Insight & Analysis

Press release: Multinationals’ FX headwinds wipe out $22bn in revenue

Published: Jul 2023

18th July 2023Kyriba’s Currency Impact Report (CIR), a comprehensive quarterly report which details the impacts of foreign exchange (FX) exposures among 1,200 multinational companies based in North America and Europe with at least 15 percent of their revenue coming from overseas, experienced $23.20 billion in total impacts to earnings from currency volatility. The combined pool of corporations reported $22.52 billion in FX-related headwinds and $0.68 billion in tailwinds in the first quarter of 2023, with North American companies reporting $21.24 billion in headwinds, and European companies reported $1.28 billion in headwinds. Total quantified currency impacts plummeted $9B since the last quarter, and for the first time since 2021, the average negative impact to corporations also dropped.

“While the downward trend is substantial, we are by no means out of the woods regarding a very complicated and volatile currency market fueled in large part by continued inflationary pressures, interest rate moves and a general sense of uncertainty from a variety of geo-political events,” said Andy Gage, SVP of FX Solutions and Advisory Services at Kyriba. “This quarter’s report shows EPS impact reported by North American companies was $0.06, six times greater than the industry standard MBO of less than $0.01 EPS impact. For the rest of 2023, CFOs need to gain accurate and faster visibility to their currency risk and underlying exposures to eliminate EPS at risk.”

Highlights from the July 2023 Kyriba Currency Impact Report include:

  • Publicly traded North American companies reported $21.24 billion in headwinds.
    • This is up 45% from YoY.
  • Publicly traded North American companies reported $0.66 billion in tailwinds.
    • This is up $0.07M from last quarter.
  • The average earnings per share (EPS) impact reported by publicly traded North American companies in Q1 2023 was $0.06.
    • This is up $0.01 from last quarter.
  • Publicly traded North American companies indicated the euro (EUR) as the most impactful currency, with 33.3% of companies referencing it as impacting revenues; the Canadian dollar (CAD) was second at 26.7%, and the Chinese yuan (CNY) was third with 20% of North American companies identifying it as impactful.
  • The euro was cited as one of the most impactful currencies by publicly traded European companies on earnings calls.
  • The top five industries that experienced the greatest impact from currencies in North America were (in ranked order): biotech & pharmaceuticals, chemicals, electronic equipment, instruments and components, airlines, and healthcare equipment & supplies.

“We see CFOs who can quantify the impact of currency volatility on their financial statements and cash flow in a much better position to reduce preventable FX losses. Finance teams who have successfully managed FX impacts are turning to data and analytics to reduce their cost of hedging and deliver improved predictability to support earnings, revenue, and cash flow guidance,” said Gage.

To learn more about FX impacts to specific industries and which currencies were most impactful to multinationals, download the July 2023 Kyriba Currency Impact Report.

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