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Vestas Wind Systems A/S
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== '''Risks''' == '''Credit risk''' * Vestas manages credit risks in accordance with the Treasury Policy, considering exposures from cash and cash equivalents, marketable securities, derivative financial instruments, and trade receivables. Limits for credit risk exposure are set based on counter-parties' credit ratings or mitigating actions * As of December 31, 2022, Vestas' maximum credit risk related to financial institution counter-parties is EUR 2,473m, and the total credit risk is EUR 5,719m. * Trade receivables and contract assets are mainly with energy sector counter-parties, and credit risk is assessed based on historical loss rates, current information, and individual assessment. Vestas groups trade receivables based on loss patterns to assess expected credit losses. * As of December 31, 2022, 59 percent of trade receivables and contract assets are in EMEA, 30 percent in America, and 11 percent in Asia Pacific. No single customer accounts for more than 10 percent of total trade receivables. * Vestas mitigates commercial credit risk through received security, such as third-party guarantees, and historically, the company has not incurred significant losses on trade receivables. * 92 percent of Vestas' exposure to financial institutions is with counter-parties with a credit rating in the range of A to AAA. The company has ISDA agreements with financial institution counter-parties for derivative financial instruments, limiting actual credit risk to net assets per counter-party. '''Market Risks''' * Vestas is exposed to market risks, including foreign currency risks, commodity price risks, and interest rate risks, which are managed in accordance with the Treasury Policy. * Foreign currency risks arise from transactions in currencies other than the functional currency, primarily from material purchases and wind turbine sales. Vestas hedges foreign currency exposures related to firm wind turbine orders and monetary balances. * The majority of Vestas' sales are in USD and EUR, and the company reduces foreign currency risk by centralising exposures in Vestas Wind Systems A/S and sourcing materials and components in USD. * Commodity price risks mainly relate to fluctuations in raw materials used in wind turbine production. The risk is managed by fixed price agreements with suppliers and commodity swaps. * Interest rate risk is related to interest-bearing debt with floating rates and cash and cash equivalents. As of December 31, 2022, a 1%-point increase in relevant interest rates would have increased profit before tax by EUR 19m.
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