Kyriba July 2021 Currency Impact Report

A Quarterly Report Assessing the Impact of Foreign Exchange to North American and European Corporate Earnings.

The Kyriba Currency Impact Report can be used as a benchmarking tool for corporate boards and CFOs to gauge their company’s currency impacts in comparison to other multinationals.

About the Report

The July 2021 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ earnings during the first quarter of 2021. To obtain this information, Kyriba analyzed the earnings calls of 1,200 publicly traded North American and European companies as part of a continued effort to provide insight into how foreign exchange 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.

Currency Impact Report – Overview

North American Companies Experience Surge in Impact and European Companies See Continued Headwinds

North American and European companies reported a combined $9.54 billion in quantified negative currency impacts in Q1 2021, up 55 percent from the previous quarter.

European companies accounted for 38 percent of the impact, reporting $3.67 billion in quantified impacts. North American companies quantifying headwinds reported a total of $5.87 billion in negative currency impacts, a break in the low trend we have seen in the last two quarters. This is potentially due to the continued volatility of the USD.

Currency Impact on North American Corporate Earnings

Currency Impact on North American Corporate Earnings

North American companies reported a $5.87 billion collective loss in Q1 2021, ending a trend upward and a 322% increase in the magnitude of aggregate headwinds.¹

The average earnings per share (EPS) impact reported by North American companies in Q1 2021 was $0.03, three times greater than the industry standard MBO of less than $0.01 EPS impact and a maintenance of the level set by the previous quarter.

¹ Impacts are likely underestimates as most companies with currency headwinds generally do not report them.

The Chinese renminbi (CNY) broke a two-quarter trend of the euro being the most mentioned currency. The Great British pound (GBP) was the third most-mentioned, followed closely by the Brazilian real (BRL) and the Swiss franc (CHF). The franc is an atypical appearance in North American earnings calls, but was also present in the top 5 mentioned last quarter. The renminbi was in the top 5 most volatile currencies, as well as top 5 most volatile weighted by GDP (page 5).

Currency Impact on European Corporate Earnings

Currency Impact on European Corporate Earnings

Continuing an upward trend, European companies reported a 23 percent decrease in negative currency impacts, with companies reporting $3.67 billion in FX-related losses.²

Of the 350 Europe-based multinationals analyzed, 5% reported headwinds in Q1 2020. Of those, 88.9% quantified their negative impacts (see page 14).

² Impacts are likely underestimates as most companies with currency headwinds generally do not report them.

The US dollar (USD) was the most mentioned currency in earnings calls for Europe, followed by the euro (EUR) and Chinese renminbi (CNY). The Great British pound (GBP) was the fourth most mentioned, followed by the Swedish krona (SEK). The Swedish krona (SEK) is an atypical appearance as the most mentioned currency, which continues the trend from the previous two quarters. The euro, renminbi, and pound were all found to be in the top 5 most volatile currencies as well (page 5).

In Q1 2021 earnings calls, 7 percent of European companies that reported impacts fielded analyst questions.

Comparison of Currency Impact to North American and European Companies

Currency Impact Report – Summary

Summary: Kyriba July 2021 Currency Impact Report

• The collective quantified negative impact reported by both North American and European companies totaled $9.54 billion in Q1 2021, a 55 percent increase from Q4 2020.
• The renminbi was the currency most mentioned as impactful by North American companies, and the third most mentioned by European companies. The US dollar was the currency most mentioned as impactful by European companies.
• 95 North American and European companies reported currency headwinds in Q1 2021. Of those companies, 81 companies quantified their FX impacts.