Quarterly Research on the Impacts of Currency on Corporate Earnings

European multinationals reported the largest currency impact since Q2 2015, with 26 companies disclosing a collective $4.27 billion in impacts.

In an up-tick from the trend of decreasing volatility and negative FX impacts over the previous five quarters, Q2 2017 has shown an increase in negative impact by $740 million, with North American and European corporates quantifying a total negative impact of $7.44 billion.

The continuation of low negative revenue impacts does not signify an end to currency volatility – just the progression of a pattern of low volatility that leaves unsuspecting corporates susceptible to risk when the next spike in volatility occurs.

A total of 296 companies— 245 in North America and 51 in Europe— reported negative currency impacts in Q4 2016. Quantified negative impacts remained 4 times greater than the Industry Standard MBO of less than $0.01 EPS impact.

A $10 billion dollar aggregate currency headwind hit corporates in Q3 2016. For companies, this meant an average of $.04 EPS erased from earnings.

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.