FiREapps Q4 2017 · FiREapps Q4 2017 Each quarter, FiREapps analyzes the earnings calls of 1,200...
Transcript of FiREapps Q4 2017 · FiREapps Q4 2017 Each quarter, FiREapps analyzes the earnings calls of 1,200...
FiREapps Q4 2017
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 Q4 2017 Currency Impact Report | 2 of 17
Overview
FiREapps Q4 2017 CURRENCY IMPACT REPORT™
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Quantified Negative Currency Impact (Billions)
Number of Companies Reporting Negative Currency Impact
European Companies North American Companies
As we saw last quarter, negative currency impacts to European companies have been on the rise. Q4 2017 continues that trend, as the quantified negative currency impact reached $6.79 billion for European multinationals - an increase of $2.52 billion over last quarter and the largest negative impact reported since Q3 2015.
Additionally, the number of European companies reporting negative currency impacts has continued to increase proportionate to the increase in quantified negative impacts, with 75 companies reporting in Q4 2017, as compared to 54 in Q3 2017 and 31 in Q2 2017.
For North American corporations, the amount of quantified negative currency impact continues to stay under the $1.5 billion mark, after reported negative impacts dropped from $6.71 billion in Q2 2017 to $1.01 billion in Q3 2017. However, North American multinationals did see a slight increase in impacts during Q4 2017, with reported negative FX impacts being roughly $30 million higher than what was reported last quarter.
Q4 2017 CONTINUES TREND OF RISING NEGATIVE EUROPEAN IMPACTS
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
0 10 20 30 40
$6.79
$4.27
$0.73
$0.23
$2.53
$3.86
$3.36
$3.15
$2.91
$7.94
$6.47
$6.71
$10.26
$10.47
$6.70
$7.44
$5.28
$7.83
$33.94
$16.88 $20.03
$6.90
$6.81 $10.67
$36.85
0
84
168
252
336
420
Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017
115122
251228
296
263
296
400409
4068
220213245
218225
338357
51
75
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5262
7145
1531
54
CNY EUR JPY BRL GBP
EUR CNY JPY CAD GBP
CNY EUR IDR BRL JPY
CNY KRW IDR EUR MXN
TRY IDR BRL ZAR SAR
CAD IDR RUB TRY ARS
CNY IDR EUR BRL MXN
CNY KRW IDR ZAR MXN
1 2 3 4 5
Top 5 Volatile G20 Currencies
1 2 3 4 5
Q4 2017
Q2 2017
Q1 2017
Q3 2017
Top 5 Volatile Currencies as Weighted by GDP Percentage
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Q4 2017
Q2 2017
Q1 2017
Q3 2017
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Currency Impact on North American Corporate Earnings
FiREapps Q4 2017 CURRENCY IMPACT REPORT™
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$9
$18
$27
$36
Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017
4.19 3.67 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 1.04
Negative Currency Impact to North American Companies (Billions)
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
$0.00 $0.03 $0.06 $0.09 $0.12
$0.03
$0.03
$0.04
$0.03
$0.04
$0.04
$0.05
$0.06
$0.07
$0.12
$0.03
$0.08
$0.06
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
A collective $1.04 billion loss was reported by North American companies that quantified negative FX impacts for Q4 2017 — up roughly $30 million from Q3 2017.1
Earnings per share (EPS) impact reported by North American companies stayed stagnant at $0.03, continuing a trend seen over the previous five quarters where EPS impact has hovered around $0.03-$0.04.
1Impacts are likely to be underestimates as most companies with currency headwinds generally do not report them.
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CAD 7.3%
BRL 7.3%
CNY 9.1%
JPY 12.7%
GBP 27.3%
EUR 36.4%
AUD 4.2%JPY
6.3%
CNY 8.3%
CAD 8.3%
BRL 8.3% EUR
31.3%
GBP 33.3%
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Top Currencies Referenced by North American Companies as Impactful
AUD 2.6%
JPY 2.6%
CAD 5.1%
CNY 12.8%
GBP 17.9%
EUR 59.0%
BRL 4.3%
AUD 8.5%
CAD 14.9%
GBP 23.4%
EUR 48.9%
Q4 2017
In Q4 2017, the euro was referenced as the most impactful currency to North American companies for the second quarter in a row. Generally mentioned as the most impactful or second most impactful currency over the past five quarters, 59 percent of North American companies referenced it as impactful in Q4 2017 — and it once again topped the list as one of the most volatile G20 currencies as weighted by GDP percentage (page 4).
The British pound was the next most referenced currency in North American earnings reports, followed by the Chinese renminbi, and Canadian dollar, with the Australian dollar and Japanese yen tying for the fifth most mentioned currency. The Euro, British pound, Chinese renminbi and Japanese yen were also included in the top five most volatile currencies as weighted by GDP percentage (page 4).
Q1 2017Q2 2017Q3 2017
CAD 5.1%
JPY 2.6%
AUD 2.6%
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Average Negative Impact to North American Companies (Millions)
$0
$50
$100
$150
$200
$250
Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
$69
$39$52$51$57$62$63
$98
$218
$169$177$164
$146
$37
4068
220213
245218225
338357353
170
279
215
0
75
150
225
300
375
Q4 2014 Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017
2542
9287105
109115
166201239
74
102
87
1526
128126140
109110
172156
11496
177
128
Number of North American Companies Reporting Negative Currency Impacts
Number of Companies Quantifying Size of Impact
Number of Companies Not Quantifying, but Reporting Impact
62.5% Did Not Quantify
40N.A. Negative
Impacts
37.5% Did Quantify
Percentage of North American Companies Quantifying Impacts
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Biotechnology & Drugs
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Most Impacted North American Industries
21 43 5
Q3 2017
Q2 2017
Q4 2017
Electronic Instruments & Controls
Biotechnology & Drugs
Auto & Truck Parts
Business Services
Medical Equipment & Supplies
Medical Equipment & Supplies
Business Services
Misc. Capital Goods
Scientific & Technical Instruments
Q1 2017
Business Services
Electronic Instruments & Controls
Misc. Capital Goods
Medical Equipment & Supplies
Scientific & Technical Instruments
Auto & Truck Parts
Biotechnology & Drugs
Medical Equipment & Supplies
Business Services
Electronic Instruments & Controls
0%
25%
50%
75%
100%
2012 Q2 2013 Q1 2013 Q4 2014 Q3 2015 Q2 2016 Q2 2017 Q1 2017 Q4
23%
14%
25%
16%18%22%
31%
43%49%50%
64%63%
46%
23%
41%47%
25%26%26%19%
14%
33%
The number of North American companies reporting FX impacts that fielded analyst questions has increased since Q3 2017, with 23 percent of companies receiving FX-related questions when reporting quarterly earnings.
Percentage of North American Companies Reporting Impacts That Fielded Analyst Questions
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Currency Impact on European Corporate Earnings
FiREapps Q4 2017 CURRENCY IMPACT REPORT™
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$0
$1
$2
$3
$4
$5
$6
$7
Q1 2015 Q4 2015 Q3 2016 Q2 2017 Q4 2017
2.742.54
4.73
2.913.14
3.36
3.86
2.53
0.23
0.73
4.27
6.79
Negative Currency Impact to European Companies (Billions)
In the fourth quarter of 2017, 75 of the 350 Europe-based multinationals analyzed by FiREapps reported negative currency impacts to their earnings (headwinds).
Of the corporations reporting headwinds 35 quantified their impacts, accounting for a collective loss of €8.31 billion ($6.79 billion) due to FX.2
2 Impacts are likely to be underestimates as most companies with currency headwinds generally do not report them.
Currency Impact on European Corporate Earnings
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BRL 5.0%
MXN 10.0%
EUR 15.0%
CNY 20.0%
GBP 50.0%
RUB 6.3%
BRL 6.3%
JPY 12.5%
CNY 18.8%
GBP 25.0%
EUR 31.3%
CNY 3.7%JPY
5.6%
GBP 11.1%
EUR 33.3%
USD 46.3%
FiREapps Q4 2017 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 2017
For the first time in 2017, the U.S. dollar was most mentioned as being impactful to European corporations.
The euro was the second most referenced currency as being impactful to European companies, followed by the British pound, Japanese yen, and Chinese renminbi. With the exception of the U.S. dollar, the currencies most mentioned as impactful to European companies in Q4 2017 were also four of the most volatile currencies as weighted by GDP percentage (page 4).
Q1 2017Q2 2017Q3 2017
JPY 5.6%
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20
40
60
80
100
Q3 2015 Q2 2016 Q1 2017 Q4 2017
40
28
2710
4326
5442
4336
3526
458191720
910
75
54
31
15
5145
7162
5246
53% Did Not Quantify
75EU Negative
Impacts
47% Did Quantify
$0
$50
$100
$150
$200
$250
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
$194.10
$164.10$182.20
$45.60
$316.00
$203.00$198.00
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 2017
Q4 2017
Electronic Instruments & Controls
Clothing & Apparel
Retail & Apparel Airlines
Q1 2017
Medical Equipment & Supplies Beverages
Chemical Manufacturing
Electronic Instruments & Controls
0%
19%
38%
56%
75%
Q3 2015 Q2 2016 Q1 2017 Q4 2017
38%
30%
40%
14%
23%25%
33%
53%
67%
56%
In Q4 2017 earnings calls, 38 percent of European companies that quantified impacts fielded analyst questions, as compared to 30 percent in Q3 2017.
Auto & Truck Parts
Electronic Instruments & Controls
Misc. Capital Goods
Auto & Truck Parts
Misc. Capital Goods
Auto & Truck Parts
Biotechnology & Drugs
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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Comparison of Q4 2017 Currency Impact to North American
& European Companies
FiREapps Q4 2017 CURRENCY IMPACT REPORT™
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75 European
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Average Quantified Negative Currency Impact in Q4 2017 (Millions)
North America Europe
Mill
ions
(USD
)
0
48
96
144
192
240$194
$69
$7.83 Billion Total Negative Q4 Impact
Size of Quantified Negative Currency Impact in Q4 2017 (Billions)
115Q4 North American &
European Negative Impacts
40 North American
Number of Companies Reporting Negative Currency Impacts in Q4 2017
0%
20%
40%
60%
80%
100%
37.8%23.4%
North America Europe
Summary: FiREapps Q4 2017 Currency Impact Report™› The total quantified negative impact in Q4 2017 was nearly 49 percent higher than Q3 2017, totaling $7.83 billion, with $6.79 billion of that impact having been reported by European companies.
› 115 North American and European companies reported global headwinds in Q4 2017. Of those companies, 50 quantified FX impacts.
› The euro was most mentioned as being impactful by North American companies, while the U.S. dollar was most mentioned by European companies as being impactful.
› North America saw a decrease in the number of companies reporting negative currency impacts as quantified negative impacts remain low. Meanwhile European companies continued to see an increase in companies reporting negative impacts as the amount of sustained negative FX impacts has increased.
Percentage of Companies Reporting Impacts That Fielded Analyst Questions in Q4 2017
Billi
ons
(USD
)
0
1
2
3
4
5
6
7 $6.79
$1.04
North America Europe
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FiREapps Q4 2017 Currency Impact Report | 17 of 17
FiREapps is the leading provider of corporate currency analytics and FX exposure management technologies. Established in 2006, FiREapps developed the first solution to automate foreign exchange exposure management for multinational companies. Through a combination of software solutions and expert analysis, FiREapps helps companies ensure they’re accurately measuring and managing their FX exposures. Numerous Fortune 500 companies rely on FiREapps technology to help them reduce FX risk and increase efficiency every day.
FiREapps is headquartered in Scottsdale, Arizona, with offices in Portland, London and Frankfurt.
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