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Best Foreign Exchange Solution Highly Commended: Danone

Published: Apr 2021

 

Photo of Zurab Abutidze, Danone.

Zurab Abutidze

Asia Treasury Head

Danone S.A. is a European multinational food-products corporation based in Paris and founded in Barcelona, Spain. It is listed on EuronextParis where it is a component of the CAC 40 stock market index. As of 2018, Danone sold products in 120 markets, and had sales in 2018 of €24.65bn.

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TMS implementation delivers impressive FX benefits to Danone

The challenge

With the rapid growth in business across Asia, Danone’s treasury team was keen to deploy technology to improve collaboration with the business teams. This prompted a review of how they were leveraging technology to gain higher visibility. “We conducted a deep dive into our existing structure in each of the 17 markets in Asia, identified key pain points, which were preventing elevation to ‘the next level’. We factored in constructive feedback from all our partners including business, procurement and IT teams and concluded that an upgrade of the disconnected legacy systems would add significant value to the business,” explains Zurab Abutidze, Asia Treasury Head.

The strategy centred on digitalisation and automation to drive future changes and create a lean, flexible system which could adapt to rapid changes in the market and contribute to business growth.

Key factors which the company needed to be essential building blocks in their envisioned technology framework were:

  • Rapid deployment of a treasury management system (TMS).
  • Seamless integration of individual functional blocks with the TMS.
  • Provide end-to-end automation.
  • Enable pricing visibility and transparency.
  • Systemic integration to reduce manual workload of treasury teams.
  • Scalable, yet flexible for customisation to meet future business demands.

Danone targeted the deployment of enhanced technology-led solutions for this treasury transformation strategy around three main pillars of operational efficiency and enhanced security, working capital and liquidity management.

The solution

Danone selected Kyriba to deliver full end-to-end visibility, transparency and improved security. The company focused on a phased implementation across 17 markets in close coordination with multiple internal and external stakeholders to ensure timely completion. It required managing differing legacy systems and aligning priorities across markets and teams with razor sharp attention to timelines.

Best practice and innovation

Danone no longer needs to manually key in its FX deal parameters as they are pre-populated, based on the feed from Kyriba. Once deals are booked, they are automatically uploaded into Kyriba and deposits are directly reported via Bloomberg confirmation. Bank fee analysis is directly performed in the TMS lending transparency to the overall process and full visibility on charges.

Adherence to hedging policy – Danone has implemented FX workflows which makes it easy for the company to adhere to its hedging policy as human discretion has now been eliminated, and it now hedges based purely on details the TMS provides as per their policy.

Price discovery – the company now has a consistent FX solution in 11 markets in Asia where it operates.

Restricted market dealing – solutions implemented by the company work across multiple restricted markets, irrespective of where users are based geographically.

Onshore regulatory compliance – automated solutions implemented with Citi ensure key country-specific regulatory requirements are complied with.

Controls – FX solution supports customisable security controls including capping transaction size and tenor by users, IP access and time-bound access restriction.

Improved risk management with enhanced reporting – automated reporting of FX deals, deposits and bank balances in Kyriba has improved visibility of its FX exposures and enabled risk exposures to be managed more efficiently.

Key benefits

  • Improved visibility.
  • FX hedging centralised.
  • Enhanced automation and standardisation.
  • Risk reduced.
  • Improved FX price discovery.

“With annual trading volumes of over US$1.5bn, even a saving of 1bp translates to US$150,000 per annum and on an average day, we book 25 transactions across the region so our estimated time saved by automating the process is 12,500 minutes per year,” says Abutidze.

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Suchit Parikh

Vice President, Asia Pacific Corporate eFX Solutions, Markets and Securities Services
Citi

Citi is delighted to work with Danone and develop a customised yet sophisticated solution that has significantly improved its FX pricing discovery and automation. It is the strength of our global franchise, our deep knowledge of the asset class, strong expertise and most importantly, our ability to understand Danone’s distinct requirements, that have enabled us to address its needs and come up with an effective solution that brings immense benefits to its business.

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Chinshiang Tan

Pre-Sales Director
Kyriba, Singapore

Firstly, I would like to congratulate Danone on winning this prestigious award. Kyriba provides connectivity to banks, ERPs as well as trading platforms and market data providers such as FXall and 360T. As we developed this solution, we recognised our client needed connectivity and flexibility. We have a proprietary data exchange solution designed to be very user-friendly. Danone used this to connect to their bank and we see this as an excellent use case for similar corporates in Asia. I would say there are three key aspects of this winning solution; first connectivity, next efficiency and finally flexibility.

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