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Insight to All Things Currency and Treasury Management

Q42014_Currency_Impact_Report-1According to the latest FiREapps Currency Impact Report, in the fourth quarter of 2014, the total reported negative currency impact was $20.18 billion (North American + European combined). All told for the full year 2014, North American and European corporates lost $39.54 billion in revenue.

As the report illustrates, in Q4 North American corporates faced the largest currency headwinds since the height of the euro crisis with $18.66 billion in revenue eroded from North American corporate earnings statements by currency surprises.

The Q4 and full year 2014 stats in the currency report cover everything from the top 5 currencies impacting North American and European corporate earnings to the percent of companies taking questions from analysts about currency impact.

3 Facts you will know after you read (the report is chock-full of these):

 1

For the full year (2014), North American & European corporates lost a combined $39.54 billion
  • North American companies reported $27.13 billion in total negative currency impact for 2014 –a 53 percent increase over 2013 ($17.78 BN).
  • European companies reported $12.41 billion in negative currency impact for 2014 and $1.52 BN in Q4.

This quarter several corporates that typically do not disclose FX related impact reported material currency related losses with in their Q42014 earnings. Additionally, there was a significant increase in the volume and complexity of questions coming from the analysts and the market, many of which indicate(d) a systematic inability to identify and quantify exposure.

 2

The percentage of companies fielding analyst questions about currency rose to all time highs
  • 63% of North American companies and 68% of European companies reporting currency impact fielded currency impact-related questions from analysts

 3

On the top and bottom line, Q4 was one of the most impacted quarters since we began this research
  • Q4 impact to earnings per share (EPS) in North America averaged $.06—almost 2x the 2013-2014 average
  • It is more than six times the less than $.01 EPS impact management objective that leading multinationals have set for their FX managers