Currency exposure: Risk management & stock return: Case: Novo Nordisk

Kenneth Singh Dosanjh

Student thesis: Master thesis


Novo Nordisk A/S is a Danish pharmaceutical company with 99% of their sales generated outside Denmark. This thesis which is a case that goes through the foreign exchange rate management at Novo Nordisk A/S throughout the years 2005-2009. The thesis is a case approach on how Novo Nordisk A/S controlled the currency exposure and what strategy was used to limit the cash flow exposure. By use of financial instruments and by naturally hedging, Novo Nordisk A/S reduced their exposure to cash flow. The Foreign exchange rate strategy practiced at Novo Nordisk A/S is controlled and the financial risk is therefore limited, due to the effectiveness of their hedging strategy and by their operating hedging (Natural hedging) It is interesting to see how Novo Nordisk A/S relates to the fluctuating currencies and to test whether there is a pattern between the stock price and the exposed currencies. The regression analysis did not show any significant relation between the exposed currencies and the stock price of Novo Nordisk A/S. The author believes that this is due to the long term hedging strategy and due to the earnings of the company which has improved each year (2005- 2009). The stock return of Novo Nordisk A/S is influenced by the market expectations of future growth, and the fact that Novo Nordisk A/S throughout the years (2005-2009) has improved their earnings increases the stock price.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
Publication date2010
Number of pages106