Agustin Mackinlay (00:00)
What keeps a global treasurer awake at night and how do they react to ever-changing US trade policies and their impact on foreign exchange and other financial markets? Welcome to CurrencyCast. My name is Agustin Mackinlay. I'm the Senior Financial Writer at Kantox and your host. In this episode, we have the pleasure to welcome Ana de Sousa, Global Treasurer at Remote and Bruno Lawaree,
Group Treasurer at Ferrero. Anna and Bruno, thank you so much for joining us today in this episode of Currency Cast.
Ana De Sousa (00:38)
Thank you for inviting It's a pleasure to be here and talk with you and Bruno. So always a pleasure to share my floor with Bruno. So maybe I can start with a brief introduction.
Agustin Mackinlay (00:54)
That's
right, I was going to ask you to introduce yourselves to the audience. Let us start with Joanna, please, if you will.
Ana De Sousa (01:02)
So my name is Ana de Sousa. I have been in the treasury world for around 10 years now. I started my career in Switzerland, where I learned everything.
I work for a company that is called Remote and we help companies hiring all around the world. And I am one of the cases. So I started working at Remote in Switzerland and then I moved to Portugal. I have two kids and I really love treasury and everything that is related with finance.
Agustin Mackinlay (01:38)
Well, that's really interesting. You have really a very international background and we'll discuss that. Bruno, what about you?
Bruno Lawaree (01:48)
Thanks, Agustin. So I'm Bruno Lawaree. So I'm the Group Treasurer of Ferrero since 2023. So based in Luxembourg, we pretty much have the most of the treasury teams based in Luxembourg and some regional treasury centers in the US and in Singapore. I used to be the treasurer of a cosmetics group before that industrial group in Switzerland, in the US, in UK.
and now based in Luxembourg. And before that, I had a kind of mixed experience between consulting and other companies, let's say. And I started working in my first job at Swift, so a relatively diverse background.
Agustin Mackinlay (02:31)
Right. Look, it looks as we have two very, very internationally minded treasurers, really interesting. And let's get started with a conversation. Trade war 2.0 is upon us. There's lots of volatility in foreign exchange markets, but also in all other financial markets. And there is an interplay here between FX
and other markets. We've seen that in the rise of the Swiss franc against the dollar, in a little bit of turbulence even in the peg between the Danish crown and the euro. So lots of news of things going on. And, so here's the first question. How do you see that interplay between foreign exchange markets and other markets? And
what keeps a global treasurer awake at night? So let's start maybe with you, Anna.
Ana De Sousa (03:33)
So it's a very interesting question. I would say that ⁓ it's very challenging to answer that. So first, I would say that all treasurers want to sleep well. So we work in an environment where we try to be more proactive and reactive. And so this is the basis of everything that we do in treasury.
Effectively, I would even say that what we see in the market and what happened in the last month, it's a reaction. And well, in my career, I have seen this several times.
We adapt, of course, so we adjust our approach, but it doesn't keep us awake during night, I would say. So by now, we know the strategies that we can use to mitigate some of the impact. There is some always risk, right? So in treasury, we deal with cash, so there is always risk associated to this. Then it depends on the policy of the company.
So then in terms of the interchange that you were reaching. So in my company, so we are a scale up, so still very open to adjust our policy. do have some flexibility and it was around this part that we have been playing the last two months.
impact. So from a financial point of view I don't see a big impact on my operations.
Agustin Mackinlay (05:21)
All right,
that's really interesting and important. Bruno, every crisis is different, but maybe there are some common elements. What are your general views? We're going to get to the specifics, but share your more general views with us, if you will.
Bruno Lawaree (05:35)
Yeah, I
Of course, yes. Indeed, I think the volatility in the markets always gives an opportunity to, let's say, reaffirm or revisit the policies, the framework. And typically, I would say when things are very volatile, probably is also an opportunity to start maybe a bit earlier or maybe faster some of the
execution of the hedging policies or try to hedge positions maybe a little bit more aggressively because of the uncertainty. I think it's we have seen with US dollar, which is of course a major currency for us like for a lot of others. But also, as you mentioned, with some of the kind of close to be pegged currencies like the DKK or RUN as well.
And then some of the big commodity currencies like the pound or even for us, Turkish lira can become very volatile with the geopolitical environment. So in our case, I think we use that as an instrument also to ensure that our framework was still relevant, but also to accelerate ⁓ some of the hedging.
let's say processes to ensure we would not get caught into a kind of highly volatile environment or at least as little as possible.
Agustin Mackinlay (07:02)
Let's go ahead with that interest rate situation. I just noticed that yesterday the Central Bank of Brazil, for example, raised a short-term interest rate to 14.75 and at the same time the Swiss National Bank is lowering rates. So it kind of reflects something that we have been discussing at Kantox, shifting interest rates differentials, also between currencies. What's your view, Bruno?
Bruno Lawaree (07:29)
Yeah, I mean, I think a lot of the discussion on USD, for example, was based also on expectations on interest rates. So, of course, it probably can have an impact. I must admit that for us, there are currencies like you mentioned, like BRL, where the points are maybe more or at least the interest rate differential is more
a challenge for the structure itself. We are less, let's say, worried about the fact that Brazil has the tendency to move the interest rate more or faster. I think it's part of the environment. The challenge with BRL for us is that it's a pretty costly, let's say, points position in our budget. So then the discussion is much more around the structure,
what do you try to achieve in terms of the hedging and is just locking the position the best approach. But I agree with you. I think definitely the interest rate differential and the points in this environment where you have big gaps is much more challenging for treasurers.
Agustin Mackinlay (08:37)
Yes. Let's discuss a little bit the cash management and liquidity management issues related to this crisis. Ana, I will start with you because In a previous conversation, you told us that cash is king in all circumstances. Why don't you elaborate a little bit on this point beyond even FX risk? What's the concrete meaning of cash is king for a
Ana De Sousa (09:03)
it.
Agustin Mackinlay (09:04)
global treasurer? Procedures, tools, systems.
Ana De Sousa (09:08)
Yes, so I think that with that statement, 90 % of the industry will agree.
So that is the basis of everything that we do in treasury. So we always want to optimise our cash or reduce our unused cash. This optimisation is part of our day-to-day. The way that I establish, there I always...
use very simple guidelines, very simple requirements that everyone understands within my team and outside of my team. So for cash I use two main requirements and in fact this is a, so I have a policy in place
at Remote and this is the first is the basic. I tell them, so if we don't achieve this, we cannot move to the next goal. So we cannot reach the next improvements. In terms of cash, what matters for us is first visibility. So we always want 100 % visibility over our cash.
Agustin Mackinlay (10:29)
Right.
Ana De Sousa (10:31)
And so it starts with the previous day statements, but today we have also intraday statements and we have, we are trying to build a real cash hype of course we like to mention in the industry of treasury. So always 100 % visibility and then 100 % control as well. So we need the, the visibility is nice, but if we cannot
manage access, use this cash when needed, then we lose a little bit of power over this cash. So visibility and control is something that we always aim and it's our first target. In terms of visibility, it's what we are used to already.
I would say that at Remote I have it a little bit easier than in other companies because I don't have legacy bank accounts. So everything that I'm opening or I'm moving or I'm using today is decided by the team already. So we know the requirements and when we open new bank accounts, we know the ability to operate. It is always part of our requirements.
And then in terms of control, of course, we want control over these cash, but much easier we can concentrate the port. And for that we always use a PMX.
Our aim is to use one central system to manage this cash and to make it stable across the world.
Agustin Mackinlay (12:23)
Okay.
Ana De Sousa (12:23)
So
our business is also, I think that I mentioned this Agustin and you know, of course, our business is payroll. And when I started my career in treasury, I do remember that people used to say, so never forget about paying my payroll. I was never the person in charge of paying the employees their payroll.
But I'm part of the flow, it was in that sense that they were giving me this pressure. And here, in fact, we pay around 30,000 team ladies every month. So it's what we do, it's the pressure that my team has every month. And this is only possible by...
creating very smooth processes because, well, there is no... We try to predict and to be the most proactive as possible in everything that we do instead of being reactive because from time to time we still have cash that doesn't reach the bank account when it's supposed. So we need to dedicate time to that cases.
Agustin Mackinlay (13:16)
Right.
Ana De Sousa (13:41)
But effectively the two main requirements, guidelines that we use for cash is visibility and control.
Agustin Mackinlay (13:51)
⁓ That's exactly, I I mean,
⁓ very interesting and exactly what we well, is music to our ears, let's say, at Kantox, visibility and control. But we would add a third leg, perhaps with automation. We'll come back to that, in a few minutes. Bruno, let me turn to you with something that we tend to disagree a little bit at Kantox is those treasury surveys, they seem to...
to segregate neatly or separate tasks of treasurers like risk management or risk management and then funding or other tasks neatly separated one from another. But in the real world and especially you at Ferrero and other global companies in a very international environment, can you neatly separate
those tasks from each other?
Bruno Lawaree (14:49)
I agree with you. I think all these different topics are interconnected. I mean, you could even argue that arguably if you have a good transactional currency cash forecast, it's also your FX exposure forecast. I think in the companies that have, let's say, relatively centralised systems and more top to bottom information,
I think they are able to leverage the cash forecast in currency as an exposure forecast at 90%. Of course, you can always add some additional, let's say more strategic forecast exposures to that. But the reality is that if you can achieve that, of course, it's two birds with one stone in a way. I think all these things are interconnected the same way that you can also look at
commodity price risk is interconnected with currencies as well. Because of course you start to say that you are buying cocoa and the price can change, but at the same time not include that in your GBP or USD forecast because that will be the settlement currency. So, no, I think everything is interconnected. Of course, depending on the situation, I guess priorities can probably slightly shift. You see,
Agustin Mackinlay (15:47)
huh.
Bruno Lawaree (16:12)
I think we experienced years of very low interest rates where I think one of the main focus was to get negative on deposits. Everybody was very happy with the financing. And then all of a sudden in six months time, I think the world changed. I'm pretty sure that you would have put in a survey 21- 22, the question about interest rate risk, it would have been much less of a discussion point where you put that in 23- 24, it becomes a topic.
I think everything is interconnected. I mean, of course, points of focus probably vary alongside the evolution of the situation and the geopolitical environment and probably also what is available in the market because you mentioned automation. I think now we can look at AI or things like that. I mean, there are quite some enablers that probably move some of these.
things that we thought were impossible 10 years ago to things that are probably applied across 50 plus percent of the treasuries.
Agustin Mackinlay (17:17)
Right. All right. Let's turn this discussion into perhaps less urgent and cash related issues and discuss topics like governance or private versus publicly traded firms, the goals of risk management. And Ana, I'll turn to you here again. You work in Switzerland and Portugal and you're a global treasurer for
a company that is headquartered in the US and has operations in 70 currencies. So give us your general thoughts on the governance of treasury management and financial risk management in general. Degrees of centralisation and especially how do you maximise exposure netting and just the general views on centralisation or
decentralisation debate.
Ana De Sousa (18:14)
I think that when I say that we manage 70 currencies, there is no one that will challenge that we need a very centralised approach to be able to reach this. So, and well, I can also share the size of my team. So we have four people in cash management managing all of this today.
So I will not be able to do it without centralisation. I cannot think about having people in the local entities managing treasury. So centralisation is the basis of everything that I do here at Remote. That is 100 % true. I used to say in a more...
playful way that I centralised to then segregate the cash because we have to meet certain risk requirements, right? So the counterparty risk doesn't allow us to concentrate this cash as in one entity, in one counterparty, of course. But then this is the centralisation that is the
It's in fact the basis of everything.
Yes, so I would even go to another part of this question that is how cash management and FX and the rest of the areas in treasury overlap, right? So in fact, there is very the points that these two areas, so the risk management and the cash, they overlap.
much more than they don't overlap. It's all about managing, so risk management is about managing our relationships with the bank. The majority of the cases, we are dealing with the same counterparties here.
Agustin Mackinlay (20:11)
Yes, all right. Now let's turn our attention to another, say, governance related issue, very general. Bruno, perhaps your views will be really interesting. I think we discussed that very briefly in a previous conversation. It's the difference between publicly listed and privately held companies in the sense, and the question is...
relatively precise. We see that companies that are listed in some cases will pay a lot of attention to protecting the accounting exposure. What we call balance sheet hedging when it comes to foreign exchange risk management, maybe the non-listed companies, they can concentrate more on the economic exposure. Do you agree with that view?
Bruno Lawaree (21:00)
Yes, I think there's just already a big process difference in the sense that listed companies typically report every quarter. In every quarter books. there is a component that is associated to, I mean, be risk management or some of the P&L activity in other income expense. They have to explain it, justify it in a way. And that definitely has impact in the
in the approach of risk management. I think in a listed company, you probably pay much more attention where you put some of the big swaps, let's say of your in-house bank, for example. Are you going to put that on the last day of a quarter with the risk of having a big cash impact or having the impact of a change of position? Probably not. You're going to put that at a different time so that you kind of safeguard the quarterly figures.
In a private company, I mean, the cycle of reporting is different. It's not really a place where you go in front of the world every quarter to try to explain why the books are like this, have this shape every quarter. So mechanically, it brings a difference in the way that you approach exposure and hedging. You can try to go more to the target cash flow date. You can try to...
Agustin Mackinlay (21:56)
⁓
Bruno Lawaree (22:21)
maybe go longer on some of the swaps because you don't have the need to try to figure out the kind of marked market or the spot impact on the cash flow on a quarterly basis. So mechanically, you can focus more on trying to do a transaction to hedge that is not impacted by the view of the quarterly accounting. So yes, I think there's a difference. After
Agustin Mackinlay (22:25)
Right.
Bruno Lawaree (22:45)
When you have a private company that is sizeable and global, I mean, at the end, from a framework point of view, you end up having the same process, the same policies, because at the end, you try to protect the same materiality of exposures. But it's true that you are less impacted by the quarterly accounting.
Agustin Mackinlay (23:05)
Right.
Right, right. Really interesting there. Thanks for that,
Now, I'll ask you a more precise question and it goes like this. For example, in currency management automation, we like to say that automation far from weakening the treasury teams control over processes, reinforces control because of something that we call perfect traceability. Each item along the transaction journey has its own reference number and you can track
every single element of any process. Bruno just mentioned swaps. So for example, you trace the near leg and the far leg of a swap to the underlying forward. In other words, automation does reinforce control. Would you share that view, Anna?
Ana De Sousa (23:57)
Yes, I agree.
The fact that we have a system that runs these checks, so it's basically a checklist that we have in place, and that people try to run, and of course that everything that is manual is more error-prone. When you have a system that does this check, then it's much easier, and I fully agree with that.
There is still a need for example on these automated replies so this treasury bot
type of chat. I still feel that people trust more on the
systems.
Agustin Mackinlay (24:44)
And you always
need that ⁓ manual checkpoints at every part of the workflow, right? Bruno, if you don't mind, let me turn to the nuts and bolts of hedging. I think we discussed briefly in our previous conversation, the so-called layered hedging programs. And here's my question. I've noticed that at some companies that have both commodity price risk
and FX risk. So notably European companies that have to deal with commodity prices that are still, by the way, priced in dollars. When they do the layered hedging programs, they do both the commodity side and the FX side. Would you share that view, or what do you see as the advantage of those layered hedging programs?
Bruno Lawaree (25:33)
I think it depends very much what is the underlying environment volatility as well. As we discussed before, for example, the current environment where the volatility is really high, you may accelerate some of these layering approach. But I think it also depends on the structure itself. When do you start hedging?
Because I think if you think, for example, about budget cycles, it depends also what are the trigger points to hedge the budget cycle. Can you start early because you can, let's say, use as some kind of proxy exposure the previous year or the last three forecasts? And in that case, of course, if you were starting to try to execute 100%, would that make a lot of sense? I think if you start to use proxy exposure to start early in cycle,
it's because you want to layer to define points of where you have a percentage of hedging in place. I mean, then it's a question by currency pair by, as a portfolio. But I, I still see, especially for companies that, that start pretty early in cycle. So in budget cycles or, or in preparation of budget cycles, the layering approach helps to average out as well
the rate out there. And so I think it has value, but then of course depends on the environment. Right now, I mean, a lot of companies probably try more to accelerate. And as you mentioned, they don't take for granted things that were previously considered pegged like the DKK or RON or other things like that. On the combination of commodity, of course, one is very linked to the other. You mentioned a lot of commodities in US dollar,
some of them in GBP, I still believe that you have to understand how you approach the commodity side and the exposure on the commodity side to ensure that you are not adding a second level of risk with the currency. So if you decide to accelerate the commodity side, I think it doesn't make sense to do a slow layering on the FX. Because what you can gain or at least stabilise
on the commodity can be lost very fast on the settlement currency. So I think to your point, that's the advantage of stabilised functions, is that you can look at all of the elements in one place because at the end they all interconnect.
Agustin Mackinlay (27:55)
Yeah.
That's right. Now, it also, I would presume, at least that's how we view it at Kantox depends on your pricing parameters. Something is different if you have, say, a catalog based prices where you keep prices steady for a campaign period and maybe you have the ability to reprice at the onset of a new campaign period. And those companies that would like to keep prices steady for longer, right, in that environment, perhaps.
those layer hedging programs make more sense. Which reminds me of the opportunity to before we finish to ask you what about pricing and tariffs do you see, so what is going on? Are we going to pass on to consumers is going to affect profit margins in general? What are your views? Both Anna and Bruno.
Bruno Lawaree (29:00)
I think on tariffs, we are a bit more impacted than Anna, guess. But, I think on tariffs, I think we have to look at ⁓ the two aspects. I mean, the first aspect of the tariffs is that for the moment, the framework is still very undefined. I mean, it is indeed there are some aspects
that are communicated, some aspects that are implemented, and some aspects that are foreseen in 80, 90 days. In my view, that's explaining or that gives also value to having a treasury function and maybe more centralised function that is very close to the business is that this is the kind of situation where there's a need to be agile.
And it's very difficult to be agile if you have, let's say, 50 different treasurers in 50 different countries. So I think the impact, there will be some kind of impact. The question is indeed how much can be passed into or moved into pricing? How much needs to be an adjustment maybe on some short-term hits on the margins? And how much is it going to impact
some of the cash flows. So I honestly think it's a real business case for the agility of the function. We will need to have this updated exposure, updated maybe custom duties, updated cash flows, updated exposure, and we'd have to integrate that to adjust pretty much the whole framework that we build since probably 18 months.
Agustin Mackinlay (30:19)
right
That's right. All right. Now, cautious of time, I think we're going to finish here. We have just one last question because we went all the way from discussing the global scenario then to cash management related issues and liquidity management, then to the governance of financial risk management. We went also
into a discussion of automation, visibility, control, and with some of the aspects of publicly traded companies versus privately held firms and some thoughts here on layered hedging programs as well. So we covered a lot of ground and I really thank you Anna de Sousa, Global Treasurer at Remote, and Bruno Lawaree, Group Treasurer
at Ferrero for being today with us. Is there anything you would like to add, Anna and Bruno?
Ana De Sousa (31:40)
I will maybe ask a question to Bruno because I think that you mentioned something very interesting before and I had no chance to ask him. So maybe it's a question for him. So We do know that private companies
versus public companies have different goals on the hedging, I think that you have experience in both worlds. So from your perspective, and I know that we are.
So the goals, when the goals are very well defined, it's very easy to reach that goals. And I'm not saying that what we do in one world is not correct and the other is more correct. But from your perspective, Bruno, what is the strategy or which world should adjust? Is the private world that is using the...
the wrong guidelines when hedging or is the public world?
Agustin Mackinlay (32:49)
Yeah.
Bruno Lawaree (32:52)
I don't know if there's really a huge, let's say, line between the two worlds. I think from my point of view, I think what typically is the reality is that the listed companies are, I would not say by default, but they are typically of a certain size. So it's almost always a kind of big medium size or large company.
And so from my point of view, the maturity of the processes, they are more probably linked to the size and kind of the maturity of the company and the function because of the materiality of the exposure. So I would say typically, if you think, example, Ferrero being a relatively large company, even though private, I think share a lot of the...
of the processes that listed companies have. But of course, the difference is that typically they do that because of the underlying exposure. They don't do that because of the quarterly or the shareholder pressure or shareholder in the sense of a very fragmented shareholder base. So I think from my point of view, it's more about the evolution. It's like a maturity level. And I think, of course, listed companies have a bit of a
accelerated need of maturity level because they are exposed on a quarterly basis to 10,000 shareholders that can challenge their way of working by just selling the share. Where private companies, probably do that more because of the recognition that the exposure is material for their business cases, for their business model, and they don't need to have the
that pressure to accelerate it, they do it at the pace where it's kind of driven by the business model. So I would say that that's where I think probably the two worlds interconnect. So it's probably more when the materiality of the exposure is any out there. So it's, that's where I don't see typically the huge difference between, let's say company when they are more or less the same size or at the same maturity level.
Agustin Mackinlay (35:00)
Well, thanks a lot for that thought. Size also, of course, matters and it tends to maybe put a limit on the difference between listed and private companies. Again, Anna de Sousa and Bruno Lawaree, thanks a lot for joining us in this episode of CurrencyCast. And I hope to see you soon again on the podcast. Goodbye.
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