Currency volatility was responsible for significant impacts on the revenues of U.S.-listed multinational corporations, costing them nearly $9 billion in Q4 2019, according to the new Kyriba Currency Impact Report (CIR), a comprehensive report which details the impact of foreign exchange (FX) among 1,200 companies in North America and Europe. Despite reduced currency volatility, this is the sixth consecutive quarter of $8 billion in losses for North American companies ? the longest such stretch in at least a decade, according to the report.
"Companies have many challenges under normal circumstances. Nine Billion in losses is simply too much for a quarter with reduced currency volatility. Factor in the surging dollar at the end of the quarter, and the impending currency war due to economic stimulus plans and we can expect deeper problems in the coming quarter," said Wolfgang Koester, Chief Evangelist for Kyriba. "At a time when every dollar is precious to multinational corporations, CFOs who have previously dismissed currency impact as an unsolvable nuisance will be costing their shareholders and need to reconsider their strategy."
According to Koester, Boards will be closely watching FX losses of an indicator of corporate governance. He warns of increased payments fraud risk adding to the challenge of corporate governance.
The average earnings per share (EPS) impact reported by North American companies in Q4 2019 was $0.03 ? three times greater than the industry standard MBO of less than $0.01 EPS impact, according to the report. For the twelfth consecutive quarter, North American companies indicated the Euro as the most impactful currency, with 42 percent of companies mentioning it during their Q4 earnings calls, according to the report. According to the report, medical equipment and supplies and the electronic equipment industries experienced the greatest impact from currencies, as those industries continue to be affected by Brexit and other volatile geopolitical events around the globe.
To learn about specific industries affected and which currencies were most impactful to multinationals, download the full Q4 2019 Kyriba Currency Impact Report here.
In Europe, Currency Impacts Are Less of a Problem
Publicly traded European companies which qualified to be monitored in the Q4 2019 report indicated a collective currency loss of $910 million, the second consecutive quarter of sub-$1 billion impacts. For the second consecutive quarter the currency most mentioned as impactful by European companies during Q3 2019 earnings calls was the U.S. dollar, which topped the Euro, followed by the Chinese Yuan, British Sterling, and Brazilian Real, as shown in the report.
The CIR is a comprehensive report, detailing the impact of foreign exchange exposures among publicly traded companies. In addition, all companies in the report do business in more than one currency, with at least 15 percent of their revenue coming from other nations.
Kyriba is hosting a webinar to help corporate treasurers understand how to reduce fraud risk and increase payments security and efficiency, April 16, 2020. Register here for more information.
About Kyriba Corp.:
Kyriba empowers CFOs and their teams to transform how they activate liquidity as a dynamic, real-time vehicle for growth and value creation, while also protecting against financial risk. Kyriba's pioneering Active Liquidity Network connects internal applications for treasury, risk, payments and working capital, with vital external sources such as banks, ERPs, trading platforms, and market data providers. Based on a secure, highly scalable SaaS platform that leverages artificial and business intelligence, Kyriba enables thousands of companies worldwide to maximize growth opportunities, protect against loss from fraud and financial risk, and reduce costs through advanced automation. Kyriba is headquartered in San Diego, with offices in New York, Paris, London, Frankfurt, Tokyo, Dubai, Singapore, Shanghai and other major locations. For more information, visit www.kyriba.com.
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