New Hedging Strategy Saved Local BC Company Half a Million Dollars

Posted by Olympia CGP on 3/9/20 2:35 PM

Nursery

The Challenge

A BC nursery was experiencing frustrations and challenges with its bank over inconsistent and confusing trading fees when executing its foreign exchange transaction.

The Chief Financial Officer, who had recently joined the company, had never had any direct experience managing an FX program.  The extent of his experience was only executing trades through their bank with little consideration into the risks their company might be exposed to.

Typically, nurseries are heavily exposed to the US dollar and the associated currency volatility.

Alexander Grant, a Senior Analyst with Olympia Trust Company discovered the nursery had been with the bank over a decade and was still not receiving relevant, personalized hedging strategies.

The Solution

Olympia started a business relationship with the company almost immediately, at first executing only spot trades, but subsequently introduced them to forward contracts. The ‘claim to fame’ with this client was presenting the impact of a +20% rise in the US dollar to their management team. Realizing the risk they were exposed to, they decided to hedge 12 months forward at USDCAD $1.06 to $1.08.

The Results

In the ensuing two years, the US dollar strengthened +35%.  The strategy suggested by Alexander Grant saved this company approximately $500,000.

It was clear from the beginning there was an opportunity for Olympia to work together with the nursery.  They received broader support from us for their treasury goals and risk management objectives.  The customized hedging solutions – including forwards and other derivatives – allowed the client to more effectively navigate their earnings volatility.  The cost of not making a change was calculated and analyzed and the numbers were stunning.

Since the first meeting in 2013, their business has quintupled and their business and personal relationship with their Analyst had flourished.

The Conclusion

There are real-world benefits of working with a knowledgeable Analyst rather than a bank. Olympia’s Analysts take the extra time to learn about your business history, your currency and payment needs and then look at current market trends to come up with a customized industry specific solution that boost efficiency, your bottom line and create opportunities for new revenue potential in global markets.

For more information or to schedule a free consultation, contact Alexander Grant.
E: granta@olympiatrust.com
P: 1.866.927.7774

Topics: Case Studies

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