Kyriba’s October 2021 Currency Impact Report

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

About the Report

The October 2021 Kyriba Currency Impact Report analyzes the reported effects of currencies to North American and European companies’ earnings during the second 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. 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.

North America and European Multinationals See Headwinds Wane

North American and European companies reported a combined $4.25 billion in quantified negative currency impacts in Q2 2021, down 55 percent from the previous quarter. European companies accounted for 45 percent of the impact, reporting $1.93 billion in quantified impacts.

North American companies quantifying headwinds reported a total of $2.32 billion in negative currency impacts, a low trend for the fiscal 2021 year.

For the first time in the history of this report, the combined pool of corporations reported $23.62 billion in tailwinds . All FX impacts represent a significant percentage of earnings this quarter, a vulnerability CFOs should continue to prioritize for risk managers.

Currency Impact on North American Corporate Earnings

North American companies reported a $2.32 billion collective loss in Q1 2021, ending a trend upward and a 60% decrease in the magnitude of aggregate headwinds.¹

The average earnings per share (EPS) impact reported by North American companies in Q2 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 euro (EUR) was the most mentioned currency, similar to Q3 and Q4 of fiscal year 2020. The Canadian dollar was the second most-mentioned, a unique appearance. The Chinese renminbi (CNY) was the third mostmentioned, followed by the Great British pound (GBP) and the Japanese yen (JPY). The euro was the most volatile weighted by GDP, while the JPY was the third most volatile and the GBP was the fifth most volatile. The CNY was the fourth most volatile unweighted (page 5).

Declining from last quarter, European companies reported a 47 percent decrease in negative currency impacts, with companies reporting $1.93 billion in FX-related losses.²

Of the 350 Europe-based multinationals analyzed, 5% reported headwinds in Q1 2020. Of those, 82.4% 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 Brazilian real (BRL). The Chinese renminbi (CNY) was the fourth most mentioned, followed by the Japanese yen (JPY). The real is an atypical appearance as the most mentioned currency, which continues the trend from Q3 2020. The euro, renminbi, and yen were all found to be in the top 5 most volatile currencies as well (page 5).

In Q2 2021 earnings calls, 5 percent of European companies that reported impacts fielded analyst questions.