Treasury and Trade Solutions
4
Citi’s forecasts call for a gradually
improving global economy during
2015. However, the outlook is marked
with increasing divergence across
countries and regions and consequent
uncertainties for corporate top-line
growth. Meanwhile, investors remain
unforgiving of earnings surprises in
an environment with elevated political
and market risks.
Against this backdrop, treasury
teams are working to support their
company’s growth, while standing
ready to “expect the unexpected”
in planning scenarios.
TREASURY PRIORITIES:
SUPPORTING GROWTH,
MANAGING CONTINGENCIES
With signs of a U.S.-led global economic recovery tempered by geopolitical
shifts, treasurers are leading the way by supporting revenue growth and
managing contingencies.
Risk remains a critical factor
For many treasurers, a top-of-mind
issue is dealing with volatility as global
markets adjust to divergent economic
growth prospects, fluctuating
commodity prices, and rate-increase
decisions by the Fed, while quantitative
easing spreads in Europe. With
international sales representing over
a third of revenue for the median
S&P 500 corporate, and prospects
for continued USD appreciation,
treasury teams are focused on risk
management strategies to protect
cash and provide more stability for
corporate earnings.
Ron Chakravarti
Managing Director,
Global Head of
Treasury Advisory
Group, Treasury
and Trade
Solutions,
Citi
Figure 1: FX Risk Drives Earnings Volatility
*
R-squared (%) of Index Volatilities with Earnings Volatility
*
Factset, Bloomberg.
Declan McGivern
Director, EMEA
Head of Treasury
Advisory Group,
Treasury and Trade
Solutions,
Citi
63%
FX
40%
Commodities
37%
Interest Rates
