edc at a glance · corporate social responsibility ... credit insurance fin: financing cib:...
TRANSCRIPT
APRIL 2015
EDC AT A GLANCE
› About EDC … mandate, locations, solutions
› 2014 Performance Highlights
› A few definitions
› EDC solutions, applied
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OUTLINE
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› Canada’s Export Credit Agency
› Crown corporation wholly owned by
Government of Canada
› Financially self-sustaining
› Operates on commercial principles
ABOUT EDC
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› To support and develop Canada’s
export trade and international
business efforts
› Financing and insurance
solutions for Canadian exporters
and investors
EDC’S ROLE
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EDC'S OVERARCHING PRINCIPLES
Partnership-Preferred Philosophy
› Leverage our financial capacity to
complement the activities of the private-sector
financial institutions to ensure that customers
can access financial solutions best suited
to their needs
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EDC'S OVERARCHING PRINCIPLES
Corporate Social Responsibility
› CSR is more than just compliance with policy or
regulation; it is the integration of values such as
honesty, respect, fairness and integrity into our daily
business practices
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EDC’S FOREIGN REPRESENTATION
North America $54.5B (55%)
Asia-Pacific $17.9B (18%)
Europe $13.5B (14%)
South / Central America $8.4B (9%)
Africa / Middle East $4.5B (5%)
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CONNECTING WITH CANADIAN BUSINESSES
ACROSS CANADA
› Facilitated $99.0 billion in business carried out by Canadian companies
› Served about 7,400 customers
› Supported business in 198 countries
› Facilitated $29 billion in emerging markets
› Contributed to 4% of GDP, supporting 719,200 jobs
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2014 PERFORMANCE HIGHLIGHTS
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EDC SOLUTIONS
Exporters’ risks to be mitigated or needs to be met:
2014 CAD Billion
Risk of not getting paid CI 67 (68%)
Need financing for themselves or their buyer FIN 22 (22%)
Need to guarantee their performance CIB 7 (7%)
Risk of losing their investment abroad PRI 3 (3%)
99
CI: Credit Insurance
FIN: Financing
CIB: Contract Insurance and Bonding
PRI: Political Risk Insurance
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Source: EDC Data 2013, as of December 2013
BUSINESS FACILITATED BY SECTOR TEAM (IN BILLIONS)
30
25
20
15
10
5
0
10.8
22.7
7.7
24.9
7.8
21.5
$ B
illio
ns
Sector
Infrastructure and Resources Extractive Transportation Information and Light Environment Communication Manufacturing Technology
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EXPORTER MARKETPLACE
5,000–10,000 Pre-exporters
38,400 total exporters, based on export sales
[ + 20,000 (est.) indirect exporters]
1,200 Med/Large Exporters (export sales >$25M)
Established Exporters ($5M < export sales < $25M) 2,600
5,300 Growth Exporters ($1M < export sales < $5M)
17,300 Evolving Exporters (export sales > $100K)
Sources: - Statistics Canada, International Trade Division, 2010 Exporter Register Database
- Industry Canada, Small Business Branch, Survey on financing and growth of SMEs, 2011
($100K < export sales < $1M) 12,000
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DIRECT VS INDIRECT EXPORTS
Aerospace sector supply chain
Foreign operators Airlines, couriers, governments, private corp., etc.
Canadian OEM (e.g. Bombardier Aerospace)
Cdn tier 1 “Integrators” Major components: turbines, avionics,
airframe, landing gear, etc.
Cdn tier 2 supplier Minor components:
e.g. Interiors
Cdn tier 3 suppliers Generic equipment, metal work, toolers,
composites, carpeting, etc.
Aftermarket Service/Parts – Canadian & Int’l suppliers & vendors
Foreign tier 1 Major components: turbines, avionics,
airframe, landing gear, etc.
Foreign tier 2 Minor components:
e.g. Interiors
Foreign OEM (e.g. Airbus, Boeing, Embraer)
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HOW WE FULFILL OUR ROLE
Commercial focus
Credit risks
Performance risks
International Guidelines
WTO
Consensus Arrangement
Berne Union
EDC Policies
Canadian Benefits
Corporate Social Responsibility
› Exporter Inc. is a Canadian company
› Started locally and now sells across Canada
› Domestic market saturated and sales have been flat
› Considering changing business model to include exporting
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STORY … EXPORTER INC.
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› Situation: Contract in Mexico
› Need: worried about non-payment
› Solution: EDC insures single contract
› Benefit: Risk of not getting paid covered
EXPORTER INC. LOOKING TO GROW
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PAYMENT RISK COVERED
Exporter
Contract
Foreign Buyer
EDC
Single Buyer
Policy
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› Situation: exporting business
growing
› Need: additional financing
› Solution: CI to free up security
under operating line
› Benefit: Risks covered and more
short term financing available to
grow business
MEXICO SALES GROWING
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INSURANCE FREES UP OPERATING LINE
EDC
AR
Policy
Exporter
Contract
Foreign Buyer
Canadian Bank
Assigned
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EDC SOLUTIONS
Exporters’ risks to be mitigated or needs to be met:
2014 CAD Billion
Risk of not getting paid CI 67 (68%)
Need financing for themselves or their buyer FIN 22 (22%)
Need to guarantee their performance CIB 7 (7%)
Risk of losing their investment abroad PRI 3 (3%)
99
CI: Credit Insurance
FIN: Financing
CIB: Contract Insurance and Bonding
PRI: Political Risk Insurance
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› Situation: New buyers want financial or
performance guarantees
› Need: Operating line tied up by guarantees
› Solution: EDC backstops performance and
financial risk for bank
› Benefit: Operating line not tied up by guarantee
COMPANY TAKING OFF IN MEXICO
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EDC BACKSTOPS PERFORMANCE
Exporter
Contract
Foreign Buyer
Letter of Credit
Advise
Confirm
Foreign Bank Security
EDC
Guarantee
Security X
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EDC SOLUTIONS
Exporters’ risks to be mitigated or needs to be met:
2014 CAD Billion
Risk of not getting paid CI 67 (68%)
Need financing for themselves or their buyer FIN 22 (22%)
Need to guarantee their performance CIB 7 (7%)
Risk of losing their investment abroad PRI 3 (3%)
99
CI: Credit Insurance
FIN: Financing
CIB: Contract Insurance and Bonding
PRI: Political Risk Insurance
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LARGE ORDER
Situation: Financial capacity constraint
to take on new contract
Need: Additional inventory, staff and
sub-contractors
Solution: EDC backstops bank’s
contract specific, one-off or “bulge”
facility to specifically support Work
in Progress
Benefit: Work in Progress is supported
until delivery & payment
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GUARANTEE IN SUPPORT OF INTERNATIONAL SALES
EDC
Exporter
Contract
Foreign Buyer
Canadian Bank
Guarantee
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BUYER ASKS FOR FINANCING
Situation: The RFP includes
a financing requirement
Need: Term financing for
the buyer
Solution: EDC buyer loan
Benefit: Exporter gets paid by EDC
upon delivery, buyer has additional
source of financing
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DIRECT LOAN TO BUYER
EDC
Loan
Exporter
Contract
Foreign Buyer
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EDC SOLUTIONS
Exporters’ risks to be mitigated or needs to be met:
2014 CAD Billion
Risk of not getting paid CI 67 (68%)
Need financing for themselves or their buyer FIN 22 (22%)
Need to guarantee their performance CIB 7 (7%)
Risk of losing their investment abroad PRI 3 (3%)
99
CI: Credit Insurance
FIN: Financing
CIB: Contract Insurance and Bonding
PRI: Political Risk Insurance
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› Situation: Demand outstripping
domestic capacity
› Need: Require financing to build new plant
› Solution: EDC uses financial network
to arrange loan and insure foreign
affiliate’s receivables
› Benefit: additional financing to
expand business
LOCAL MANUFACTURING FACILITY NEEDED
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EDC and CDIA
Foreign Bank
Guarantee
AR Policy
EDC
Canadian Bank
Guarantee
Foreign Buyer
Contract
Exporter Foreign Subsidiary
Loan
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EDC SOLUTIONS
Exporters’ risks to be mitigated or needs to be met:
2014 CAD Billion
Risk of not getting paid CI 67 (68%)
Need financing for themselves or their buyer FIN 22 (22%)
Need to guarantee their performance CIB 7 (7%)
Risk of losing their investment abroad PRI 3 (3%)
99
CI: Credit Insurance
FIN: Financing
CIB: Contract Insurance and Bonding
PRI: Political Risk Insurance
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› Looking to repeat model in India
› Access EDC’s extensive network:
banks, government, buyers
› Help Exporter Inc. build successful
market entrance strategy (new plant,
intro to buyers, market info)
› Exporter Inc.’s success is EDC’s
success
BUILDING ON SUCCESSFUL MODEL
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EDC’s “PULL” transactions
EDC
Loan
Exporter
Contract
Foreign Buyer
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EDC SOLUTIONS
Exporters’ risks to be mitigated or needs to be met:
2014 CAD Billion
Risk of not getting paid CI 67 (68%)
Need financing for themselves or their buyer FIN 22 (22%)
Need to guarantee their performance CIB 7 (7%)
Risk of losing their investment abroad PRI 3 (3%)
99
CI: Credit Insurance
FIN: Financing
CIB: Contract Insurance and Bonding
PRI: Political Risk Insurance
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QUESTIONS?