Investor Presentaiton
Novo Nordisk Annual Report 2023
Introducing Novo Nordisk
Strategic Aspirations
Risks
Management
Consolidated statements
Additional information
Sensitivity of an immediate 5% decrease in currency rates on
31 December versus DKK²
Credit exposure for cash at bank, marketable securities and
derivative financial instruments (fair value)
DKK million
2023
2022
Sensitivity of all currencies
DKK million
Cash at
bank
Derivative
Marketable
financial
securities instruments
Total
Income statement
(117)
(37)
2023
Other comprehensive income
6,058
3,431
AAA range
15,838
Total
5,941
3,394
AA range
6,451
Hereof sensitivity of USD
A range
7,292
912
1,432
15,838
7,363
8,724
Income statement
70
150
BBB range
17
17
Credit risk exposure to non-financial counterparties
Outside the US, Novo Nordisk has no significant concentration of credit risk related
to trade receivables or other receivables and prepayments, because the exposure in
general is spread over a large number of counterparties and customers. In the US, the
three major wholesalers account for a large proportion of total net sales, see note 2.1.
However, US wholesaler credit ratings are monitored, and part of the trade receivables
are sold on full non-recourse terms; see below for details.
Novo Nordisk closely monitors the current economic conditions of countries impacted
by currency fluctuations, high inflation and an unstable political climate. These
indicators, as well as payment history are taken into account in the valuation of trade
receivables. The country risk ratings in 2023 have overall remained unchanged from
2022 to 2023.
Other comprehensive income
5,082
2,923
Total
5,152
3,073
Not rated or below BBB
range
632
632
Trade receivable programmes
2. An immediate 5% increase would have the opposite impact of the above..
The foreign exchange sensitivity analysis comprises effects from the Group's cash,
trade receivables and trade payables, current loans, current and non-current financial
investments, lease liabilities and foreign exchange forwards. Anticipated currency
transactions, investments in foreign subsidiaries and non-current assets are not included.
AA range
Total
14,392
15,838
2,344
32,574
At year-end, the Group had derecognised receivables without recourse having due
dates after 31 December 2023 amounting to:
2022
AAA range
6
10,797
DKK million
10,803
US
5,507
963
A range
6,550
124
1,764
6,470
8,438
Japan
Financial contracts coverage at year end
BBB range
124
124
Months
USD
CNY³
CAD
JPY
GBP
Not rated or below BBB
2023
12
12
9
12
0
range
466
2022
12
0
9
12
11
Total
12,653
10,921
2,727
466
26,301
3. Chinese yuan traded offshore (CNH) is used to hedge Novo Nordisk's CNY currency exposure.
2023
2022
2021
5,059
1,394
1,313
2,050
2,273
2,453
The table above shows financial contracts existing at year-end to cover the expected
future cash flow for the disclosed number of months. During 2023, the hedging horizon
varied between 9 and 12 months for USD, CAD and JPY. The hedge horizon for CNY has
been increased from 0 to 12 months, while GBP has been phased out. Average hedge
rate for USD cash flow hedges is 676 at the end of 2023 (696 at the end of 2022).
Credit risk
Credit risk arises from the possibility that transactional counterparties may default
on their obligations, causing financial losses for the Group.
Credit risk exposure to financial counterparties
Novo Nordisk considers its maximum credit exposure to financial counterparties to be
DKK 32,574 million (DKK 26,301 million in 2022). In addition, Novo Nordisk considers its
maximum credit exposure to trade receivables, other receivables (less prepayments and
VAT receivables) and other financial assets to be DKK 67,209 million (DKK 52,714 million
in 2022). Refer to note 4.9 for details of the Group's total financial assets.
To manage credit risk regarding financial counterparties, Novo Nordisk only enters into
derivative financial contracts and money market deposits with financial counterparties
possessing a satisfactory long-term credit rating from at least two of the three selected
rating agencies: Standard and Poor's, Moody's and Fitch. Furthermore, maximum credit
lines defined for each counterparty diversify the overall counterparty risk. The credit risk
on marketable securities is low, as investments are made in highly liquid bonds with
predominantly AAA credit ratings.
Novo Nordisk's subsidiaries in the US and Japan employ trade receivable programmes in
which trade receivables are sold on full non-recourse terms to optimise working capital.
Refer to note 3.4 for the split of allowance for trade receivables by geographical segment.
Interest rate risk
Novo Nordisk's exposure to interest rate risk is considered to be low due to the
capital structure. Non-current debt consists of fixed rate instruments. Interest rate
risk on marketable securities of DKK 15,838 million is considered low due to a low
portfolio duration.
Liquidity risk
The liquidity risk is considered to be low. Novo Nordisk ensures the availability of
the required liquidity through a combination of cash management, highly liquid
investment portfolios and both uncommitted and committed credit facilities.
Novo Nordisk uses cash pools for optimisation and centralisation of cash management.
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