Case study: an importer and distributor takes control of margin and currency

The client is an e-commerce importer and distributor of consumer products, with a Singapore parent and trading entities in Australia, New Zealand and Hong Kong. Its largest customers are national retail chains. Stock is bought in US dollars from manufacturers in China and sold in Australian and New Zealand dollars, so every move in the currency went straight through to earnings, and the group did not have a reliable view of which products actually made money.

What we did

We started with the currency. Lowe CFO Advisory designed and implemented a treasury policy that hedged the US dollar purchase pipeline with forward cover matched to supplier payment dates, with set cover ratios and an approval process the board could sign off once rather than argue about every month. Landed cost became predictable, and earnings stopped moving with the exchange rate.

Then we built a true margin model by SKU: purchase price at the hedged rate, freight, duty, warehousing and the retailer rebates and returns that sit below the headline sale. Several high-volume lines turned out to be thin once the full cost was loaded, while a smaller set of products carried the group. The range and the buying plan were reweighted towards the higher-margin SKUs.

Finally we led the move from the ABM ERP to Xero across the four entities, with a custom inventory module so that stock, cost and margin data flowed into one consolidated monthly pack rather than being rebuilt by hand.

What changed

Earnings were protected from currency swings and the risk was managed under a written policy rather than by hoping the dollar held. Pricing and range decisions were made on true margins, and the pivot to higher-margin products lifted profitability across the group. The finance function ran on Xero with live inventory and a consolidated view of Singapore, Australia, New Zealand and Hong Kong.

The client is not named and figures have been left out.