UK food and drink exporters are being warned they are leaving millions of pounds in profits exposed as currency turmoil hits businesses already facing rising costs.
New research has revealed that 74 per cent of senior finance decision makers in the sector do not regularly review their foreign exchange strategy, despite extreme swings in currency markets.
The warning comes after a period of major volatility, with daily currency movements reaching between 2 and 6 per cent — putting companies without protection at serious risk.
More than half of businesses surveyed said they use no currency hedging or financial tools to shield profits from sudden market shocks.
The lack of preparation is proving expensive. UK food and drink firms lost an average of 3 per cent of net profits to currency fluctuations over the past year, with companies operating on tight margins taking the biggest hit.
Experts warned many firms are being caught out by a lack of knowledge, with some admitting they do not understand hedging, while others wrongly believe it is too risky.
The disruption is also affecting everyday operations, with nearly half of businesses saying currency swings are creating problems when paying overseas suppliers and receiving international payments.
As global markets remain unpredictable, finance chiefs are being urged to act before further volatility wipes out more hard-earned profits.
Eliot Bassett, Managing Director at Lumon Corporate, said: “There is an incredible underlying positivity across the UK’s F&D sector right now, with 99% of leaders actively chasing sales growth and nearly one in five planning to launch new products this year.
“However, Chief Financial Officers and Finance Directors within the industry are universally acknowledging that currency volatility is wreaking havoc on cashflow forecasting, input costs, and margins, yet are failing to take action to protect the revenue driving that growth.”
The urgency for strategic FX management is heightened by a massive geographical pivot away from traditional trading partners. F&D companies are now three times more likely to see major export opportunities in China (29%) than in the U.S. (11%). This sharp drop in enthusiasm for the U.S. market follows recent tariff impositions, high compliance costs, and unpredictable market access linked to geopolitical uncertainty.
Bassett concludes: “Relying on standard retail bank execution or a passive approach is no longer sustainable in an era where geopolitical upheavals are the ongoing norm rather than the exception. Financial leaders need to shift away from simple trade execution and move toward sophisticated, tailored hedging strategies to secure margin stability.”
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