FiREapps Q3 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.
Transcript
FiREapps Q3 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.
Number of Companies Reporting Negative Currency Impact
European Companies North American Companies
Following four quarters of relatively low impacts, North American companies sustained headwinds nearly 12 times greater than that of the previous quarter. This leap to $11.81 billion in quantified negative currency impacts is the most significant collective negative impact reported in 10 quarters. Additionally, the number of North American companies reporting negative currency impacts was nearly six times greater than the number of companies that reported in Q2 2018.
After two quarters of significant impacts, European companies sustained $3.8 billion in negative currency impacts in Q3 2018, down more than $10 billion from the previous quarter. Q3 2018 earnings also showed a nearly 40 percent decrease in the number of European companies that reported negative impacts.
North American Corporates Hit By Significant Headwinds in Q3 2018
Negative Currency Impact to North American Companies (Billions)
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
$0.00 $0.03 $0.06 $0.09 $0.12
$0.04
$0.04
$0.03
$0.03
$0.03
$0.04
$0.03
$0.04
$0.04
$0.05
$0.06
$0.07
$0.12
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
North American companies reported an $11.81 billion loss in Q3 2018, a 1,057 percent increase from the previous quarter.1
Earnings per share (EPS) impact reported by North American companies stayed at $0.04 - four times that of the industry standard MBO of less than $0.01 EPS impact.
1Impacts are likely to be underestimates as most companies with currency headwinds generally do not report them.
Top Currencies Referenced by North American Companies as Impactful
MXN8%
TRY8.3%
ARS10.4%
BRL20.8%
CNY22.9%
EUR29.2%
For the seventh consecutive quarter, the euro (EUR) was mentioned as the most impactful currency by North American companies, with nearly 30 percent of companies citing it as impactful during Q3 2018 earnings calls.
The Chinese renminbi (CNY) and Brazilian real (BRL) were noted as the second and third most referenced currencies in North American earnings reports, followed by the Argentine peso (ARS). The Turkish lira (TRY) and Mexican peso (MXN) tied for the fifth currency most mentioned as impactful.
The number of North American companies reporting FX impacts that fielded analyst questions decreased slightly from Q2 2018, with 19.79 percent of companies receiving FX-related questions when reporting quarterly earnings.
Percentage of North American Companies Reporting Impacts That Fielded Analyst Questions
Negative Currency Impact to European Companies (Billions)
A substantial decrease from the previous quarter, European companies reported $3.8 billion in negative currency impacts in Q3 2018, falling close to the average amount of quantified impacts seen between Q3 2015 and Q4 2017.2
Of the 359 Europe-based multinationals analyzed, 47 reported headwinds in Q3 2018. Of those, 28 quantified their negative impacts (page 13).
2 Impacts are likely to be underestimates as most companies with currency headwinds generally do not report them.
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Top Currencies Referenced by European Companies as Impactful
RUB8.6%
TRY8.6%
ARS11.4%
EUR14.3%
USD25.7%
BRL31.4%
In a turn from the norm, the Brazilian real (BRL) was most referenced as impactful by European companies, followed by the United States dollar (USD), euro (EUR) and Argentine peso (ARS). The Turkish lira (TRY) and Russian ruble (RUB) tied for the fifth most mentioned currency.
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Average Quantified Negative Currency Impact in Q3 2018 (Millions)
North America Europe
Mill
ions
(USD
)
0
40
80
120
160
200
$136
$52
$15.61 Billion Total Negative Q3 Impact
Size of Quantified Negative Currency Impact in Q3 2018 (Billions)
312Q3 North American &
European Negative Impacts
265 North American
Number of Companies Reporting Negative Currency Impacts in Q3 2018
0%
20%
40%
60%
80%
100%
39%20%
North America Europe
Summary: FiREapps Q3 2018 Currency Impact Report™
› The collective quantified negative impact reported by North American and European companies in Q3 2018 was one percent higher than what was reported in the previous quarter, totaling $15.61 billion with North American companies accounting for 75 percent of the total impact.
› 312 North American and European companies reported currency headwinds in Q3 2018. Of those companies, 255 quantified FX impacts.
› As negative impacts to North American companies increased, so too did the number of companies reporting impacts. Conversely, as the amount of negative impacts reported by European companies decreased, the number of companies reporting decreased as well.
Percentage of Companies Reporting Impacts That Fielded Analyst Questions in Q3 2018
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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.
