Treasury Today November/December 2022

Published: Nov 2022



Operational resiliency

As 2022 draws to a close, war continues to grind on in Europe in a brutal stalemate. Russia is now attacking western Ukraine in its bid to destroy the country’s critical infrastructure and Russian troops, dug-in in the east, currently occupy 16% of Ukrainian territory. Meanwhile, Ukraine has led a successful counterattack behind Russian lines and exposed critical Russian weaknesses ahead of what promises to be a long winter. Winter promises tough months for European businesses too. If there is one key message from European treasurers featured in this edition, it is that the energy crisis is taking a heavy toll.

In our Question Answered, Oliver Stratmann, Head of Treasury and Investor Relations at Germany’s specialist chemical group LANXESS, says energy costs at the company have doubled in the last year. So far, LANXESS has been able to pass on increased raw material and energy prices to customers, albeit with a time lag, but this will become increasingly challenging. In an alarming long-term implication for Germany’s industrial base, the company has substantially increased exposure to cheaper US-based production.

Meanwhile, treasury at the European and international operations of Japanese brewing giant Asahi Europe and International (AEI) has put in place advanced business continuity plans which include the ability to immediately switch to alternative fuel sources at its gas-fired European brewery operations should gas supply into Europe dwindle further. In one silver lining, many corporates, AEI included, report stepping up the hunt for renewable capacity in their energy mix because of the crisis. Perhaps the International Energy Agency’s prediction ahead of COP27 kicking-off in Egypt that the war could be a historic turning point towards a cleaner and more secure future will come true.

In today’s shaken up world of heightened geopolitical risk, corporates can, at least, rest easy in the dollar’s dominance. Our Back to Basics feature finds crypto isn’t going to become the new global currency anytime soon. Our key take-home is that treasurers are adopting a ‘wait and see’ approach and are wary of investing in crypto.

Other digital and tech innovations are gathering steam, however. As embedded finance continues to evolve, there is an opportunity for treasurers to explore how these developments could help their businesses. Our feature explains what embedded finance means, what’s driving progress in the space, and how treasury can get involved.

Lastly, we explore the essence of good leadership, one of those amorphous concepts that people struggle to pin down because it comprises a fuzzy combination of different skills. Treasury Today interviewees point out leadership isn’t synonymous with corporate position nor is it something that necessarily responds to generous remuneration. It can be taught – and companies neglect it at their peril.

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