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Currency Volatility Costs Companies over $10 Billion in Q4/2016

FX reduced the earnings of 29 percent of large North American multinationals in the fourth quarter, with average impact of 4 cents per share.

By Treasury & Risk Staff | Updated on April 27, 2017

This week, currency risk management software vendor FiREapps released its quarterly report on the impact of foreign exchange (FX) on corporate earnings. The report surveyed Q4/2016 earnings reports from 1,200 large, publicly traded multinationals based in North America and Europe.

Of the 1,200 companies, 296 reported that currency shifts had a negative impact on their earnings in the fourth quarter. Among companies that quantified this effect, the total impact was a reduction in earnings of $10.47 billion. This is less than a third the size of the total currency impact FiREapps quantified a year earlier: $36.85 billion in Q4/2015. The FiREapps report attributes this difference “not necessarily to lower currency volatility, but to the number of companies that appear to have not reported material impacts.” In Q4/2015, 409 companies reported negative currency impacts.

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