In light of widespread currency volatility, a global supplier of spare parts and equipment to the can making industry has taken measures to protect profit margins on its export driven revenues.
Crown Canlines Group, based in Glasgow, is a leading supplier to the Metal Packaging Industry, specialising in the food and beverage markets. The business supplies over 300,000 products to can manufacturers.
In addition to its office in Glasgow, the business has operations in Texas, USA and recently it opened a third office in Alicante, Spain following the EU referendum vote.
The business exports to the Middle East, Europe, South East Asia, Africa and Russia. Undertaking all sales in U.S. dollars means that the Group receives over $2million USD per annum which it looks to convert back into pounds as well as euros.
Looking to protect profit margins in the face of widespread exchange rate volatility, Crown Canlines spoke with Bibby Financial Services’ Foreign Exchange team, which was able to identify an improved sterling return on the income USD receipts.
Ken Crown, Director of Crown Canlines Group, said: “While the devaluation of the pound has been advantageous to our business so far, the EU referendum vote is a serious cause for concern for our business, particularly as we see the EU as a strong growth market. For exporters such as us, there are a large number of unknowns concerning what a future relationship will look like. Following the result we took the decision to move quickly and set up an additional office in Alicante, Spain to give us access to the EU, as well as improve our access to markets in Africa and the Middle East.
“We recently reviewed our FX positioning and by working with Bibby Financial Services we were able to secure a better rate and improve our margin on FX by 0.5%. Across a whole year, this better return makes a huge difference to our business.
“By securing currency rates for transactions with FX from BFS, we can mitigate the risk of currency fluctuations and forecast for growth more accurately”.
Michael McGowan, Managing Director of Foreign Exchange, at BFS explains: “Crown Canlines is a fantastic business with a strong international supply chain and exports all around the world. When we got on board with the business, we undertook a pricing exercise to identify how our FX offering could help. Through this process we were able to secure favourable FX rates on the U.S. dollar, improving the returns for the business.
“As well as the financial saving, Crown Canlines can use our Foreign Exchange facility to exchange currencies on the same day, as well as tap into the vast expertise that our forex experts have to offer. This flexibility gives the manufacturer the opportunity to fund global invoices with any preferred currency.”
Findings from Bibby Financial Services new Trading Places research revealed that currency fluctuation was the biggest challenge for exporters, with over a third (34%) seeing it as a problem. For UK importers, the challenge was even bigger with over half (51%) identifying currency fluctuations, while almost a fifth (18%) said that they would benefit from support in this area.
Michael McGowan, added: “The past 18 months have seen a lot of volatility with the pound and we are seeing an increase in demand from SMEs that want to book in their FX rates. But despite many UK importers and exporters being financially impacted by the effects of this volatility, almost a quarter of businesses trading overseas have never reviewed their FX facilities.”