Automated currency management is the latest phase of a treasury transformation project that has allowed Théa Group to reduce its hedging costs, manage risks more systematically, and improve its financial performance.

Théa Group specialises in the research, development and commercialisation of eye care products. Headquartered in France, the group has 35 subsidiaries across Europe, Russia, North and Sub-Saharan Africa, and South America and also works with distributors in other regions.

In 2021 the company generated revenues of €683m, of which one third was through its subsidiary in France.

Théa Group used spreadsheets and manual processes to manage its cash, treasury and risk management until six years ago when it implemented a new software solution to support more centralised operations.

With operations in 70 countries and exposures in 30 currencies resulting from both purchasing and sales, FX risk management is a significant treasury activity. Each subsidiary invoices customers in local currency and FX risk is managed centrally in group treasury.

“To help manage the scale and complexity of our FX hedging within a small team, we implemented an automated currency management tool that helps automate our exposure reporting and hedging process,” explains Group Treasurer Catherine Cledel.

Prior to implementing the solution, FX exposure management and hedging took a significant amount of time and resources with manual processes leading to the risk of error and omission. The company therefore realised that it needed to implement a more automated FX solution and outlined the following objectives:

• Increase efficiency and automation in FX management to reduce manual intervention and resource requirements.
• Reinforce internal controls to increase security and auditability.
• Take a more strategic and systematic approach to currency hedging to comply with treasury policy and take advantage of favourable hedging opportunities.
• Improve FX reporting with a view to adopting IFRS accounting standards.
• Become more resilient and better prepared for rapidly changing market conditions and high volatility.

“We conducted research internally and contacted our partner bank BNP Paribas,” says Cledel. “BNP Paribas recommended Kantox, with which it has a strategic partnership. This enabled us to access the company’s automated currency management capability as an integrated element of our banking solution.”

Théa Group has set up hedging rules so that FX hedging takes place automatically around the clock based on its preferred thresholds. Exposures are generated at the point of billing and aggregated in the automated currency management tool.

Once the system has calculated the hedging requirement, FX orders are transferred directly to BNP Paribas’s integrated digital banking platform for execution.

“We retain full visibility and control over our exposures and hedging activities via dashboards, which also allow us to adjust our hedging strategies if required, such as in the case of high market volatility in emerging currencies,” explains Cledel.

Théa also uses Defthedge – a third-party risk reporting tool – for reporting, decision support, and to assist with accounting.

“Our automated currency management tool enables us to automate our hedge accounting requirements and reporting, whilst maintaining the benefits of dynamic FX management,” says Cledel. “We have reduced hedging costs, managed our risks more systematically and ultimately improved our P&L. Furthermore, we have freed up treasury resourcing that can be directed towards other business-critical activities.”

Cledel observes that the company’s chief financial officer has launched a global transformation project – of which treasury is a part – in order to position the group for further growth, leverage digitisation and automation, and increase its resilience and agility as a finance function.

“This involves implementing a treasury management system to support our activities in a more robust and systematic way, improve efficiency and control, and support better reporting and decision making,” she says.

“These objectives are even more important in a small treasury function. By digitising and automating our operations we are able to adapt to changing internal, market and regulatory conditions, and meet the needs of the group more effectively.”