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FX Crisis Management: Dealing with Currency Shocks

Kyriba’s latest analysis shows FX dissolved 10 cents per share of corporate earnings in Q2/2022.

By T&R Staff | November 03, 2022 at 03:12 PM
Stock image: dollar sign dissolving. Credit: Oliver Denker/Adobe Stock

No company that does business overseas is going to be surprised to hear that currencies are volatile right now and are impacting many multinationals’ bottom line. But Kyriba’s most recent “Currency Impact Report” puts a number to the challenge—and it’s eye-opening.

Every quarter, the firm analyzes the earnings calls of 1,200 large, publicly traded companies that operate outside the financial services sector and are based in either North America or Europe. In May, we reported on Kyriba’s Q2/2022 “Currency Impact Report,” which studied corporates’ Q4/2021 earnings calls. That analysis suggested the foreign exchange (FX) tailwinds that were increasing companies’ earnings per share earlier in 2021 had shifted by the end of the year. By late last year, most multinationals in the study were instead facing headwinds, which had a cumulative impact on North American companies totaling more than $4.5 billion in the fourth quarter.

The recently released October 2022 “Currency Impact Report” shows that those headwinds became much stronger over the first half of this year. Of the 1,200 companies in the most recent Kyriba study, 243 reported currency headwinds in their Q2/2022 earnings calls, and 229 quantified the impact of those headwinds. The aggregate negative impact across all those companies (in both North America and Europe) totaled $37.27 billion. For businesses based in North America that quantified FX effects, the headwinds totaled $34.25 billion, or $155 million per company, on average.

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