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Red Stag Timber Case Study
Red Stag Timber
Red Stag Timber (Red Stag), headquartered in Rotorua, is the largest sawmill in the Southern Hemisphere.
Founded in 2003, this privately-owned company specialises in Radiata Pine lumber products. It operates the Waipa Mill, which is celebrated for its sustainable timber production from renewable plantation forests. With 330 staff, the company's success lies in its commitment to quality, sustainability, and industry leadership.
They annually produce and distribute over 600,000m³ of lumber across the globe, with a turnover exceeding NZ $300 million, $80 million NZD of that being foreign currency.
Red Stag is one of CNS's longest-standing partners, with a decade-long relationship. They initially engaged with Tuatara as an FX trader before the company sold the trading platform to XE, evolving into the treasury management platform known as CNS Treasury.
"I don't see why every middle-sized business that trades in currency of any sort of volume isn't using CNS" - Paul Laing, Commercial Manager
Red Stag’s treasury policy included FEC (forward Exchange Contracts) and derivative instruments across multiple counterparties. Reporting was spreadsheet-based which was “OK” for FEC reporting but woefully inadequate for derivatives reporting, which made it difficult to impossible to understand its real-time cover and exposure. Initially, Red Stag was looking for a platform that could correctly and accurately record/report its foreign currency transactions and cover to enable better decision-making and more accurate Board reporting.
They also were struggling with 3 additional issues:
To improve the efficiency of its monthly board reporting because it was time-consuming and prone to human error.
To streamline their deal management, the need to create a centralised repository for all trades with all counterparties.
To increase visibility of current and historic trades to understand where to place future cover.
Red Stag Timber utilises CNS’ Foreign Exchange module with key features including:
Bank integration for FX deals
Central repository for all hedges and exposures
Graphical and tabular reporting
FEC calculator tool
Monthly marked-to-market calculations
Market Analytics tool
The implementation of CNS proved to be a turning point for Red Stag Timber. The ability to make smarter decisions around future cover was a result of increased visibility over historical trades and the ability to gain insights into the market using the analytics tool.
Paul Laing, Commercial Manager, comments they have made much better decisions, seen significant time savings and an increase in the accuracy of board reporting since the move to CNS Treasury. The CNS system was built in conjunction with the four major audit firms, leading to a smooth audit process for Red Stag (accounting standards for ‘mark to market’ reporting of financial instruments is a bit of a dark art/ science to most). The platform's ability to handle complex derivatives, the seamless automation of data from banks, and the customer support provided by the team, plays a pivotal role in their treasury operations success
"We used to spend 80% of our time doing data entry and 20% on our hedging strategy, with CNS that has been flipped, and we now spend 80% of our time on our strategy.” - Paul Laing, Commercial Manager