Metair is a leading international manufacturer, distributor and retailer of automotive components and energy storage solutions. The company produces and sells components mainly to original equipment manufacturers (OEMs) in South Africa to manufacture cars and light commercial vehicles and has produced parts locally for more than 400,000 vehicles during 2020.
The group’s profitability is significantly influenced by the risk in exchange rates and currency fluctuations due to the fact that components for parts are imported from Europe and then sold to local car manufacturers, while import prices are set in the relative foreign currencies and need to be hedged in order to protect the ZAR value.
Within the Metair group, TreasuryONE’s dealing team works closely with each subsidiary’s management team to protect them from adverse movements in the exchange rate when the risk arises, ensuring that the company is effectively hedged and adverse exchange rate movements are avoided.
TreasuryONE actively makes use of various methods to monitor the currency, such as the technical analysis graph below:
The group of companies under Metair are managed differently regarding the way the risk arises. TreasuryONE’s dealing team looks at each company on its own and constantly compares the benchmark rates with where the market is, thereby looking for opportunities in the market to constantly improve Metair’s effective coverage rate.
Below is a sample of a risk cycle:
The benchmark rate changes constantly, and the TreasuryONE team uses technical and economic analysis, coupled with the sentiment that is in the market at any given moment to determine levels that should be targeted.
Metair now has access to a complete Treasury Management System (TMS), managed by TreasuryONE’s team of experts. The sophisticated risk reporting in the TMS is very beneficial to Metair because exposure, hedges and current market rates can be combined for the team to know at all times where and how great their risk is.
- Hedging program, tailored to fit Metair’s business patterns, outlook and risk policy
- Advice on commodities price and interest rates risk in addition to FX risk advice
- 100% cash visibility to better manage the cash in the business
- Access to full treasury management system and experienced TreasuryONE operational & cash management staff
Hennie de Klerk, Founder and CEO at TreauryONE, commented, “The rand is one of the most volatile currencies in the world. We have moved from one crisis to the next – first the Covid pandemic and then the war in Russia / Ukraine, and now worldwide inflation and possible recession. We have witnessed first-hand how volatile currency markets can be and how sensitive currencies can react to any changes and news headlines.”
“For importers and exporters, market risk and currency volatility pose real risks to their businesses, and exchange risk management continues to be a priority for South African CFOs and Treasurers,” Hennie concluded.
TreasuryONE is SA’s market leader in providing a broad range of best practice treasury solutions, treasury & RPA technology and market risk advice to organisations of all sizes. TreasuryONE’s product offerings include the delivery and support of treasury management technology systems, robotic process automation (RPA) solutions, market risk management and execution services, managed treasury services, cash and liquidity management, money market funds, corporate payment factory and supply chain finance technology. Clients experience the value of enhanced treasury performance and reduced risk in today’s demanding fast-moving financial environment.