Key takeaways on capturing and managing FX exposure
by Kylene Casanova
In their presentation on FX exposure management, Rob Waddell and Mark Stegman from Brown-Forman, the 'producer and marketer of fine quality beverage alcohol brands', they listed the key takeaways from their experience:
- first, understand the company's overall risk profile and risk tolerance AND remember that hedging only delays the impact FX exposure, it buys you time
- develop a system or process to capture true global FX exposure, including US functional FX B/S and foreign functional earnings translation
- hedge or at least identify and aggregate FX exposure centrally to ensure you take advantage of natural offsets
- consider extending hedge tenor to reduce year over year volatility
- further reduce Earnings Per Share volatility by ensuring hedge accounting is achieved.
Excellent advice from experienced practitioners.
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