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Insight to All Things Currency and Treasury Management

In 2012, U.S.-based multinational corporations lost $50 billion in revenue because of unmitigated currency volatility.

As part of FiREapps’ ongoing effort to provide insight into how currency affects corporations, we have analyzed the earnings calls of a subset of the Fortune 2000 companies that have at least 15 percent or more international revenues in at least two currencies. The numbers we reveal here are top-line impacts reported during fourth quarter earnings calls by companies within that subset.Key findings recap

2012Q4

  • ŸIn the fourth quarter of 2012, 230 companies reported a negative revenue impact from currency fluctuations, a nearly three-fold increase over 2011Q4.
  • ŸOf those 230, 109 companies quantified an impact; in aggregate the negative currency-related revenue impact was $4.2 billion in the fourth quarter of 2012, a nearly 5-fold increase from a year earlier.
  • The 109 companies that quantified a negative currency impact faced an average headwind of 1.14 percent.

2012

  • In 2011 the total net currency impact was positive, just over $21 billion. In 2012, the total net currency impact was negative, $50 billion. The net reduction in top-line revenue associated with currency impacts, then, was more than $70 billion over the two years.
  • In total dollar terms we begin to see a sustained shift toward currency headwinds in the fourth quarter of 2011, with net negative currency impacts through the end of 2012.
  • The drivers of currency headwinds have changed since 2011. Before, impacts came largely from a single currency. Now, they’re coming from a range of currencies in different parts of the world. This represents a trend that we expect to continue.

Read more about the impact currency volatility had on U.S.-based multinationals in the full report. You’ll learn about how the perfect currency storm in the euro zone has become a global currency war (and what that means for corporates). You’ll learn about the top 5 currencies most frequently mentioned as impactful in earnings calls by quarter in 2012. And you’ll learn about how you can join the group of MNCs that do not face significant currency impacts because they proactively manage currency risk across their full portfolio of currencies.