Cases in International Finance：在國(guó)際金融案例

CasesinInternationalFinanceHedgingForeignExchangeExposureCase#1:Lufthansa

“IfKarlMarxcouldseewhattheforeignexchangemarketisdoingtocaptainsofindustry…asuccessfulcorporateexecutiveofoneoftheworld’sprestigeairlinescanputonamultimilliondollarcurrencyspeculation–andwin–andstillgetlambastedbythecritics.Itsenoughtomakeacapitalistcry!”Intermarket,1985SomeinterestingFacts…1926:LufthansawasbornthroughthemergerofDeutscheAeroLloydandJunkersLuftverkehr–itinheritsitscranelogofromDAL1934:Lufthansaoffersitsfirsttransatlanticflight1990:LufthansaresumesflightstoBerlinfollowingGermanunification1990:LufthansajoinsthestaralliancewithAirCanada,SAS,ThaiAirlinesandUnitedAirways–thefirstmultinationalairlinegroupingLufthansaTodayLufthansaisthenationalcarrierofGermany–headedbyWolfgangMayrhuber(since2003)Revenue(2004):E17BNetIncome(2004):E383MPassengers(2004):50.9MLoadFactor(2004):74%Lufthansahas253aircraftwithanaverageageof10.5years.Boeing:40%Airbus:60%InJanuary1985,undertheChairmanshipofHeinzRuhnau,Lufthansapurchasedtwenty737jetsfromBoeingfor$25,000,000apiece($500MTotal)Length:100FeetWingspan:86FeetCruisingSpeed:470MPHMaxAltitude:35,000FeetRange:

1000MilesSeats:123Atthetime,theexchangeratewasDM3.20perdollar.Atthisrate,theplaneswouldcostLufthansaDM1.6BOverthepreviousyear,thedollarhadbeenappreciatingagainsttheDeutschmark..Lufthansa’sOptionsOption#1:RemainUncovered Theriskiestoptionwiththegreatestpotentialgain(ifthedollarweakensagainsttheDeutschmark)andthegreatestpotentialcost(ifthedollarstrengthens).Option#2:FullForwardHedge Thesafestoftheoptions.IfLufthansaboughtdollarsforwardatthecurrentrateof3.2,theycouldlockinacostofDM1.6BOption#3:OptionHedge IfLufthansapurchasedputoptiononDMat3.20DM/$(orcalloptionsondollars),theycouldtakeadvantageofthepotentialgainfromadollardepreciation,butstillhedgethepossibleappreciationriskLufthansa’sOptionsOption#4:MoneyMarketHedge Lufthansacouldobtaindollarsnow,byborrowingDeutschmarks,convertingthemtodollarsatDM3.20andthendepositingthemineitheraUSbankoraEurodollaraccountuntilneeded.Inprinciple,thisshouldhavethesameeffectastheforwardhedgeOption#5:PartialHedge Lufthansacouldpurchase$250MdollarsforwardatDM3.20atallowtheremainingbalancetobeun-hedged.Option#6:CashFlowMatching Lufthansacouldtryandgenerate$500MinticketsalesintheUS–veryunlikely!Lufthansa’sOptionsUncoveredFullForwardPartialHedgeOptionHedgeRuhnauwasconvincedthatthedollarwasgoingtofallandoptedforthepartialhedge.Hewasprovedrightasthedollarplummetedinthemideighties.DidRuhnaumaketherightdecision?AlternativeRelevantRateTotalCostUncoveredDM2.30DM1.150BPutOptionsDM2.30+PremiumDM1.246BPartialHedge.5(2.30)+.5(3.20)DM1.375BFullForwardDM3.20DM1.6BWhileRuhnauwascorrectonthedirectionofthedollar,hecouldhavesavedsomemoneyusingoptionsratherthanapartialhedge!Case#1:Porsche“PorschemakesmostofitscarsinGermany,soitscostsaremainlyinEuro.YetalargechunkofitsrevenuescomefromsalesinAmerica.“TheEconomist,June5,2003SomeinterestingFacts…Porschewasfoundedin1931byFerdinandPorsche,aformerDaimlerBenzdirector.OneofthefirstPorschemodels…lookfamiliar?SomeinterestingFacts…ThefirstrealPorsche–designedin1948September30,1955:JamesDeaniskilleddrivinghisPorsche550SpyderPorscheTodayPorscheisledbyPresidentandCEODr.Wendelin

Wiedeking(since1993)NetSales(2003):E5.582BNetIncome(2003):E565MEPS(2003):E32.29EPSGrowth(2003):22%Porscheisessentiallyaprivatelyheldcompany.All8.75MvotingsharesareheldbythePorschefamily.Theremaining8.75Mnon-votingsharesareprimarilyheldbyinstitutionalinvestorsTheJewelinthePorscheCrownhasalwaysbeenthe911Series.(14different911modelscurrently)Porsche911CarreraEngine:3.6l6CylinderEnginePower:325Hp@6,800RPMAcceleration:0-60in4.8Sec.TopSpeed:177MphUnitsSold(2003):27,789AveragePrice:E92,000Cost:E78,000ProfitMargin:16%The911commandsalmostexclusiveownershipofitsmarketsegment(highendsportscars).Whilesalesarecyclical,priceelasticityisverylow.TheBoxsterwasintroducedin1996tocompetewiththelowersendsportscarsalreadyonthemarket.PorscheBoxsterEngine:2.7l6CylinderEnginePower:240Hp@6,400RPMAcceleration:0-60in5.9Sec.TopSpeed:160MphUnitsSold(2003):18,411AveragePrice:E44,000Cost:E41,000ProfitMargin:8%TheBoxsterislesscyclicalthanthe911,butmuchmorepricesensitive–particularlysinceintroductionoftheBMWZ4in2003PorscherecentlygainedentryintothelucrativeSUVmarket.FuelledbySUVcrazyAmericans,thelaunchoftheCayennein2002hasbeenhailedasoneofthemostsuccessfulproducelaunchesinhistoryPorscheCayenneEngine:3.2l6CylinderEnginePower:247Hp@6,000RPMAcceleration:0-60in8.5Sec.TopSpeed:133MphUnitsSold(2003):20,603AveragePrice:E68,000Cost:E61,000ProfitMargin:10%TheCayenneisclearlyatthehighendforSUVs–Porscheisquicklymovingtodevelopalowerpowered,lowercostversion.Porsche’sGrowingSalesPorsche’sCompetitivePositionAutomakerSales(Billions)Revenue(PerVehicle)MarginDebt(%ofAssets)ROICAudiE22.6E27,0006.6%.2%NABMWE42.3E32,2118.0%47.5%11.3%FiatE58.2E25,8291.6%31.3%-2.9%MercedesE50.2E39,0006.4%NANAPeugeotE54.4E16,1925.3%42.9%10.5%PorscheE5.6E72,88916.4%6.4%20.5%RenaultE36.3E14,2504.1%47.6%3.7%VolkswagenE86.9E13,5835.2%42.4%6.8%“Welearnedthehardwaythatbanksarenevertherewhenyouneedthem…”:Porsche’santi-debtphilosophyPorsche’sForeignExchangeExposureUnitedKingdomUnitedStatesAutomakerSalesProductionSalesProductionBMW11%15%26%11%Fiat6%0%0%0%Mercedes9%0%19%7%Peugeot12%6%0%0%Porsche11%0%42%0%Renault9%0%1%1%Volkswagen7%0%13%7%PorschehastheheaviestUSexposure(andthisisincreasing),yetithasthelowestrateofnaturalhedginginthesector…”(Citigroup)PricingPressuresPorsche’sNewestModel,the911Carrera4sCabriolet(2003)waspricedincontinentalEuropeatE85,000(a15%markupovercostof$72,000).Simultaneously,thenewCabrioletwasintroducedintheUSfor$93,000ImpliedExchangeRate=

$93,000E85,000=1.09$/E(.91E/$)EUR/USDAstheDollarfalls,sodoprofitmargin!Atthecurrent$1.29perEuroexchangerate…$93,0001.29$/E=E72,093AprofitmarginofessentiallyzerooverthecostofE72,000!!Alternatively,Porschecouldpriceto911intheUSatalowerprofitmargin(say,thatoftheBoxster-8%)E72,000(1.08)=E77,800(1.29)=$100,310Priceelasticityofthe911isthelowestofthevariousPorscheplatforms,butcouldtheUSmarketwithstandapriceincreaseofthismagnitude?(7.8%)Por