Currency exchange rate volatility leaves companies $12.3B poorer – CFO Dive

Dive Brief:

• North American and European companies lost $12.3 billion in the third quarter of 2019 because of the negative impact of currency exchange rates, according to the Kyriba Currency Impact Report. The findings mark the fifth consecutive quarter of $10+ billion in losses, the longest stretch in a decade.
• Even so, the $12.3 billion in losses represent an improvement over previous quarters. Losses reached $26.7 billion at their peak in the first quarter of 2019, and they remained high in the second quarter, at $22.6 billion. 
• “Waiting for currency volatility to calm down has been a $98 billion mistake for CFOs of multinational corporations,” said Wolfgang Koester, chief evangelist at Kyriba, referring to combined exchange-rate losses over the last five quarters. “CFOs who dismissed this problem as a temporary wave of market drama […] need to reconsider their strategy.”

Dive Insight:

According to the findings, 296 companies — 285 in North America and 11 in Europe — reported negative currency impacts.

In North America, companies were hit with $11.5 billion in negative impacts; European companies lost $750 million.

Other findings

• The average earnings per share (EPS) impact reported by North American companies in Q3 2019 was $0.03, three times greater than the industry standard of less than $0.01 EPS impact.
• The dollar was mentioned as the most impactful currency by European companies, and the Euro was considered the most impactful currency by North American companies. 
• The most impacted North American industries are medical equipment, business services, capital goods, auto and truck parts, and chemical manufacturing.