EBITDA/EBIT profitability adjustment for forex exposure

I am trying to compare the financials of company XYZ in a developing nation (e.g. Algeria) against companies to which I have financials but are in developed markets (e.g. Europe and/or US). XYZ has exposure to a foreign currency as part of its opex and capex because it needs to buy and operate equipment which are sold and denominated in USD/EUR whereas the comparables do not have a foreign currency exposure. To compare EBITDA and EBIT margins, I believe that Hedging here needs to be considered even though XYZ doesn't use/pay for any hedging and is exposed to that risk.

I want to find an adjustment to profitability EBITDA and EBIT margins to get a better estimate of XYZ's operational performance (a minimum estimated adjustment would do).

However, no instruments I am aware of provide and estimate of hedging costs for this Algerian currency exist against the EUR or USD at a fixed exchange rate.

If I am looking for hedging costs to fix a currency to the exchange rate at which I made say the capex investment:

1) what instruments are there that indicate the hedging for the Dinar to USD - if none exist is there anything that provides a minimum cost for hedging at a fixed exchange rate (say for a year)?

2) If I use the black-scholes formula using

  •      spot price = strike price
  •      1 year horizon
  •      volatility of the Dinar vs the USD
  •      Zero for risk free
  •      Zero for Dividend yield

     would this give me an estimated minimum of hedging costs accounting for only the volatility?

Hope someone can help out.


Thanks

 

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