To establish best practice and help our community to learn from each other’s experiences, we have launched a new series: Community Voices. The Treasury Today Group, along with our series partner, Association of Corporate Treasurers Singapore (ACTS), have reached out to corporates across the world to hear how COVID-19 is affecting their roles as treasury practitioners.
Yang Xu is the Vice President and Global Treasurer of Kraft Heinz, a US$26bn publicly listed global food company. Having worked in various roles across treasury, M&A, strategy, finance, sales and marketing and operations in many different countries, Yang believes the best treasury professionals drive value through business partnership and cross functional acumen, and differentiate by defining and delivering the optimal capital structure of a company. Yang holds a Masters degree of Business Administration from HEC School of Paris and London Business School, and is a native of China.
For 150 years, the Kraft Heinz Company (Nasdaq: KHC) has produced some of the world’s most beloved products. The company’s vision is To Be the Best Food Company, Growing a Better World. It is one of the largest global food and beverage companies, with 2019 net sales of approximately US$25bn and its portfolio is a diverse mix of iconic and emerging brands. As the guardians of these brands and the creators of innovative new products, the Kraft Heinz Company is dedicated to the sustainable health of its people and the planet.
We are in the food sector so the business impact on the demand side is actually strong, and we are very focused to deliver food through various channels and reach people and households in need. We have always managed liquidity in a very prudent and proactive way, so we have strong liquidity as we speak. The situation does create FX/commodity volatilities for us as a global company.
We have continuous and even enhanced dialogues with businesses, especially related to working capital. We have systematic hedging policies and adherence is very important for us as a risk management tool.
Our top priorities at the moment are having good insights on liquidity and putting in place precautionary measures and contingency plans. I don’t think it changes any way we approach our liquidity management, but it just requires heightened precision, advanced planning and clear visibility.
We have daily calls and a crisis management team with a strong business continuity plan, and we focus on operational efficiencies to deliver the key stock keeping units to the market. Treasury is front centred in terms of liquidity and risk management, but given our past prudent management and strong liquidity and banking relationship, it’s much less of a fire drill.
We use a lot of video calls and so far it’s been good. With external parties (eg rating agencies, banks, investors, insurance underwriters, pension asset managers) we’ve always used conference calls, so in this aspect it has not changed.
We discuss with Tax and Government Affairs to stay tuned in to any decisions, such as specific cash tax deferral, pension contribution and so on, that have relevance to preserve liquidity.
Treasury has always been a core finance function. In the past its focus was on cash generation, debt capital transaction, capital allocation strategies. Now it’s liquidity and risk management. Nevertheless, it is always an influential function within the company.
We actually have boosted morale with a sense of duty and mission: our company is feeding people around the world; our treasury function is preserving the bloodline (cash) for the company at this moment in need.
Be proactive, be prudent in balance sheet management, be obsessed with strong (even excess) liquidity, it always serves in a down market. Adhere to risk management parameters, and don’t take a strong view on FX, commodities. We are first and foremost a risk management function, and should not seek to be a profit centre.
As a global company we see the trend from one country/region to another. Macro trends are much more inter-related, logistic/supply chain, and currencies, monetary/fiscal measures. We need to stay current at all times, it’s part of the job as a global treasurer.
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