures seat-comfort systems and mechanical and electromechanical, light-duty motion control, such as seat adjusters, seat cables and side bolsters, among others, and Power Products, which manufactures pedal systems, steering systems, electronic displays and cable controls. The Company is active in North and South America, Europe and Asia, through more than 40 sites with 10.482 people employed..
GlobalCar Market
The Kongsberg Group operates in many different geographical markets and the resulting net assets, earnings and cash flows are influenced by multiple currencies. Kongsberg Automotive is exposed to foreign exchange rate risks in the following areas: transaction exposures-, which include commercial transactions and financing transactions both internally and externally; translation exposure which relate to net investments in foreign entities which are converted to Euros in the consolidated financial statements. This concerns European operations in non-Eurozone countries which have costs in local currencies and revenues primarily in Euro, as well as Canadian and Mexican operations, which have revenues primarily in USD. The Group seeks to align its revenue and cost base to reduce the currency exposure on a net cash flow basis.
Raw material risk
This Norwegian Group is exposed to market fluctuations in the price of the following major raw materials: steel, copper, zinc, aluminum, polymer resins and electronics. A sudden fluctuation in the market conditions could therefore impact the Group’s financial position, revenues, profits and cash flow. Raw material sourcing cost are also exposed to customs and duties and politically driven changes of those. Interest risk Interest risk is linked to long-term debt and is primarily driven by changes in EUR and USD interbank lending interest rates. The risks are related to how the Company’s borrowing cost will change in relation to changes in interest rates.
Average Capital Cost
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk with financial institutions and other parties because of cash-in-bank and customer trade receivables arising from operating activities. Credit risks are considerable in the automotive industry. The Group closely monitors outstanding amounts, and rapidly implements actions if receivables become overdue. Kongsberg Automotive has good routines for receivables in place and losses in this area have been minimal in the past. Liquidity and capital risk The capital of the Group consists of shareholder’s equity, borrowings and third-party financing. Total capital is defined as total equity plus net debt and is managed to safeguard the business as a going concern, to maximize returns for its owners and to maintain an optimal capital structure to minimize the weighted average cost of capital. Birgit Gunilla Nordström(60) is on the board of Kongsberg Automotive ASA and Bombardier Transport Sweden AB. She has been President at Sony Ericsson Mobile Communications AB.
Firas Abi-Nassif holds the position of Chairman at Kongsberg Automotive ASA, Investment Committee & Advisory Board Member at Phoenician Funds, Operating Partner at Fortitude Partners LLC and Investment Committee Member at Middle East Venture Partners. He has been working in Credit Suisse in New York.
Companys Treasury Departement
All activities around cash funding,borrowings and financial instruments are centralized within theKongsberg Automotive Treasury department. The development of netinterest-bearing debt and liquidity reserve is closely monitored. Thereduction in financial leverage continued in 2018. Rating risk TheGroup is subject to non-public solvency ratings by external businesspartners and institutions and to public ratings by the ratingagencies Moody’s and Standard & Poor’s. Pension liabilityrisk The evaluation of the Group’s pension liabilities is subjectto changes in insurance-technical assumptions, such as discount ratesand local pension evaluation guidelines. Regulatory and tax risks TheGroup is subject to a wide variety of laws, tax regulations,government and supranational policies that may change in significantways. There can be no assurance that laws, tax regulations andpolicies or its practical application by authorities will not bealtered in ways that will require modification of business models andobjectives or affect returns on investments. Here Nordic News presents the major shareholders in Kongsberg Automotive based on information from 4Traders.com:
| Name | Equities | % |
| Teleios Capital Partners GmbH | 111,923,331 | 25.0% |
| Nordea Investment Management AB (Norway) | 21,508,790 | 4.81% |
| KLP Kapitalforvaltning AS | 21,202,817 | 4.74% |
| RWC Asset Management LLP | 20,990,657 | 4.69% |
| Dimensional Fund Advisors LP | 16,067,682 | 3.59% |
| Folketrygdfondet | 12,277,732 | 2.74% |
| Ennismore Fund Management Ltd. | 11,447,197 | 2.56% |
| Kommunal Landspensjonskasse Gjensidig Forsikringsselskap | 11,029,516 | 2.47% |
| Pareto Asset Management AS | 8,669,441 | 1.94% |
| MP Pensjon PK | 8,663,107 | 1.94% |
