FX Reviews – Furniture Manufacturing

Client Brief

PMC was asked to review and comment on the FX hedging processes of a Taiwan-based company, following a recent acquisition by a financial sponsor.

PMC Solution
  • Conduct extensive on-site discussions with senior management and Business Unit; managers in order to develop an in-depth understanding of the FX and commodity risks generated by the business and how these changed over time;
  • Perform a desk review of Group and Business Unit level reporting and hold discussions with Group Treasury to understand the existing approach to managing FX and commodity risk;
  • Produce a detailed report which provides a number of recommendations for change to the business’ internal information flows;
  • Document the risk management policy.
Results & Recommendations

By implementing our recommendations, the business was able to assess its FX and commodity exposures more accurately, enabling these risks to be identified and managed more effectively.

  • Understand the real, underlying FX exposures that your business faces
  • Show how your FX risks can be better managed in both financial (cash flows and balance sheet) and commercial terms
  • If you have a new management team
  • When FX markets are volatile
  • During acquisition/divestment activity
  • Or if you simply want a specialist to optimize your approach

Your bespoke review will consist of two phases:

  • Stage 1 – Management level meeting to understand your FX risks, the current risk management approach and any other commercial/financial constraints. We will then provide practical recommendations for improvement
  • Stage 2 – Generation of an FX model and draft Board policy document, providing the quantitative basis and governance framework for hedging activity

We also offer representation on Treasury Committees where FX is a key risk being managed.

  1. Experienced and independent specialists providing clear insights into, and applying current market practices towards the management of, your FX risks
  2. Providing a clear road map for improvement or reassurance that no change is needed

At the end of this process, you will have the practical analytical and policy tools, in a bespoke solution, for the ongoing and effective management of your FX risk