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    • airlines
    • healthcare
    • macroeconomic volatility

    Geopolitics, inflation and supply chain disruption- implications for corporate treasury


    Treasurers at the healthcare company, Fresenius and the low-cost carrier, Wizz Air share how they are strategizing to tackle the burgeoning macroeconomic volatility. 

    by Anmol Karwal

    Published: February 21st 2023

    The pandemic, a seismic shift to homeworking, and ongoing economic uncertainty have made the past two years challenging and unpredictable for corporate treasurers. However, numerous challenges remain on the horizon including escalating inflation, rising energy prices, geopolitical instability and further concerns over economic growth globally.

    Money costs money 

    2021 was a record year for deal making, fuelled by low interest rates and large cash piles accumulated during the pandemic, but companies are now facing headwinds when it comes to buying and selling businesses. Among them: rising interest rates, Russia’s war in Ukraine and a selloff in capital markets.

    This scenario is particularly toilsome for the highly acquisitive, international healthcare company, Fresenius. Since 2020, the company has spent approx. €1.4 billion dollars on acquisitions and investments for which it tends to tap short-term debt instruments, particularly the commercial paper market. 

    Steffen Patzak, Vice president of treasury at Fresenius

    However, with short term rates much higher, the treasury team had to pivot its strategy to ensure a smooth growth of business and has extensively reduced its short-term debt from €1.26 billion (15.9% of total debt) at the start of the year to just €582.5 million (6.7% of total debt) at the end of the third quarter of 2022, as per its latest regulatory filings. 

    “With what’s happening now [inflation and interest rate increase], we do see that the commercial paper market has seen some shortages and is less liquid.” said Steffen Patzak, Vice president of treasury at Fresenius, while speaking to delegates at the 2022 EuroFinance International Treasury Management

    Furthermore, 80% of the company’s debt is at a fixed interest rate and with minimal threat of higher interest costs as benchmark rates rise, the company doesn’t hold any interest rate swaps to fix the cost of variable interest rate debt. 

    “Our short-term refinancing needs are limited and as usual, we target to refinance upcoming maturities conservatively and well ahead of time. The debt structure is characterised by a defensive financing mix with roughly 80% of our debt being fixed rate instruments helping us to protect against the rise in interest rates,” Sara Hennicken, CFO at Fresenius told investors during the third quarter earnings call. 

    Battling cyclicality

    After struggling with the pandemic induced lockdowns in 2020, treasurers in the airline industry have been continuously resisting the risks posed by the volatile macroeconomic and geopolitical environment, commodity inflation, supply chain bottlenecks and labour shortages. 

    Prudent risk management is of utmost importance for the segment of LCCs or Low cost carriers including Wizz Air, the fastest growing European ultra-low-cost airline, which particularly stays competitive by keeping low prices and hence financial risks are enlarged. 

    Viktor Mura, Head of treasury, tax and investor relations at Wizz Air
    Viktor Mura, Head of treasury, tax and investor relations at Wizz Air

    “Low cost carriers were built on a model that should be by design crisis proof due to the fact that it is driven by the underpinning principle that you should be the lowest cost provider in your markets,” said Viktor Mura, Head of treasury, tax and investor relations at Wizz Air. 


    The treasury team has been agile to tackle the incessant volatility as it reinstated the jet fuel hedging in June 2022 and decided to align its policy with its peers from FY24 onwards. The hedges are rolled forward quarterly, 18 months out. As of December 2022, the company held jet fuel hedges sufficient to lock 59% of its oil consumption till March 2023 and 45% till March 2024.  

    A key focus of the treasury team has been on diversification of business and risk management. The company has added 40% more capacity, particularly in new markets where it was not operating before. Furthermore, the treasury team ensures that the balance sheet remains insulated with high liquidity with € 1.4 billion in total cash & cash equivalents at the end of December 2022, 4.5% higher than the start of the financial year. 

    “Due to the relatively high exposure to macro risks, we have prudent financial policies in general that also means that we prioritise maintaining a very liquid balance sheet over dividends or other cash intensive shareholder economic return strategies in general,” Mura further told delegates. 

    Battling incessant macroeconomic volatility with inflation running at a 40-year high, soaring interest rates and a looming recession amidst an ongoing supply-chain disruption, treasurers will discuss their strategies to reassess their priorities at the EuroFinance Global Treasury Americas event in San Francisco from March 21st-22nd 2023. 

    For more information and to register, please visit the website.