E-trading at Philip Morris’ Treasury

by John Jacob, Director Treasury, Philip Morris Finance S.A. 

Could you describe the FX risks you run as a business? 

The largest foreign exchange transactional volumes arise from hedging the in-house bank’s multicurrency intercompany loan portfolio through currency swaps. Other transactional exposures resulting from the purchase of raw materials or international sales activities are hedged on a selective basis at headquarter level. The same goes for net investment hedges.  

The company’s objective is to achieve hedge accounting wherever possible.

Could you describe your FX hedging policy?

Certain hedge activity, for example foreign currency funding related hedging, is mandatory. Hedging decisions for other transactional or net investment hedging are taken at headquarter level by the Treasurer and CFO. Any hedging activity must be related to an underlying commercial exposure: speculation is strictly forbidden. The company’s objective is to achieve hedge accounting wherever possible. 

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