Automating FX Hedging And Applying AI In Treasury At Breitling

Foreign.

To this week's Treasury Career Corner podcast, where I interview treasury professionals about their treasury careers. Each and every week, I talk to treasurers about how they build their careers, where they are now, where they see both themselves and the treasury profession going to next. Let's get on with the show.

In this week's show, I'm joined by Olivier Smeakins, the global head of treasury at Breitling. Breitling is a leading Swiss watchmaker. Pushing boundaries since 1884. The innovative company invented the modern chronograph and pioneered the navigational tool Watch. Today is still breaking new ground as a casual, approachable and sustainable luxury brand. With this unmistakable modern retro style. Breitling is both a company with a history and one that is ahead of its time. But I'm going to get Olivier to tell us a little bit more about the brand and everything else. Later on in the show, we're going to go back to the beginning of his career and talk about how you first started in finance and Treasury. Over to you, sir.

Hello, Mike. Yes, great to be speaking today and being able to share something about my career. Yes, really honored you invited me. I started my career at KPMG back in time in Belgium as a consultant in risk. So doing internal audits, I mean, also risk management assignments, etc. What I liked a lot about, I mean, that first step in my career is that you get assignments in plenty of different industries, Right. And as a young graduate, it's great. And to get a feel of what you will really like to do in life. Right? So in the insurance industry, in production, in oil and gas, even for government institutions. And quite quickly I noticed that I like tangible stuff. So after a few years there as a consultant, which I enjoyed a lot, I moved into the automotive industry and I was, as an internal audit measure, traveling around the world. So two weeks per month somewhere on the planet, auditing manufacturing cards.

That was with. And that you say you automated. That was. How do you say it? Bosel.

Yeah, it was Bose. Also. It's a Dutch privately owned company. They make toolbars and exhaust systems. It's a great. I traveled around the world, went to Kazakhstan, the us, Brazil, Argentina, and it's just great to see how products are being made. Right. And also meeting a lot of people, different cultures. So I enjoyed that a lot. But after two years of traveling, starting a family, it begins to become too much to travel all the time. So that's how I rolled into Treasury. I was speaking to our CFO saying, hey, I'm traveling too Much. Is there something else that I can do? He said, yes, actually, you know, we're this big multinational, we have operations everywhere, but we don't have, you know, somebody dedicated to Treasury. Do you feel like, you know, taking up that role?

Yeah.

And I thought, actually, I don't know too much about treasury, but of course, why not? So that's where I started, you know, building these 13 weeks rolling cash flow forecasting automotive. As you know, they work on very small margin. Cash flow is always something tricky. So that was the first insight I was able to create. Also in terms of foreign currencies, we had exposures in the US with US dollar, but also, I mean, with the South African Rand, which are very, you know, exotic. So just trying to understand, all of the exposure we had in all of the countries was already an exercise on itself and then coming up with hedging solutions.

And when you came into that, you're obviously fresh to treasury, you know, and I often ask this, you know, from people, what was your checklist? If you, like, you were the first treasury person, you know, so you work with the cfo. What was he saying? Right. Obviously cash, that was a key thing. But then you're talking about foreign exchange, or how was your checklist, or how did you structure it?

Definitely cash getting inside in cash, cash that we have in each country. How can we repatriate the cash? Looking at cash burn within the group, within the entities, see where it comes from, how can we improve it, how can we better centralize cash? These kind of topics were definitely key, especially in an environment back in time where being in the exhaust systems, which became really a commodity in the end and started transitioning towards ev, et cetera. So margins were only, you know, reducing, so cash heating. And then for sure, when, you know, the reporting currency was euro. And we had exposure in plenty of countries, exotic ones like Ruble, South African Rand, Brazilian Real, and then even the Argentinian Pesos, where we had the manufacturing entity. So these were quite challenging currencies to find adequate solutions for.

And you would, as you say, fresh in your treasury career per se. You know, you'd, you know, managed within audit and you'd done controlling and things like that. How did it contrast, you know, if you like, I was at a session this morning, we were talking about people going, oh, I want to get into treasury, what then? If you have other people now coming to you and say, hey, as you said earlier, you're doing a recruitment campaign at the moment, what are you telling them? What's your story of treasury and why it's so fascinating.

For me, it's just, you know, about being open minded, use common sense and also reach out to more senior people around you. Right. What I did, I built a good relationship back in town with the controller, the head of financial reporting, you know, a person that had, you know, 10 years more experience than me. So the advantage is if that person guides you because usually they are aware of plenty of these issues or topics, but they don't really have the time to deal with it. And so they're very happy that you ask the questions that you take over some of these issues they have, but they don't have the time to do it themselves. So as long as you're open, willing to learn, willing to pick up certain topics, then I think it's fine. Then, then you will learn for sure.

And you did that role for three years or so and then what happened next? Or you know, talk.

The company are such a two main business lines. We had to sell one of those business lines. The company came into some financial troubles back in time. I don't know how they do today and I won't expand on that one, but, but for sure, you know, there was a division that was sold and with that the group became much, much smaller. And as such, for me, that last year in the company was tremendous from a learning perspective. Right. Of course you don't like see a company going into financial issues.

Yeah.

But as a young treasurer, it's amazing. Right. Because then, you know, you become the center suddenly of attention. You're being pulled into quite strategic meetings with shareholders with the C level and they ask you as well to prepare certain presentation, dig into issues, see how we can save the company with additional financings, et cetera. So that was a tremendous journey. But at the same time I also knew the company would become smaller and was the right moment, you know, after.

The diversity to move. But actually you're saying about that crisis point because I know we had this discussion in our previous chat when we did our pre podcast. What you know, if someone else is listening today and they're saying, oh, actually I've got lots more face time with my cfo. You know, we got tariffs in the world, we got lots of challenges and things. How should they handle it? Or what was your you got to checklist if you like.

It's a while ago. But one of the key things was okay, liquidity. So it was really about finding a solution. I remember sitting in meeting rooms together with various financing partners and see if they wanted to set up a Syndication, you know, jointly. And that didn't work out immediately, so we had to find a separate solution where we went into a bit more of kind of backstop financing with hedge fund, et cetera, in the background. So that was quite a journey.

Yeah. And then you joined my good friend Julian Mouay. Talk us through that. He's been on the podcast. We'll put a link there. I'm going to get him on the podcast again. I've already threatened him. Now you've done it. He's got to be. Join us. So, Julian, I'm shouting you out there.

No.

No.

So I got in touch with Julia. Indeed very happy that he reported me. I moved from Belgium to Luxembourg. They were setting up Adyen back in Times, spun off from Johnson Controls. They were setting up offices in Luxembourg. They asked me to join because they needed a Treasury center there. And Julian had a great feel. It's often about, you know, getting a good gut feeling. Right. One thing is your experience, the other thing is having a good feeling with the company, but also the person that will recruit you. And that has always been like a key thing for me. Like, you know, how does the culture feel? How do you connect with the person on the other side? And so again, great experience there. Coming from a privately owned company too. It's these big multinationals talking to you, York.

So who are. I know Adient very well. Do you want to explain Johnson Controls? Obviously automotive, you know, there's a piece of automotive stuff from Johnson Controls, but Adient in a similar way is probably something that Adient touched in most cars in the world. Would that be right?

Yeah, that's correct. They are producing seats for all major OEMs globally. So massive company, the leader in that area and me with state of the art treasury processes inherited from Johnson Controls. So for me it was a bit new coming from, you know, a place where you need to set up everything from scratch, where you help yourself out, try to get inside. Going to an organization where everything is smooth, everything works fine, there's great processes and treasury systems.

And what impressed you most about that? Well, you know, when you walked in, what was the. Wow, this is amazing. All were the things that stood out for you.

For me, it's great going to a stock lifted company and see how that works. In terms of systems, of course, some people might like it. These massive corporates I think was great for me from the perspective where you see how things should be done. Perspective best in class. At the same time, what I missed a bit was the fast decision making which you see in privately owned companies and smaller companies. Yeah, that's the part that I missed a bit. So it was balancing between both, you know, and learning, seeing how it should be organized, but at the same time missing a bit of the speed that you can see in other organizations.

But I think also I think I remember you again, you and I have talked about the fact that by being somewhere like that, it sort of rounded out a lot of your experience, didn't it? And you gained a lot and that then helped you elevate yourself now because it ticked a lot of the other boxes.

I fully agree. And so that's when I started looking around. It was like I mentioned to you as well, was bit tough back in time because we were going through this Covid period where, you know, it was very difficult to move roles. It was very difficult to, you know, to find another job. But for me, you know, in my mind that I want to find something new and if I knew it could take time, but I wanted the right role. And for me it was exactly that. Going again in a scenario where, you know, a company is growing but at the same time where there's still some things to be put in place.

Right.

Not coming in an organization where everything is already as it should be. And that's where I came in contact with Breitling private equity owned firm. You can well imagine that the speed that was missing a bit was even three times or four times faster than even I was used to. So I love that part. And then going in an organization where it's really about building and growing, it's amazing what I've learned and what I've been able to put in place over the past four years.

So when you. Well, actually let's do. Can you just explain who I gave a little bit of a header of the show, who Breitling are, you know, when you joined, maybe who they are now and then because that's going to then influence your immediate priorities when you walked in the door and then you know your challenges as you've gone through sort of thing. What's it been like? And give us a quick overview.

No, correct. So Breitling was family owned back in time, right before in 2017 it was acquired by private Equity. It was a company mainly focused on distribution. It was also a brand which was a bit dusted, if I can say a bit with an image of very chauvinistic image, but still with fantastic products. And so it needed from a marketing perspective and I think you introduced the brand very well needed to Make a complete switch. So that happened. And second then it was also about upgrading the distribution. So instead of going from pure distribution good to a multi channel approach. So we've opened more than 300 boutiques over the past years. We still work to wholesalers as well. But we've also launched Ecom which was very successful as well during COVID times. So we more than doubled our turnover just in a few years. And with that also, you know, what needed to be put in place in terms of Treasury. If you look at that, there was no foreign currency hedging in place or very basic one at the start when I joined. Meanwhile this year in June I implemented Can Talks. So full hedge automation.

Yeah.

We are now looking for a Treasury management system. We will take a decision probably next quarter on which tools to use and with that we need to get fully ready within a private equity environment at a certain point in time. Either there's a strategic buy, what is an ipo. And the idea now is to get completely ready from treasury perspective to take that next step and professionalize the organization.

And there, you know, again, you and I talked about private equity. We, we've talked, you know, I haven't Julie Fabris on the show in the past where she talked about, you know, we made the jokey comment, you know, it's all about the cash and you know, that's all it's about in private. But as she said, and she said back in the day, you know, a while ago now, but she said, yeah, it is just about the cash, but once you've got the cash right then and you got the clarity and everything else, then you can do all the other interesting stuff. And she was all right, you know, great way to do it with yourself. How would you describe working as a private equity treasurer? What's that been like and what are the challenges?

No, but fully, fully agree that liquidity is a key thing, right? Because management, the organization, they have fantastic plans, right? It's very entrepreneurial. So we have plenty of IDs and you need liquidity, you need cash to realize those IDs. So it's always like that. And at the same time your business can be cyclical, right? Sometimes you're generating great cash for plenty of opportunities and then after a while might be a bit short. So it's always the case in these entrepreneurial companies where there's a massive growth forecast. Where we opened of the past, we have more than 300 tickets now, but we opened 140 in three years time. So that has a massive Impact on cash. We also acquired two historic brands with a fantastic heritage. Last week there was Dubai Watch Week where we officially launched our house of brands. So there will not only be Breitling, but also.

With trading expected next autumn, just the acquisition of those brands and then all the investments required in the coming year to relaunch those brands are massive. Right. So I mean, that's where again you come to the center of the attention, where your CFO tells you, hey, you know, we need to finance all these initiatives, go and help me. And that has been a great challenge over the past year, two years, which I love. Right. I can get bored of the usual day to day treasury things. I get more excited about all these different projects. Of course you need to have the day to day under control, but it's the projects where you know that give you energy, right? The challenges that you get and you.

Talk about projects and things like that. And I had a really great roundtable session with 24 treasurers last week and I was running the tech stream, you know, talking to them about technology and different comments about treasury management systems, you know, raise of AI and there were different things about it. And how was your. And I know that you love, you're great with your technology, you had that as part of your IT and controlling and project management. You know, not all treasurers have that, if you like. So with you, how has that shaped your approach? If you like, when you've looked at processes or technology and you're talking about tms there as well, how do you approach that yourself? And again, you know, for advice, show what should other people be thinking about?

No, I mean, you know, let me first start that we're entrepreneurial, documented before cash is very important growth and performance results. Because in the end it's about increasing the value of the company. And so it's also very lean for me, right. I don't have a big team. So you always have to be creative or you're pushed to be thinking creatively to do things in the most efficient way and also try to automate things. And the good thing is within Breitling is that we want to automate things. We're happy to invest in technology. For instance, we were the first ones having a unique NFT for each watch. So it means if we want to activate the warranty of your watch, you need to scan the NFT and with that you activate the warranty and you know, we get a message, hey, there was a watch sold somewhere in a certain boutique somewhere around the world. And so permanently through an app we can see. Oh well, this watch is being sold here and there.

Yeah. Now hang on, we're just going to explain just for that near field technology that's for guys that don't know it. It's not like your barcode is actually electronic and it's straight the way through the supply chain, isn't it? Sorry, that's for some of our treasures, might not understand NFT sort of thing.

There you go. A non fungible token which goes over the blockchain, etc. So it means as well within Treasury. Now I had a couple of conversations with different treasury management system providers but what I was really impressed about compared to I had initial conversations two years ago as well. But the speed at which these AI solutions are being developed, it's amazing what the systems eventually will be able to do. I can just dream about it. You could just dream about it a year ago and now it will be able to do it. I think some systems can already do it today, others will need six more months. But that's I think where you know, they will be able to make the difference. I will be able. And also within an organization, that's the way it works. For instance, I was in a conversation two weeks ago with one of the IT guys talking about foreign currency exposure and I told him like, you know, today what I've been always doing is just looking at my bank statements, looking at my foreign currency bank statement, understanding what my historical foreign currency cash flows were. And I was explaining that to him. I said, you know, can't you help me doing that in an automated way? He said, yes, you know, we have our data lake. I'll just connect feeders that we've in place today now, you know, with MT940 statements, Ebix et cetera, connected to our data lake and you will just be able to chat and ask the system to make a chart showing you the historical fixed exposure for each of the currencies. I'm like wow, okay, let's go for it, let's do that. And now he's building it. So I think it will greatly help us and I think going forward, I think being open to using new technologies, especially also for generations with some experience. Right. I'm still young but still, you know, I'm 15, 20 years experience. Yeah, you still have to remain open because if you don't move, you don't pick it up, don't learn and participate in the new technologies before you know, you will be running behind and you will be losing efficiencies. As a company.

And you want to embrace those, don't you as well?

Yeah, I want to embrace those, definitely.

And you are the definition of international with your career sort of thing. You've gone from Belgium, then Luxembourg and you do a lot of stuff in Switzerland and things cross cultural and organizational challenges. How do you deal with those sort of things? Any advice for someone that may be struggling with it or, you know, tips for success? What have you seen working?

Well, I love it. The international environment. Luxembourg is also a great example. Usually previous job in Luxembourg and also now usually you're in the office with 10 or 15 different nationalities, which is great to share experiences, if you look at. But also, I mean, in terms of culture within companies. First working for a Dutch company, a U.S. company, now more Swiss, German company. You see really a difference in styles. You know, in Belgium, as a Belgium, we're used to be a bit more diplomatic and to adjust. Right. We've always been like this small country in between France, Germany, the Netherlands, you know, having to be diplomatic. So I think that's also something that helps. Right. Being able to adjust, being able to be flexible, understand other cultures, understand other backgrounds and also adjust in the way you communicate. I think that's a key thing.

Definitely. And then again, if we look across the period of your career and that's great. That's just as you said, you've given it right the way across. Are there any moments you would pick out that you've grown as a leader? I know we're going to talk about some of the current challenges of treasury and things, but you personally, you know, rather than just technically, you're very strong, you know, you've got this. Otherwise you wouldn't be in the role you are now. But any other key moments that as you look back, someone listening today goes, oh, yeah, actually, that's something I should.

Work on a couple of things. First, more at the start of my career, it's really being of having the possibility to present in the Board. Right? Yeah. With leading this working capital project where we had to release a million from a balance sheet. Right. Again, for a liquidity perspective. And so they asked me to lead that project and then it was about presenting the results and the progress of that project every two weeks in the Board. That's where you get the opportunity. You have to keep things simple. Right. Being treasury has always been very technical and it's always about trying to have these complex topics, you know, summarize and explain in a way that's understandable for everybody.

Translating it.

Yeah, Translating it and that has always been a struggle because you also like the technicalities being a treasure. You like the data, you like the details and then again step back and say, okay, it's now trying to bring the message in a simple way that everybody understands it and what the outcome you would like to have. Right. Which is usually a yes. So that's the key thing. The other things, what I started to do over the past two, three years is also being part of panels, being part of today the treasury career corner, but also presenting some of the solutions. I implement supply chain finance before asset based lending. So what I usually do is together with the bank that provide us the facility is I'll go on any events that they have and have a joint presentation. I think it's also a good idea to do that and also to develop yourself.

And that brings us beautifully actually with panels and things. You and I recently caught up at Euro Finance Budapest. We're having a great conversation. What were the sessions you were thinking? Right, I want to be at that one. And then there was, in fact I was, as I say, I was with these guys today and we were saying, yeah, AI can be very good. Not quite there yet for Treasury a lot of the time, you know, but there are some use cases and things. But you know, various other bits. But what were the sessions you were going. That's really important to me. I see that as a big challenge issue for treasury or which were the ones who were like, actually I can take it or leave it. What are you thinking? And the major things that treasurers should.

Be focusing on was actually unexpectedly. But others will say what happens usually is that actually I was caught up in all these meetings. I didn't expect to see all of my relationship banks there. So I wasn't able to follow a lot of sessions, you know, in advance. I'd make this long list of all sessions I wanted to follow and eventually I saw Jose Manuel Barroso which gave like this master class on geopolitics which I found super insightful.

Yeah.

The rest I was mainly speaking with banks, relationship banks and some of the treasury management system providers. I think the outcome is a bit similar than going to the sessions, although you don't really have tips experience immediately from other. But my biggest takeaway again is back to AI, what you raised. I think things are going extremely fast. I have the advantage with Brightling is that, you know, I still have a system landscape where I start a bit from scratch. So I want to make sure to go with the provider that has the most advanced or the best plans in terms of AI and improving their systems over time. A very nice roadmap. What I also like is blockchain. I know, you know, you hear less about it, but still in the background, I think there's a lot of things happening with blockchain Swift being challenged potentially, like players like Ripple or whatever. Let's see how that's going to develop in the years. So I think technology for sure, as always, especially in private equity, catches king, it will remain king. And then thirdly, I think there's for the moment, great interest in treasury also from school leavers, from the younger generation. I think it's also about, and that's what I love to do, is just train them, get them excited about Treasury. So also in the next month for me, the ideas to grow the team I'm looking for young people. I want to join, want to learn. I'm fine that people make mistakes, that happens. But you learn from it and then you improve and you build a great team.

Just wanted to ask, go back to the technology question there. I think we may have even talked about it as well. But, you know, there are lots of treasury management system providers. At one stage there was a massive range of them and then they all slimmed down. They got bought out by a lot of them and now we've got sort of a. A lot of them are flourishing again and there are new providers and things like that. I've talked to people again on my session last week. We were talking about those that have legacy and they're having to build on those old systems and that's. Somebody's dragging them back. But then you've got the new providers and that's all very well, but they don't have the knowledge, if you like, that's come from that stuff. So how are you seeing that? What do you think in that battle of wills, what do you think is going to come out?

No, correct. That was a good discussion for sure. What is positive is that also private equity is interested now in treasury management system. I think a lot of these providers are now were bought by private equity or private equity invested in those. So they also believe in those future systems in terms of decision making. Indeed, you have these older systems that now have the challenge to adapt their systems to AI functionalities, which takes probably a bit more time, but also takes a lot of investment. And then you have a couple, a few companies, new joiners that should build something from scratch sometimes even. But their issue might be that, hey, you know, how many customers do they already have? Did they fix all the bugs, et cetera in their systems? So as a company, how do you decide? Where do you go with more experienced system versus let's say, these new journeys in the market? It's a decision I haven't taken yet. What I've done is now I had sessions with, with five or six different providers. There were a couple of these newer companies, a bit more of the known brands. I want to make a short list of three and then go in further depth of what they are offering and then take a joint decision, but not only on my own, but together with the accounting team, with our CFO and then all agree. Generally speaking, within Breitling, we're open to new technologies, we're open to new fintechs, et cetera. I've seen it also in other areas. We like to try things and most of the time it works out fine, but if it does work out also fine to, you know, end the relationship and just find another solution. Right. So very entrepreneurial from that perspective and.

You'Ve got that open mindset which is great and things. So you've been very kind with your time. We're going to put your LinkedIn details in the show notes as well as a takeaway advice that we give each week for the listeners of things. What skills or experiences with you do you feel have made the biggest difference? If you like and you know, what would you encourage them to focus on? Obviously technology sounds like one, but what other things are you thinking?

No, I think that on the one hand, indeed you have typical treasury skills, technology skills, but we all know that and you know even better than me that treasury is sometimes a role you grow into. Right?

Yeah.

More to the day than in the past. You have the possibility to have some programs at universities to get to know treasury, but it wasn't yet there back in time when I started. So I think it's about being open, about willing to learn the job and definitely also about more the soft skills, communicative, being open. From my perspective, it's fine making mistakes, sharing those and see how you can improve yourself. Right. It's also being open, being flexible more and more that is what is expected within boundaries and just being enthusiast, that's the key thing for me. It's a lot when you look for people to join, it's feeling this enthusiasm, right. The willingness to take on things and the rest you can learn. So it's all about mindset and you.

Talk about the, you know, one of the wrap it up. But I also want to ask, so you Talk about those challenges. So you're a Treasury leader. You know, there are a variety of challenges. Are there any particular challenges you think that have shaped you and that other people, other senior treasury leaders should think about?

I can just give an example. It's sometimes people. I think sometimes the tough part is dealing with other people in organizations because you don't always have a match. Right. You might get along well with your boss with certain colleagues, but sometimes it can also be tough with other colleagues. It's having the ability to deal with that. I had some experience as well in my career where you have certain colleagues. You know, I'm somebody. I like to work together. Right. To build something as a team. But sometimes it's about dealing with those situations. And that made me grow a lot.

Finding common ground.

Yes, finding common ground. So that's, for me, a key thing is sometimes people within organization. I guess it's even tougher than the job as such.

Yeah. Amazing. Libya, amazing to see you here. And I caught up with you in Budapest and shared a beer, but we'll definitely share some more in the future. And also I'll say hi to Julian from you when I chase them to meet you back on the podcast. You've been a superstar. Thank you very much, sir. And looking forward to seeing you very soon.

Thank you very much, Mike. Thank you.

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Thanks.