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A Notional Approach to FX Hedging

Henry Schein has experienced phenomenal growth since listing on NASDAQ in 1995, with revenues growing from $616m in 1995 to $8.5bn in 2011, the result of increased market share through internal growth and strategic acquisitions, greater product and service diversification, and major international expansion. To support this growth, our treasury function has evolved enormously over this period. Having now put in place a sophisticated cash, treasury and risk management infrastructure, our aim has been to leverage it further to maximise possible operational and financial efficiencies, and to deliver value to the organisation. As we expand internationally global cash management and FX risk have become more significant priorities. In this article, we outline how leveraging a global, multi-currency notional cash pool has enabled us not simply to optimise liquidity, but also to hedge our FX risk more effectively.

Key Points

  • As Henry Schein has expanded globally it has centralised its treasury activities and established a world-class treasury function
  • In 2008 the company implemented SunGard AvantGard Integrity, which forms the base of its treasury management infrastructure
  • It now has cash concentration structures in place in N. America, Europe and Australia, and has implemented a multi-currency notional cash pool with Bank Mendes Gans
  • The author outlines the company’s future plans including entering new markets

 

Written by

Ferdinand G. Jahnel
Vice President, Treasurer
Henry Schein Inc.

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