What currencies does Budget primarily hedge its current-year currency exposure to?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
Currency Risk. We use currency exchange contracts to manage our exposure to changes in currency exchange rates associated with certain of our non-U.S.-dollar denominated receivables and forecasted royalties, forecasted earnings of non-U.S. subsidiaries and forecasted non-U.S. dollar denominated acquisitions. We primarily hedge a portion of our current-year currency exposure to the Australian, Canadian and New Zealand dollars, the euro and the British pound sterling. The majority of forward contracts do not qualify for hedge accounting treatment. The fluctuations in the value of these forward contracts do, however, largely offset the impact of changes in the value of the underlying risk they economically hedge. We have designated our euro-denominated notes as a hedge of our investment in euro-denominated foreign operations.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, Budget uses currency exchange contracts to mitigate risks from currency exchange rate fluctuations. These fluctuations are associated with non-U.S. dollar receivables, forecasted royalties, earnings from non-U.S. subsidiaries, and potential non-U.S. dollar acquisitions.
Specifically, Budget primarily hedges a portion of its current-year currency exposure to the Australian, Canadian, and New Zealand dollars, as well as the euro and the British pound sterling. This hedging strategy aims to offset the impact of changes in the value of these currencies on Budget's financial performance.
It is important to note that while Budget uses forward contracts, the majority of these do not qualify for hedge accounting treatment. However, the fluctuations in the value of these forward contracts largely offset the impact of changes in the value of the underlying risk they economically hedge. Budget also designates its euro-denominated notes as a hedge of its investment in euro-denominated foreign operations.