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The Group is directly and indirectly exposed to changes in the price of raw materials and energy used in its manufacturing activities. The Group seeks to mitigate the impact of changes in commodity prices both through specific supply contracts containing pre-established pricing conditions and, in a limited number of cases, through financial derivative instruments.
The Group may also be subject to the risk of changes in value of listed financial instruments or market indices in relation to certain bonds it has outstanding. Any such risks are fully hedged by derivatives put into place at the time the bonds are issued.
Moreover, the Group holds certain derivative financial instruments whose value is linked to the price of listed shares and equity indices (principally equity swaps on Fiat shares).
Although theses transactions were entered into for hedging purposes, they do not qualify for hedge accounting under IFRS. As a consequence, changes in the underlying values could have an effect on Group profit or loss