LOW RISK MARKET SHARE GAIN

RISK MANAGEMENT TOOLS HELPED METAL DISTRIBUTOR

Metals Processing Co.* was concerned as one of their major customers required long-term fixed pricing in order to process a deal and approached Metal Edge Partners with the issue.

The metals service center did not want to rely on variable cost future inventory because they did not want uncertain, and/or potentially negative, profit. Further, the amount of conservatism required in their customer pricing to account for variable future costs may have caused them to lose the opportunity altogether. Due to working capital and physical space constraints, they could not purchase all the required inventory up front.

OUR APPROACH

Our deep knowledge, in-depth understanding of the metals market and risk management expertise provided the client with revenue predictability and margin certainty. To eradicate the exposure of market fluctuation and gain revenue predictability for Metals Processing Co. we utilized the futures and swaps markets to help structure a solution for the client. With our help, Metals Processing Co. setup multiple avenues through which to trade derivatives, built the necessary support infrastructure to quantify and manage their risk, and retained their customer’s business without jeopardizing their financial health.

RESULTS

The client benefited from being able to grow their market share by accessing its customer’s business and not having to be at the whims of the market when trying to forecast revenue and margins.

*We take our client’s confidentiality seriously. Referrals are available on request.