COMPANIES large and small should ensure they cover themselves against foreign exchange rate risks in overseas markets.

This was the key message at an International Trade Forum briefing, held at accountants Baker Tilly in Basingstoke.

Speakers at the event included Neil Pickard, regional treasury manager at HSBC Bank, and Paul Outridge, deputy group treasurer at De La Rue, whose corporate headquarters are in Basingstoke.

Neil Pickard outlined the issues facing companies that are selling products and services outside the UK.

"Once the sale is made, it is important that a company protects itself against any potential loss due to changes in the exchange rate," he advised.

"This can become complex if a company is trading in a number of countries."

He included some pointers in his talk, citing examples of losses incurred by two companies that had not taken protective action, and of companies that had actually profited from managing their risk effectively.

Paul described the potential foreign exchange risks of a company such as De La Rue, which is the world's largest printer of commercial securities.

It is involved in the production of more than 150 national currencies and a wide range of security documents, such as travellers cheques and vouchers.

It is also a leading provider of cash-handling equipment to banks and retailers worldwide.

Its global business is split into 12 per cent UK and Ireland, 30 per cent the rest of Europe, 30 per cent the Americas and 28 per cent the rest of the world. It has 6,600 employees across 31 countries.

The types of exposure faced by De La Rue include transactions arising from trading activities, economic issues including competitive threats and the location of its manufacturing bases, and translating overseas balance sheets and revenues into sterling.

"The company has board-approved treasury policies which are reviewed annually," said Paul.

"Each business unit has to seek protection against risk. Once a sale or purchase is confirmed in a non-local currency then an equal and opposite commitment must be made in the foreign exchange markets through the firm's Group Treasury.

"Also, net non-local currency cashflows must be hedged for a 12-month period."

ITF secretary John Harrocks concluded: "Treasury risk is not often the subject of a briefing to companies operating in overseas markets.

"We may focus on a specific country or region, or the skills or cultural sensitivity necessary to achieve success in foreign markets.

"Managing the risk of buying and selling in foreign currencies is just as important in order to prevent the erosion of profits."

For further information, and details of the next ITF event, contact John Harrocks on 01256 352275 or e-mail itf@nhcci.co.uk