San Diego – Currency volatility was responsible for significant impacts on the revenues of U.S.-listed multinational corporations, costing them more than $11.5 billion in Q3 2019, according to the new Kyriba Currency Impact Report (CIR), a comprehensive report which details the impact of foreign exchange (FX) among 1,200 companies in North America and Europe. This is the fifth consecutive quarter of $10+ billion in losses for North American companies – the longest such stretch in at least a decade.
“Waiting for currency volatility to calm down has been a $98 billion mistake for CFOs of multinational corporations. CFOs who dismissed this problem as a temporary wave of market drama have unnecessarily cost their shareholders and need to reconsider their strategy,” said Wolfgang Koester, Chief Evangelist for Kyriba. “Unless they utilise the tools now available to gauge and manage currency exposures accurately and in real-time, those that remain exposed to currency movements are at the mercy of currency markets to determine their financial success. CFOs and corporate treasurers should not be playing roulette with corporate cash and equity.”
The average earnings per share (EPS) impact reported by North American companies in Q3 2019 was $0.03 – three times greater than the industry standard MBO of less than $0.01 EPS impact. For the eleventh consecutive quarter, North American companies indicated the Euro as the most impactful currency, with 46 percent of companies mentioning it during their Q3 earnings calls, according to the report. Medical equipment and supplies and the business services industries experienced the greatest impact from currencies, as those industries continue to be affected by Brexit and other volatile geopolitical events around the globe.
To learn about specific industries affected and which currencies were most impactful to multinationals, download the full Q3 2019 Kyriba Currency Impact Report here.
In Europe, Currency Impacts Are Less of a Problem
Publicly traded European companies which qualified to be monitored in the Q3 2019 report indicated a collective currency loss of $750 million, snapping a streak of eight consecutive quarters of $1 billion impacts. For the first time in three quarters, the euro was not the currency most mentioned as impactful by European companies during Q3 2019 earnings calls. This distinction belonged to the U.S. dollar, which topped the Euro, followed by the British Sterling, and Brazilian Real.
The CIR is the most comprehensive report of its kind, detailing the impact of foreign exchange exposures among publicly traded companies. In addition, all companies in the report do business in more than one currency, with at least 15 percent of their revenue coming from other nations.
Kyriba will be showcasing its FX risk management solution at Kyriba Live in Las Vegas, February 24-25. The solution is part of a larger cloud network designed to help CFOs and their teams better activate and protect their global cash and liquidity to achieve better financial outcomes.