FiREapps Q2 2018
Each quarter, FiREapps analyzes the earnings calls of 1,200 publicly traded North American and European
companies as part of a continued effort to provide insight into how currency impacts organizations. The
companies included in this data set are large multinational firms doing business in more than one currency
with at least 15 percent of their revenue coming from overseas.
A Survey of North American & European Corporate Earnings
CURRENCY IMPACT REPORT™
The data included in this report refers only to companies that reported FX impacts in earnings calls.
FiREapps Q2 2018 Currency Impact Report | 2 of 17
Overview
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FiREapps Q2 2018 CURRENCY IMPACT REPORT™
Quantified Negative Currency Impact (Billions)
Number of Companies Reporting Negative Currency Impact
European Companies North American Companies
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
0 10 20 30 40
$14.42
$22.89
$6.79
$4.27
$0.73
$0.23
$2.53
$3.86
$3.36
$7.94
$6.47
$6.71
$10.26
$10.47
$6.70
$7.44
$5.28
$7.83
$22.93
$15.44
$6.90
$6.81 $10.67
0
84
168
252
336
420
Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 2018
123
85115122
251228
296
263
296
45184068
220213245
218225
51
75
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67
62
7145
1531
5478
Following a quarter of the highest reported negative currency impacts seen in years, European companies continue to experience large losses due to FX in Q2 2018. Of the European companies that quantified their negative impacts, there was a reported $14.42 billion in losses - nearly 20 times more than the reported negative currency impact in Q2 2017 - and there was an additional increase in the number of European companies reporting overall.
Q1 2018 also showed some of the lowest quantified negative currency impacts for North America, but Q2 2018 brought renewed impacts and an increase in the number of North American companies reporting, the highest seen since Q2 2017.
Europe Continues to Report Large Headwinds
CNY EUR JPY GBP INR
CNY EUR JPY GBP KRW
CNY EUR JPY BRL GBP
EUR CNY JPY CAD GBP
ARS IDR KRW TRY SAR
KRW IDR ARS CNY BRL
TRY IDR BRL ZAR SAR
CAD IDR RUB TRY ARS
1 2 3 4 5
Top 5 Volatile G20 Currencies1 2 3 4 5
Q4 2017
Q2 2018
Q1 2018
Q3 2017
Top 5 Volatile Currencies as Weighted by GDP Percentage
FiREapps Q2 2018 Currency Impact Report | 4 of 17
Q4 2017
Q2 2018
Q1 2018
Q3 2017
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FiREapps Q2 2018 Currency Impact Report | 5 of 17
Currency Impact on North American Corporate Earnings
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FiREapps Q2 2018 CURRENCY IMPACT REPORT™
FiREapps Q2 2018 Currency Impact Report | 6 of 17
$9
$18
$27
$36
Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 2018
4.10 4.185.83
3.261.21
4.00
18.66
28.94
16.9519.29
33.94
16.88
6.90 6.817.94
6.47 6.71
1.01 1.040.04
1.02
Negative Currency Impact to North American Companies (Billions)
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
$0.00 $0.03 $0.06 $0.09 $0.12
$0.04
$0.03
$0.03
$0.03
$0.04
$0.03
$0.04
$0.04
$0.05
$0.06
$0.07
$0.12
$0.03
Average EPS Impact Reported by North American Companies
Industry Standard MBO of Less than $0.01 EPS Impact
Currency Impact on North American Corporate Earnings
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North American companies reported a $1.02 billion loss in Q2 2018, a 2,657 percent increase from the previous quarter.1
Additionally, in breaking a three-quarter streak, North American companies reported a $0.04 EPS impact during Q2 2018 - four times that of the industry standard MBO of less than $0.01 EPS impacts.
1Impacts are likely to be underestimates as most companies with currency headwinds generally do not report them.
AUD 2.6%
JPY 2.6%
CAD 5.1%
CNY 12.8%
GBP 17.9%
EUR 59.0%
MXN 6.5%
CAD 8.7%
GBP 13.0%
CNY 17.4%
EUR 54.3%
FiREapps Q2 2018 Currency Impact Report | 7 of 17
Top Currencies Referenced by North American Companies as Impactful
BRL 4.3%
AUD 8.5%
CAD 14.9%
GBP 23.4%
EUR 48.9%
Q4 2017Q1 2018 Q3 2017
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TRY4%
CAD 5.9%
BRL 9.8%
GBP 9.8%
ARS 13.7% CNY
13.7%
EUR 43.1%
Q2 2018
For the sixth consecutive quarter, the euro (EUR) was mentioned as the most impactful currency by North American companies, with 43.1 percent of companies mentioning it during Q2 2018 earnings calls.
The Chinese renminbi (CNY) and Argentine peso (ARS) tied for the next most referenced currency in North American earnings calls, followed by a tie for third of the British pound (GBP) and Brazilian real. (BRL) The Canadian dollar (CAD) and Turkish lira (TNY) were the fourth and fifth most mentioned currencies.
EUR 43.1%
MXN 6.6%
CAD 5.1%
AUD 2.6%
45
1840
68
220213
245218225
338357353
170
0
75
150
225
300
375
Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 2018
161325
42
9287105
109115
166201239
74
2951526
128126140
109110
172156
11496
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Average Negative Impact to North American Companies (Millions)
$0
$50
$100
$150
$200
$250
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
$35
$8
$69
$39$52$51$57$62$63
$98
$218
$169$177$164
Number of North American Companies Reporting Negative Currency Impacts
Number of Companies Quantifying Size of Impact
Number of Companies Not Quantifying, but Reporting Impact
35.6% Did Not Quantify
45N.A. Negative
Impacts
64.4% Did Quantify
Percentage of North American Companies Quantifying Impacts
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1316
Biotechnology & Drugs
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Most Impacted North American Industries
21 43 5
Q3 2017
Q2 2018
Q4 2017
Electronic Instruments & Controls
Biotechnology & Drugs
Auto & Truck Parts
Business Services
Medical Equipment & Supplies
Electronic Instruments & Controls
Scientific & Technical Instruments
SemiconductorsChemical Manufacturing
Q1 2018
Business Services
Personal & Household Products
Scientific & Technical Instruments
Auto & Truck Parts
Oil Well Services & Equipment
Medical Equipment & Supplies
Business Services
Electronic Instruments & Controls
0%
25%
50%
75%
100%
2012 Q4 2013 Q3 2014 Q2 2015 Q1 2016 Q1 2016 Q4 2017 Q3 2018 Q2
21%22%23%
14%
25%
16%18%22%
31%
43%49%50%
64%63%
46%
23%
41%47%
25%26%26%19%
Percentage of North American Companies Reporting Impacts That Fielded Analyst Questions
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Auto & Truck Parts
Chemical Manufacturing
The number of North American companies reporting FX impacts that fielded analyst questions decreased slightly from Q1 2018, with 21 percent of companies receiving FX-related questions when reporting quarterly earnings.
FiREapps Q2 2018 Currency Impact Report | 10 of 17
Currency Impact on European Corporate Earnings
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FiREapps Q2 2018 CURRENCY IMPACT REPORT™
FiREapps Q2 2018 Currency Impact Report | 11 of 17
$0
$4
$8
$12
$16
$20
$24
Q2 2015 Q1 2016 Q4 2016 Q3 2017 Q2 2018
2.54
4.73
2.91 3.14 3.36 3.862.53
0.23 0.73
4.27
6.79
22.89
14.42
Negative Currency Impact to European Companies (Billions)
Currency Impact on European Corporate Earnings
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Although down from Q1 2018, European companies continue to see negative currency impacts higher than what they had sustained in previous years, with companies reporting a collective $14.42 billion in losses due to FX.2
Of the 350 Europe-based multinationals analyzed, 78 reported headwinds in Q2 2018. Of those, 41 quantified their negative impacts (page 13).
2 Impacts are likely to be underestimates as most companies with currency headwinds generally do not report them.
CNY 3.7%
JPY 5.6%
GBP 11.1%
EUR 33.3%
USD 46.3%
BRL 9.7%
GBP 11.3%
CNY 16.1%
USD 22.6%
EUR 40.3%
FiREapps Q2 2018 Currency Impact Report | 12 of 17
Top Currencies Referenced by European Companies as Impactful
JPY 6.4%BRL
6.4%
CNY 10.6%
GBP 12.8%
USD 19.1%
EUR 44.7%
Q4 2017Q1 2018 Q3 2017
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TRY 5%
GBP 5.7%
RUB 8.0%
CNY 8.0%
BRL 11.5% USD
31.0%
EUR31.0%
Q2 2018
The euro (EUR) and US dollars (USD) were most mentioned as impactful by European companies, followed by the Brazilian real (BRL), a tie between the Chinese renminbi (CNY) and the Russian Ruble (RUB), with the British pound (GBP) and Turkish lira (TRY) being the fourth and fifth most mentioned.
CNY 3.7%
FiREapps Q2 2018 Currency Impact Report | 13 of 17
20
40
60
80
100
Q1 2016 Q4 2016 Q3 2017 Q2 2018
371340
28
2710
4326
5442
4154
3526
458191720
78
6775
54
31
15
5145
7162
47.4% Did Not Quantify
78EU Negative
Impacts
52.6% Did Quantify
$0
$100
$200
$300
$400
$500
Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
$351.78
$423.89
$194.10$164.10$182.20
$45.60
$316.00
$203.00
Average Negative Impact to European Companies (Millions)
Number of European Companies Reporting Negative Currency Impact
Percentage of European Companies Quantifying Impacts
Number of Companies Quantifying Size of Impact
Number of Companies Not Quantifying, but Reporting Impact
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Most Impacted European Industries
21 43 5
Q3 2017
Q2 2018
Q4 2017
Electronic Instruments & Controls
Clothing & Apparel
Q1 2018
Chemical Manufacturing
Electronic Instruments & Controls
0%
19%
38%
56%
75%
Q1 2016 Q4 2016 Q3 2017 Q2 2018
22%
42%38%
30%
40%
14%
23%25%
33%
53%
Auto & Truck Parts
Construction & Agriculture Machinery
Misc. Capital Goods
Biotechnology & Drugs
Percentage of European Companies Reporting Impacts That Fielded Analyst Questions
Chemical Manufacturing
Biotechnology & Drugs
Electronic Instruments & Controls
Misc. Capital Goods
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Chemical Manufacturing
Misc. Capital Goods
Auto & Truck Parts
Biotechnology & Drugs
Chemical Manufacturing
Electronic Instruments & Controls
Auto & Truck Parts
Biotechnology & Drugs
In Q2 2018 earnings calls, 22 percent of European companies that quantified impacts fielded analyst questions, as compared to 42 percent in Q1 2018. This is the lowest percentage of reporting companies fielding analysts questions since Q1 2017.
FiREapps Q2 2018 Currency Impact Report | 15 of 17
Comparison of Q2 2018 Currency Impact to North American
& European Companies
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FiREapps Q2 2018 CURRENCY IMPACT REPORT™
78 European
FiREapps Q2 2018 Currency Impact Report | 16 of 17
Average Quantified Negative Currency Impact in Q2 2018 (Millions)
North America Europe
Mill
ions
(USD
)
0
100
200
300
400
500
$352
$35
$15.44 Billion Total Negative Q2 Impact
123Q2 North American &
European Negative Impacts
45 North American
Number of Companies Reporting Negative Currency Impacts in Q2 2018
0%
20%
40%
60%
80%
100%
22%21%
North America Europe
Summary: FiREapps Q2 2018 Currency Impact Report™
Percentage of Companies Reporting Impacts That Fielded Analyst Questions in Q2 2018
Billi
ons
(USD
)
0
4
8
12
16
20
24
$14.42
$1.02
North America Europe
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› The total quantified negative impact in Q2 2018 was 33 percent lower than Q1 2018, totaling $15.44 billion, with $14.42 billion of that impact having been reported by European companies.
› 123 North American and European companies reported currency headwinds in Q2 2018. Of those companies, 70 quantified FX impacts.
› There was a 150 percent increase in the number of North American companies reporting negative currency impacts in Q2 2018.
› As negative impacts to European companies remain higher than previous years, the number of companies reporting impacts increased, but he number of companies quantifying negative impacts has decreased.
Size of Quantified Negative Currency Impact in Q2 2018 (Billions)
FiREapps Q2 2018 Currency Impact Report | 17 of 17
FiREapps is the leading provider of cloud-based enterprise currency management (ECM) solutions for currency exposure management and enterprise currency analytics. Established in 2005, FiREapps developed the first solution to automate foreign exchange exposure management for multinational companies. Today, the company provides automated solutions to support the analysis and management of currency exposure, as well as the assessment and reporting of how currencies can impact corporate financial performance. FiREapps is headquartered in Scottsdale, Arizona, with offices in Portland, London and Frankfurt.
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