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$9.5 Billion in Total Quarterly FX Headwinds for North American and European Multinational Corporations

Published 

San Diego – Kyriba’s Currency Impact Report (CIR), a comprehensive quarterly report detailing the impacts of foreign exchange (FX) exposures among 1,200 multinational companies based in North America and Europe, revealed a negative impact from currency volatility of $9.54 billion. North American companies experienced greater headwinds than their European counterparts in the first quarter of 2021, reporting $5.87 billion in FX-related negative impact — a staggering increase of 322% from the last quarter. By comparison, European corporations reported $3.67 billion in negative impact.

“Despite warnings that currency volatility would be on the rise, many companies were unprepared to manage FX exposures, according to the data. As businesses experience a post-pandemic surge in activity, CFOs were unable to keep up with currency movements, unnecessarily risking corporate liquidity,” said Wolfgang Koester, Chief Evangelist for Kyriba. “With nearly $10 billion in preventable losses, CEOs need their finance chiefs to understand the currency exposures within their balance sheet and take action to retain profits and maximise liquidity to sustain growth.”

Highlights from the July 2021 Kyriba Currency Impact Report include:

  • The average earnings per share (EPS) impact from currency volatility reported by North American companies in Q1 2021 held steady at $0.03 — three times greater than the recommended standard of $0.01 EPS impact.
  • Publicly traded North American companies that qualified to be monitored in the Q1 2021 report had a collective currency loss of $5.87 billion.
  • Publicly traded European companies that qualified to be monitored in the Q1 2021 report had a collective currency loss of $3.67 billion.
  • North American companies indicated the Chinese renminbi (CNY) as the most impactful currency, with 33% of companies referencing it as most impactful, snapping the Euro’s (EUR) hold as the most impactful currency over the last two quarters.
  • The U.S. dollar (USD) remained the currency most mentioned as impactful by European companies on earnings calls for the third quarter in a row, followed by the euro, with the Chinese renminbi ranking third.
  • The top five industries that experienced the greatest impact from currencies in North America (in order) were machinery, trading, distribution, professional services, healthcare equipment, biotech and pharmaceuticals and chemicals.
  • The top five industries that reported the greatest impact for Europe (in order) were electronic equipment, instruments and components, construction and engineering, airlines, biotech and pharmaceuticals, and chemicals.

The Kyriba Currency Impact Report is a comprehensive report detailing the impact of foreign exchange exposures among publicly traded companies. All companies analyzed in the report’s findings conduct business in more than one currency, with at least 15% of their revenue coming from nations that are located outside of their headquarters.

To learn more about specific industries affected and which currencies were most impactful to multinationals, download the full July 2021 Kyriba Currency Impact Report.

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