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.
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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.
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
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%
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Top Currencies Referenced by North American Companies as Impactful
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.
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.
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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%
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Top Currencies Referenced by European Companies as Impactful
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%
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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.
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Comparison of Q2 2018 Currency Impact to North American
› 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)
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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.