Central cash and liquidity management

Corporate Treasury is responsible for central cash and liquidity management for our subsidiaries, whose operations span the globe. More than 80% of the Group’s external revenue is consolidated in cash pools and used to balance internal liquidity needs. In countries where this practice is ruled out for legal reasons, internal and external borrowing and investment are arranged centrally by Corporate Treasury. In this context, we observe a balanced banking policy in order to remain independent of individual banks. Our subsidiaries’ intragroup revenue is also pooled and managed by our inhouse bank in order to avoid external bank charges and margins (intercompany clearing). Payment transactions are executed in accordance with uniform guidelines using standardised processes and IT systems.

Managing market risk

The Group uses both primary and derivative financial instruments in order to limit market risk. Interest rate risk is managed exclusively via swaps. Currency risks are hedged using forward transactions, cross-currency swaps and options in addition. We largely pass on the risk arising from commodity fluctuations to our customers and manage the remaining risk using commodity swaps. The framework, responsibilities and controls governing the use of derivatives are laid down in internal guidelines.