The October 2021 Report Shows Persistent FX Vulnerability for North American Corporations Reporting $22.93 Billion in Q2 Tailwinds
SAN DIEGO–(BUSINESS WIRE)–Kyriba’s Currency Impact Report (CIR), a comprehensive quarterly report that details the impacts of foreign exchange (FX) exposures among 1,200 multinational companies based in North America and Europe, reveals $27.87 billion in total impacts to earnings from currency volatility. The combined pool of corporations reported $23.62 billion in tailwinds and $4.25 billion in headwinds in the second quarter of 2021. North American companies experienced greater headwinds than their European counterparts, reporting $2.32 billion in FX-related negative impacts — a decrease of 153% from the previous quarter. By comparison, European corporations reported $1.93 billion in negative impacts — a decrease of 45% from the previous quarter.
“Despite the overwhelming tailwinds North American multinationals experienced this quarter, these one-time earnings are a warning sign to all CFOs who are trying to protect their balance sheets and income statements from currency volatility. Headwinds and tailwinds reveal the vulnerability North American and European multinational corporations’ revenues and earnings per share have to currency movements,” said Wolfgang Koester, Chief Evangelist for Kyriba. “With many reporting 10% or more of earnings were the direct result of currency gains or losses, CFOs have a long way to go to mitigate risk.”
Highlights from the October 2021 Kyriba Currency Impact Report include:
- The average earnings per share (EPS) impact from currency volatility reported by North American companies in Q2 2021 held steady at $0.03 — three times greater than the recommended standard of $0.01 EPS impact.
- Publicly traded North American companies that qualified to be monitored in the Q2 2021 CIR reported a combined $22.93 billion in positive currency impacts, and $2.23 billion in negative currency impacts.
- Publicly traded European companies that qualified to be monitored in the Q2 2021 CIR reported a combined $686 million in positive currency impacts, and $1.93 billion in negative currency impacts.
- North American companies indicated the euro (EUR) as the most impactful currency, with 33% of companies referencing it as impacting revenues; the Canadian dollar was second with 26% of North American companies identifying it as impactful.
- The U.S. dollar (USD) remained the currency most mentioned as impactful by European companies on earnings calls for the fourth quarter in a row, followed by the euro and the Brazilian real ranking third.
- The top five industries that experienced the greatest impact from currencies in North America were (in ranked order): professional services, machinery, trading & distribution, healthcare equipment & supplies, life sciences tools & services, and biotech & pharmaceuticals.
- The top five industries that experienced the greatest impact in Europe were (in order): biotech & pharmaceuticals, healthcare equipment & supplies, chemicals, construction & engineering, electronic equipment, and instruments & components.
“Supply chain disruption and inflation will test CFOs and treasurers’ enterprise liquidity strategies and application of best practices to protect EPS, drive growth and reduce supply chain risk in the coming months. Cash forecasting precision and the ability to deliver multiple cash flow scenarios will be expected of CFOs as they demonstrate to the Board how to best optimize enterprise liquidity,” said Koester.
The Kyriba Currency Impact Report is a comprehensive report detailing the impact of foreign exchange exposures among publicly traded companies. All companies analyzed in the report conduct business in more than one currency, with at least 15% of their revenue coming from nations located outside of their headquarters.
To learn more about specific industries affected and which currencies were most impactful to multinationals, download the October 2021 Kyriba Currency Impact Report here.
About Kyriba Corp.:
Kyriba empowers CFOs, Treasurers, and their IT counterparts to transform treasury, payments, working capital, and connectivity solutions to activate liquidity as a dynamic, real-time vehicle for growth and value creation. Kyriba is a secure, scalable SaaS platform that leverages artificial intelligence, automates payments workflows, and enables thousands of multinational corporations and banks to maximize growth, protect against loss from fraud and financial risk, and reduce operational costs. With 2,000 clients worldwide, including 25% of Fortune 500 and Eurostoxx 50 companies, Kyriba manages more than 1.3 billion bank transactions per year, and 250 million payments for a total value of $15 Trillion annually.
Kyriba is headquartered in San Diego, with offices in Dubai, Frankfurt, London, Minsk, Paris, Shanghai, Singapore, Tokyo, Warsaw and other major locations. For more information, visit www.kyriba.com.
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