FiREapps Q3 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.
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Overview
FiREapps Q3 2017 CURRENCY IMPACT REPORT™
Quantified Negative Currency Impact (Billions)
Number of Companies Reporting Negative Currency Impact
European Companies North American Companies
Q3 2017 saw the largest amount of collective negative currency impacts to European companies since Q3 2015. Up $3.54 billion from last quarter, European multinationals reported $4.27 billion in losses due to FX. In addition to an increase in FX impacts, European companies also saw an increase in the number of companies reporting negative currency impacts during earnings calls.
In contrast, North American companies saw a decrease in quantified negative impacts, the number of companies reporting impacts and the average earnings per share (EPS) impact (page 6).
Q3 SHOWS LARGEST EUROPEAN FX IMPACTS SINCE 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
0 10 20 30 40
$4.27
$0.73
$0.23
$2.53
$3.86
$3.36
$3.15
$2.91
$4.73
$7.94
$6.47
$6.71
$10.26
$10.47
$6.70
$7.44
$5.28
$19.29 $24.02
$33.94
$16.88 $20.03
$6.90
$6.81 $10.67
$36.85
0
84
168
252
336
420
Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017
122
251228
296
263
296
400409399
68
220213245
218225
338357353
51
46
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5262
7145
1531
54
EUR CNY JPY CAD GBP
CNY EUR IDR BRL JPY
CNY KRW IDR EUR MXN
EUR KRW CNY JPY IDR
CAD IDR RUB TRY ARS
CNY IDR EUR BRL MXN
CNY KRW IDR ZAR MXN
KRW EUR TRY IDR AUD
1 2 3 4 5
Top 5 Volatile G20 Currencies
1 2 3 4 5
Q4 2016
Q2 2017
Q1 2017
Q3 2017
Top 5 Volatile Currencies as Weighted by GDP Percentage
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Q4 2016
Q2 2017
Q1 2017
Q3 2017
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Currency Impact on North American Corporate Earnings
FiREapps Q3 2017 CURRENCY IMPACT REPORT™
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$9
$18
$27
$36
Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017
22.73
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
Negative Currency Impact to North American Companies (Billions)
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
$0.00 $0.03 $0.06 $0.09 $0.12
$0.03
$0.04
$0.03
$0.04
$0.04
$0.05
$0.06
$0.07
$0.12
$0.03
$0.08
$0.06
$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
A collective $1.01 billion loss was reported by North American companies that quantified negative FX impacts for Q3 2017 — down $5.7 billion from Q2 2017.
Earnings per share (EPS) impact reported by North American companies has continued to hover around $0.03-$0.04 mark over the past five quarters, with companies reporting an average EPS impact of $0.03 for Q3 2017.1
1Impacts are likely to be underestimates: most companies with currency headwinds generally do not report them and only 38 percent of the companies that reported negative impacts actually quantified their losses.
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Top Currencies Referenced by North American Companies as Impactful
BRL 4.3%
AUD 8.5%
CAD 14.9%
GBP 23.4%
EUR 48.9%
CAD 7.0%
BRL 7.0%
CNY 11.6%
JPY 16.3%
EUR 27.9%
GBP 30.2%
Q3 2017
Q4 2016
The euro was the most referenced currency in Q3 2017 earnings calls as being impactful to North American companies. The euro has continued to take a top spot, generally mentioned as the most impactful or second most impactful currency over the past three quarters, and this quarter it was also the most volatile G20 currency as weighted by GDP percentage (page 4).
The British pound was the next most referenced currency in earnings reports, followed by the Canadian dollar, Australian dollar and Brazilian real. The Canadian dollar and the British pound were also included in the top five most volatile currencies weighted by GDP percentage (page 4).
CAD 7.3%
BRL 7.3%
CNY 9.1%
JPY 12.7%
GBP 27.3%
EUR 36.4%
Q1 2017
AUD 4.2%JPY
6.3%
CNY 8.3%
CAD 8.3%
BRL 8.3% EUR
31.3%
GBP 33.3%
Q2 2017
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Average Negative Impact to North American Companies (Millions)
$0
$50
$100
$150
$200
$250
Q2 2014 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
$39$52$51$57$62$63
$98
$218
$169$177$164
$146
$37$42
68
220213
245218225
338357353
170
279
215202
0
75
150
225
300
375
Q3 2014 Q1 2015 Q3 2015 Q1 2016 Q3 2016 Q1 2017 Q3 2017
42
9287105
109115
166201239
74
102
8793
26
128126140
109110
172156
11496
177
128109
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% Did Not Quantify
68N.A. Negative
Impacts
38% Did Quantify
Percentage of North American Companies Quantifying Impacts
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Most Impacted North American Industries
21 43 5Q3
2017
Q2 2017
Q4 2016
Medical Equipment & Supplies
Electronic Instruments & Controls
Scientific & Technical Instruments
Business Services
Misc. Capital Goods
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
Biotechnology & Drugs
Medical Equipment & Supplies
Business Services
Electronic Instruments & Controls
0%
25%
50%
75%
100%
2012 Q1 2012 Q4 2013 Q3 2014 Q2 2015 Q1 2016 Q1 2016 Q4 2017 Q3
14%
25%
16%18%22%
31%
43%49%50%
64%63%
46%
23%
41%47%
25%26%26%19%
14%
33%
23%
At 14 percent, the number of North American companies reporting impacts that fielded analyst questions on FX during Q3 2017 earnings calls is the lowest it has been since Q3 2012 and is down 11 percent from the previous quarter.
Percentage of North American Companies Reporting Impacts That Fielded Analyst Questions
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Currency Impact on European Corporate Earnings
FiREapps Q3 2017 CURRENCY IMPACT REPORT™
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$0
$1
$2
$3
$4
$5
$6
Q4 2014 Q3 2015 Q2 2016 Q1 2017 Q3 2017
1.52
2.742.54
4.73
2.913.14
3.36
3.86
2.53
0.23
0.73
4.27
Negative Currency Impact to European Companies (Billions)
In the third quarter of 2017, 54 of the 350 Europe-based multinationals analyzed by FiREapps reported negative currency impacts to their earnings (headwinds).
Of the corporations reporting headwinds, 26 quantified their impacts, nearly seven times more than Q2 2017, accounting for a collective loss of €3.63 billion ($4.27 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
JPY 6.4%
BRL 6.4%
CNY 10.6%
GBP 12.8%
USD 19.1%
EUR 44.7%
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Top Currencies Referenced by European Companies as Impactful
AUD 4.3%
BRL 8.7%
CNY 13.0%
EUR 17.4%
GBP 56.5%
Q3 2017
Q4 2016
For the second quarter in a row, the euro was most mentioned as being impactful to European corporations.
The U.S. dollar is the second most referenced currency as being impactful, followed by the British pound and Chinese yuan, which have been mentioned as impactful currencies for the previous three quarters as well. The Brazilian real and Japanese yen also made appearances as currencies that impacted European companies.
BRL 5.0%
MXN 10.0%
EUR 15.0%
CNY 20.0%
GBP 50.0%
Q1 2017
RUB 6.3%
BRL 6.3%
JPY 12.5%
CNY 18.8%
GBP 25.0%
EUR 31.3%
Q2 2017
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20
40
60
80
100
Q2 2015 Q1 2016 Q4 2016 Q3 2017
28
2710
4326
5442
433618
26
458191720
91023
54
31
15
5145
7162
5246
41
52% Did Not Quantify
54EU Negative
Impacts
48% Did Quantify
$0
$50
$100
$150
$200
$250
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
$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 2016
Electronic Instruments & Controls
Aerospace & Defense
Misc. Fabricated Products
Personal & Household Products
Retail & Apparel Airlines
Q1 2017
Medical Equipment & Supplies Beverages
Biotechnology & Drugs
Chemical Manufacturing
Electronic Instruments & Controls
0%
19%
38%
56%
75%
Q2 2015 Q1 2016 Q4 2016 Q3 2017
30%
40%
14%
23%25%
33%
53%
67%
56%
22%
In Q3 2017 earnings calls, 30 percent of European companies that quantified impacts fielded analyst questions, as compared to 40 percent in Q2 2017.
Auto & Truck Parts
Electronic Instruments & Controls
Auto & Truck Parts
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
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Comparison of Q3 2017 Currency Impact to North American
& European Companies
FiREapps Q3 2017 CURRENCY IMPACT REPORT™
54 European
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Average Quantified Negative Currency Impact in Q3 2017 (Millions)
North America Europe
Mill
ions
(USD
)
0
48
96
144
192
240
$164
$39
$5.28 Billion Total Negative Q3 Impact
Size of Quantified Negative Currency Impact in Q3 2017 (Billions)
122Q3 North American &
European Negative Impacts
68 North American
Number of Companies Reporting Negative Currency Impacts in Q3 2017
0%
20%
40%
60%
80%
100%
30%14%
North America Europe
Summary: FiREapps Q3 2017 Currency Impact Report™› The total quantified negative impact in Q3 2017 was nearly 30 percent lower than Q2 2017, totaling $5.28 billion, with $4.27 billion of that impact reported by European companies.
› 122 North American and European companies reported global headwinds in Q3 2017. Of those, 52 (42.6 percent) quantified their impact.
› The euro was most mentioned as being impactful by both North American corporates and European companies.
› North America saw a decrease in the number of companies reporting negative currency impacts, while European companies saw an increase.
Percentage of Companies Reporting Impacts That Fielded Analyst Questions in Q3 2017
Billi
ons
(USD
)
0
2
3
5
6
$4.27
$1.01
North America Europe
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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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