On Monday, Hammerson, one of the UK’s largest retail and commercial property investors, reported resilient and strong income in the first six months of this year despite wavering consumer confidence. Adjusted profits at Hammerson rose 6.0% to £112.6 million, with particularly strong return on capital coming from overseas.
Hammerson’s French portfolio (amounting to 23% of the company’s overall property values) returned 2.9% on capital in the first half of this year, outstripping their UK retail parks arm, which lost 3% on capital over the same period.
Against the backdrop of the UK’s departure from the European Union, it’s clear that Hammerson’s overseas portfolio will continue to remain a vital part of their operations and will contribute to the company’s diversified holdings.
Alongside most large, diversified and international public companies, Hammerson actively hedge their foreign exchange exposure in order to retain hard-earned profits earned overseas when repatriating the proceeds. Hammerson’s hedging strategy is used specifically to “provide protection from volatility in foreign exchange markets”, according to their H1 2016 report, going further to add that “At 30 June 2016, 76% of our euro-denominated assets were hedged, as well as approximately two-thirds of our euro-denominated net income.”
The use of forward contracts, currency options and hedging programmes have clearly been a success for Hammerson this year, with foreign exchange adding £75 million to the value of their net assets, outstripping the contributions seen from consolidated property revaluations and premium property revaluations (£29 million and £48 million respectively), one of Hammerson’s more traditional sources of income.
Jeremy Cook, Chief Economist at World First explains; “For a company as large and as influential as Hammerson, it’s easy to understand and see the effects of foreign exchange exposure (both good and bad) on ongoing business. For SMEs expanding overseas without a 3-digit headcount Treasury department, the impacts of FX can be harder to gauge.”
World First are experts in international payments and currency hedging and can help you protect yourself against the volatility of trading overseas through currency options, forward contracts and more.
To find out more about how World First could help you manage your currency needs, give one of our friendly specialists a call today on 020 3432 6984 or visit worldfirst.com.