FiREapps Q2 2016 Corporate Earnings Currency Impact Report
Lower Volatility in Q2 Meant Lower Negative Impact…Until Brexit
For more than a year now, we have been talking about how volatility is not a “new normal” but rather just normal. A drop in the first two quarters doesn’t change that.
In fact, the last week of the second quarter underscores this point even better – Brexit served as a swift reminder that unpredictability reigns – volatility could be high one quarter, relatively muted for most of the following two, then come back with a jolt in the next.
The Top 5 Things You Need to Read in This Report
- The total quantified negative impact in Q2 was 47% smaller than Q2 of 2015, totaling $10.26 billion, with $6.9 billion coming from North American corporates alone.
- Of the 296 reported headwinds, 76% were reported by North American Corporates and 127 (43%) were quantified globally – lower than the 48% quantified in Q1.
- GBP topped the list for currencies most mentioned as impactful for both our North American and European corporates. In both cases this was the first time which GBP topped the list.
- In Europe, this was only the 3rd time (in as many quarters) that GBP made an appearance on the top 5 list after debuting on the European list in Q3 2015.
- The percentage Corporates reporting a currency impact who received questions from analysts was surprisingly low in both Europe (33%) and North America (31%). Anecdotally, we believe that this phenomenon was driven by CFOs expecting and pre-empting analysts questions with a statement to the effect of: “We are still working to triage the impact from Brexit…”
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