Kyriba’s Currency Impact Report Reveals $27.87 Billion in Total FX Volatility for North American and European Multinational Corporations

Published 

Kyriba’s Currency Impact Report (CIR), a comprehensive quarterly report that details the impacts of foreign exchange (FX) exposures among 1,200 multinational companies based in North America and Europe, reveals $27.85 billion in total impacts to earnings from currency volatility. The combined pool of corporations reported $23.62 billion in tailwinds and $4.25 billion in headwinds in the second quarter of 2021. North American companies experienced greater headwinds than their European counterparts, reporting $2.32 billion in FX-related negative impacts — a decrease of 153% from the previous quarter. By comparison, European corporations reported $1.93 billion in negative impacts – a decrease of 45% from the previous quarter.

“Despite the overwhelming tailwinds North American multinationals experienced this quarter, positive impacts are not a positive development. Headwinds and tailwinds reveal the vulnerability North American and European multinational corporations’ revenues and earnings per share have to currency movements,” said Wolfgang Koester, Chief Evangelist for Kyriba. “With many reporting 10% or more of earnings affected by currency gains or losses, protecting the balance sheet and income statement are critical components of a CFO’s enterprise liquidity strategy.”

“Supply chain disruption and inflation will test CFOs and treasurers’ liquidity strategies and application of best practices to protect EPS, drive growth and reduce supply chain risk in the coming months. Cash forecasting precision and the ability to deliver multiple cash flow scenarios will be expected of CFOs as they demonstrate to the Board how to best optimise enterprise liquidity. The capacity for buyers to inject liquidity into the supply chain and help suppliers access cash to remain solvent is becoming mandatory. This needed capacity will be especially challenging as higher borrowing costs typically stimulates fewer opportunities to return cash to stakeholders,” said Koester.

Highlights from the October 2021 Kyriba Currency Impact Report include:

  • The average earnings per share (EPS) impact from currency volatility reported by North American companies in Q2 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 Q2 2021 CIR reported a combined $22.93 billion in positive currency impacts, and $2.23 billion in negative currency impacts.
  • Publicly traded European companies that qualified to be monitored in the Q2 2021 CIR reported a combined $686 million in positive currency impacts, and $1.93 billion in negative currency impacts.
  • North American companies indicated the euro (EUR) as the most impactful currency, with 33% of companies referencing it as impacting revenues; the Canadian dollar was second place with 26% of North American companies identifying it as impactful.
  • The U.S. dollar (USD) remained the currency most mentioned as impactful by European companies on earnings calls for the fourth quarter in a row, followed by the euro and the Brazilian real ranking third.
  • The top five industries that experienced the greatest impact from currencies in North America were (in ranked order): professional services, machinery, trading & distribution, healthcare equipment & supplies, life sciences tools & services, and biotech & pharmaceuticals.
  • The top five industries that experienced the greatest impact in Europe were (in order): biotech & pharmaceuticals, healthcare equipment & supplies, chemicals, construction & engineering, electronic equipment, and instruments & components.

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

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

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