Kyriba, the global leader in cloud treasury and finance solutions, today announced that its FX management technology has been proven to help its publicly traded clients manage earnings per share (EPS) at risk closer to the best practice standard of less than $.01.
Based on information gathered from customer data and use cases over the last several years, Kyriba sees that many CFOs, of both public and private companies, are still allowing unnecessary currency risk to negatively impact the financial performance of their companies. For publicly traded companies, Kyriba sees company valuations being materially impacted by negative FX results on earnings that reduce EPS.
The inability to effectively manage negative currency impacts continues to bedevil many global organizations. In the May 2019 Kyriba Currency Impact Report, a survey of 1,200 publicly traded companies, Kyriba found that North American companies sustained nearly $21 billion in FX losses during the fourth quarter of 2018, the largest hit in nearly three years. Meanwhile, the average EPS at risk due to FX reported by those same companies rose to $.05, the highest level since 2016, according to the report.
"With the technology available today, it is completely unnecessary for companies to routinely accept these types of foreign exchange losses," said Wolfgang Koester, Chief Evangelist at Kyriba. "Reducing currency impacts with the right technology is one of the easiest things a global CFO can do to shore up negative impacts to net operating income and EPS."
According to Koester, what's required is a more holistic approach to FX management, something that enables FX risk to be mitigated through pre- and post-trade processes. In April, Kyriba closed on its acquisition of FiREapps, the pioneer and leader in enterprise currency management, to create the industry's first end-to-end solution for managing FX risk.
FiREapps has had a nearly decades-long track record of helping companies mitigate currency risk and manage their EPS at risk to less than $.01, and together Kyriba and FiREapps are helping multinational companies increase their hedge ratios on the balance sheet, while also improving cash flow hedging by more than 25 percent, Koester said.
"In my decades of talking with CEOs and CFOs of some of the largest global companies, they always say they want the same thing: in-depth insight and intelligence that allows them to protect the value of their business and make better risk-mitigating decisions," Koester said. "The acquisition of FiREapps by Kyriba makes all of that possible in a single-vendor solution."
In a case study from 2018, Tennant, a manufacturing company, was able to reduce EPS impact to less than $.01, while organically reducing currency exposure by 42 percent.
On Friday, June 7, in London, Koester and Kyriba clients will be discussing best practices in FX management at the Kyriba Live Treasury & Finance Summit UK, part of a global conference series for treasury and finance professionals.
Background on the May 2019 Kyriba Currency Impact Report
In this report, Kyriba analyzed the earnings calls of more than 1,200 publicly traded North American and European companies to collect data on the negative impact and volatility of various currencies during Q4 2018. The Kyriba Currency Impact Report, which is compiled through enterprise currency management leader FiREapps, a Kyriba company, can be used as a benchmarking tool for corporate boards and CFOs to gauge their company's currency impacts in comparison to other multinational corporations.
To learn about specific industries that were affected and which currencies were most impactful to corporations, download the latest Kyriba Currency Impact Report here.
About Kyriba Corp.
Kyriba empowers financial leaders and their teams with award-winning solutions for cash and risk management, payments and working capital optimization. Kyriba delivers a highly secure, 100 percent SaaS enterprise platform, superior bank connectivity and a seamlessly integrated solution set for tackling today's most complex financial challenges. Thousands of companies, including many of the world's largest organizations, rely on Kyriba to streamline key processes, protect against loss from fraud and financial risk, and accelerate growth opportunities through improved decision support. Kyriba is headquartered in San Diego, with offices in New York, Paris, London, Tokyo, Dubai and other major locations. For more information, visit www.kyriba.com.
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