The Challenge
Navigating a volatile landscape without a framework
For a leading European agriculture exporter with operations across multiple international markets, foreign exchange volatility had become a persistent challenge. The business generated most of its revenue in euros while reporting in PLN, alongside a cost base that included USD-denominated inputs. This exposure across multiple currency pairs left earnings and cash flow vulnerable to ongoing market swings.
Despite engaging in regular hedging activity, the company’s approach was largely opportunistic, driven by short-term market movements rather than a clearly defined strategy. As conditions changed, hedging activity would accelerate or pause, resulting in inconsistent execution and uneven outcomes.
This approach amplified earnings volatility and made financial planning difficult. At the same time, reliance on forward contracts limited flexibility, while hedging tenors were capped at 12 months by the incumbent bank, preventing alignment with longer-term commercial commitments.
Liquidity pressures further complicated the picture. When trades moved out of the money, hedging positions constrained credit availability, reducing financial flexibility and reinforcing a reactive approach to risk management.
The Solution
Building a disciplined framework for FX risk
Convera worked closely with senior stakeholders to understand the company’s exposures, risk appetite, and commercial priorities, identifying a clear need for a more disciplined approach.
The solution centered on a structured, rules-based hedging framework aligned to the company’s financial goals. Defined hedge ratios, time horizons, and execution guidelines introduced consistency and removed much of the subjectivity from day-to-day decision-making, giving the business greater control over the impact of FX risk.
To help unlock flexibility, Convera introduced a structure that enabled the company to reposition its hedging portfolio without requiring additional upfront liquidity. This allowed the business to extend its hedging horizon to up to 24 months, bringing risk management closer in line with its commercial commitments.
Convera also introduced a more diversified, layered approach to FX risk management. By combining option-based solutions with forwards and shorter-term instruments, the business was able to smooth market entry points while retaining the flexibility to respond to changing conditions.
The Results
Strengthening resilience through a structured FX strategy
The move to a structured, rules-based strategy delivered a measurable improvement in the impact of volatility on the company’s cash flows and forecasts. Earnings and cash flow became more consistent, supporting more confident planning.
With extended hedging horizons and greater flexibility, the business could better align risk management with its underlying commercial activity while still benefiting from favorable market movements. At the same time, reduced interaction between hedging positions and credit availability eased liquidity pressures and strengthened overall financial resilience.
Beyond the numbers, the transformation changed how the organization approached FX risk. What had been a reactive, transaction-led process became a disciplined, strategically aligned program embedded within its broader treasury operations.
This case study is provided for general information purposes only and does not constitute investment, legal, tax or accounting advice, or a recommendation to enter into any transaction. The outcomes described are specific to the circumstances of the client concerned and should not be regarded as indicative of future results or outcomes for other businesses.
Any company considering a currency risk management strategy must understand that hedging products are derivative financial instruments which may expose the company to risk should the underlying exposure being hedged cease to exist. They may be suitable if you have a high level of understanding and accept the risks associated with derivative financial instruments that involve foreign exchange and related markets.
If you are not confident about your understanding of derivative financial instruments, or foreign exchange and related markets, Convera strongly suggests you seek independent advice before making the decision to use these instruments.
Moving from a reactive forwards-based approach to a structured hedging strategy has transformed how we manage FX risk. We now have greater visibility, more consistency in our results, and the flexibility to adapt as market conditions change while staying aligned to our core business objectives.”
European agribusiness
Finance Director