Market Risk
Market risk is the risk that changes
in market prices, such as foreign exchange rates and interest rates
will affect the Group’s income or the value of its holding of financial
instruments.
Symrise monitors the associated risks using “natural hedging” by manufacturing most of the products in the areas where they are sold and, furthermore, we use cash flow and hedging instruments as forward exchange contracts to help offset the potential currency risk.
Rising interest rates could increase our debt exposure. Fluctuations are largely hedged through interest rate swaps. Considering the robust debt-equity ratio and significant free cash flow, even a significant rise in the interest rate would not represent a significant risk to the company.
The Group adopts a policy of ensuring that 80% of its exposure to changes in interest rates on borrowings is on fixed rates basis. This is achieved by entering into interest rate swaps.