FiREapps Q4 2017 · FiREapps Q4 2017 Each quarter, FiREapps analyzes the earnings calls of 1,200 publicly traded North American and European companies as part of a continued effort

FiREapps Q4 2017

Each quarter, FiREapps analyzes the earnings calls of 1,200 publicly traded North American and European

companies as part of a continued effort to provide insight into how currency impacts organizations. The

companies included in this data set are large multinational firms doing business in more than one currency

with at least 15 percent of their revenue coming from overseas.

A Survey of North American & European Corporate Earnings

CURRENCY IMPACT REPORT™

The data included in this report refers only to companies that reported FX impacts in earnings calls.

FiREapps Q4 2017 Currency Impact Report | 2 of 17

Overview

FiREapps Q4 2017 CURRENCY IMPACT REPORT™

Copyright © 2018 Rim Tec Inc. All rights reserved. 051018

Quantified Negative Currency Impact (Billions)

Number of Companies Reporting Negative Currency Impact

European Companies North American Companies

As we saw last quarter, negative currency impacts to European companies have been on the rise. Q4 2017 continues that trend, as the quantified negative currency impact reached $6.79 billion for European multinationals - an increase of $2.52 billion over last quarter and the largest negative impact reported since Q3 2015.

Additionally, the number of European companies reporting negative currency impacts has continued to increase proportionate to the increase in quantified negative impacts, with 75 companies reporting in Q4 2017, as compared to 54 in Q3 2017 and 31 in Q2 2017.

For North American corporations, the amount of quantified negative currency impact continues to stay under the $1.5 billion mark, after reported negative impacts dropped from $6.71 billion in Q2 2017 to $1.01 billion in Q3 2017. However, North American multinationals did see a slight increase in impacts during Q4 2017, with reported negative FX impacts being roughly $30 million higher than what was reported last quarter.

Q4 2017 CONTINUES TREND OF RISING NEGATIVE EUROPEAN IMPACTS

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

0 10 20 30 40

$6.79

$4.27

$0.73

$0.23

$2.53

$3.86

$3.36

$3.15

$2.91

$7.94

$6.47

$6.71

$10.26

$10.47

$6.70

$7.44

$5.28

$7.83

$33.94

$16.88 $20.03

$6.90

$6.81 $10.67

$36.85

0

84

168

252

336

420

Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017

115122

251228

296

263

296

400409

4068

220213245

218225

338357

51

75

FiREapps Q4 2017 Currency Impact Report | 3 of 17 Copyright © 2018 Rim Tec Inc. All rights reserved.

5262

7145

1531

54

CNY EUR JPY BRL GBP

EUR CNY JPY CAD GBP

CNY EUR IDR BRL JPY

CNY KRW IDR EUR MXN

TRY IDR BRL ZAR SAR

CAD IDR RUB TRY ARS

CNY IDR EUR BRL MXN

CNY KRW IDR ZAR MXN

1 2 3 4 5

Top 5 Volatile G20 Currencies

1 2 3 4 5

Q4 2017

Q2 2017

Q1 2017

Q3 2017

Top 5 Volatile Currencies as Weighted by GDP Percentage


Q4 2017

Q2 2017

Q1 2017

Q3 2017

Copyright © 2018 Rim Tec Inc. All rights reserved.


Currency Impact on North American Corporate Earnings




$9

$18

$27

$36

Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017

4.19 3.67 4.10 4.185.83

3.261.21

4.00

18.66

28.94

16.9519.29

33.94

16.88

6.90 6.817.94

6.47 6.71

1.01 1.04

Negative Currency Impact to North American Companies (Billions)

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

$0.00 $0.03 $0.06 $0.09 $0.12

$0.03

$0.03

$0.04

$0.03

$0.04

$0.04

$0.05

$0.06

$0.07

$0.12

$0.03

$0.08

$0.06

Average EPS Impact Reported by North American Companies

Industry Standard MBO of Less than $0.01 EPS Impact

Currency Impact on North American Corporate Earnings

A collective $1.04 billion loss was reported by North American companies that quantified negative FX impacts for Q4 2017 — up roughly $30 million from Q3 2017.1

Earnings per share (EPS) impact reported by North American companies stayed stagnant at $0.03, continuing a trend seen over the previous five quarters where EPS impact has hovered around $0.03-$0.04.

1Impacts are likely to be underestimates as most companies with currency headwinds generally do not report them.


CAD 7.3%

BRL 7.3%

CNY 9.1%

JPY 12.7%

GBP 27.3%

EUR 36.4%

AUD 4.2%JPY

6.3%

CNY 8.3%

CAD 8.3%

BRL 8.3% EUR

31.3%

GBP 33.3%


Top Currencies Referenced by North American Companies as Impactful

AUD 2.6%

JPY 2.6%

CAD 5.1%

CNY 12.8%

GBP 17.9%

EUR 59.0%

BRL 4.3%

AUD 8.5%

CAD 14.9%

GBP 23.4%

EUR 48.9%

Q4 2017

In Q4 2017, the euro was referenced as the most impactful currency to North American companies for the second quarter in a row. Generally mentioned as the most impactful or second most impactful currency over the past five quarters, 59 percent of North American companies referenced it as impactful in Q4 2017 — and it once again topped the list as one of the most volatile G20 currencies as weighted by GDP percentage (page 4).

The British pound was the next most referenced currency in North American earnings reports, followed by the Chinese renminbi, and Canadian dollar, with the Australian dollar and Japanese yen tying for the fifth most mentioned currency. The Euro, British pound, Chinese renminbi and Japanese yen were also included in the top five most volatile currencies as weighted by GDP percentage (page 4).

Q1 2017Q2 2017Q3 2017

CAD 5.1%

JPY 2.6%

AUD 2.6%



Average Negative Impact to North American Companies (Millions)

$0

$50

$100

$150

$200

$250

Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

$69

$39$52$51$57$62$63

$98

$218

$169$177$164

$146

$37

4068

220213

245218225

338357353

170

279

215

0

75

150

225

300

375

Q4 2014 Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017

2542

9287105

109115

166201239

74

102

87

1526

128126140

109110

172156

11496

177

128

Number of North American Companies Reporting Negative Currency Impacts

Number of Companies Quantifying Size of Impact

Number of Companies Not Quantifying, but Reporting Impact

62.5% Did Not Quantify

40N.A. Negative

Impacts

37.5% Did Quantify

Percentage of North American Companies Quantifying Impacts


Biotechnology & Drugs


Most Impacted North American Industries

21 43 5

Q3 2017

Q2 2017

Q4 2017

Electronic Instruments & Controls


Auto & Truck Parts

Business Services

Medical Equipment & Supplies


Business Services

Misc. Capital Goods

Scientific & Technical Instruments

Q1 2017

Business Services


Misc. Capital Goods


Scientific & Technical Instruments

Auto & Truck Parts



Business Services


0%

25%

50%

75%

100%

2012 Q2 2013 Q1 2013 Q4 2014 Q3 2015 Q2 2016 Q2 2017 Q1 2017 Q4

23%

14%

25%

16%18%22%

31%

43%49%50%

64%63%

46%

23%

41%47%

25%26%26%19%

14%

33%

The number of North American companies reporting FX impacts that fielded analyst questions has increased since Q3 2017, with 23 percent of companies receiving FX-related questions when reporting quarterly earnings.

Percentage of North American Companies Reporting Impacts That Fielded Analyst Questions



Currency Impact on European Corporate Earnings




$0

$1

$2

$3

$4

$5

$6

$7

Q1 2015 Q4 2015 Q3 2016 Q2 2017 Q4 2017

2.742.54

4.73

2.913.14

3.36

3.86

2.53

0.23

0.73

4.27

6.79

Negative Currency Impact to European Companies (Billions)

In the fourth quarter of 2017, 75 of the 350 Europe-based multinationals analyzed by FiREapps reported negative currency impacts to their earnings (headwinds).

Of the corporations reporting headwinds 35 quantified their impacts, accounting for a collective loss of €8.31 billion ($6.79 billion) due to FX.2

2 Impacts are likely to be underestimates as most companies with currency headwinds generally do not report them.

Currency Impact on European Corporate Earnings


BRL 5.0%

MXN 10.0%

EUR 15.0%

CNY 20.0%

GBP 50.0%

RUB 6.3%

BRL 6.3%

JPY 12.5%

CNY 18.8%

GBP 25.0%

EUR 31.3%

CNY 3.7%JPY

5.6%

GBP 11.1%

EUR 33.3%

USD 46.3%


Top Currencies Referenced by European Companies as Impactful

JPY 6.4%BRL

6.4%

CNY 10.6%

GBP 12.8%

USD 19.1%

EUR 44.7%

Q4 2017

For the first time in 2017, the U.S. dollar was most mentioned as being impactful to European corporations.

The euro was the second most referenced currency as being impactful to European companies, followed by the British pound, Japanese yen, and Chinese renminbi. With the exception of the U.S. dollar, the currencies most mentioned as impactful to European companies in Q4 2017 were also four of the most volatile currencies as weighted by GDP percentage (page 4).

Q1 2017Q2 2017Q3 2017

JPY 5.6%



20

40

60

80

100

Q3 2015 Q2 2016 Q1 2017 Q4 2017

40

28

2710

4326

5442

4336

3526

458191720

910

75

54

31

15

5145

7162

5246

53% Did Not Quantify

75EU Negative

Impacts

47% Did Quantify

$0

$50

$100

$150

$200

$250

Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

$194.10

$164.10$182.20

$45.60

$316.00

$203.00$198.00

Average Negative Impact to European Companies (Millions)

Number of European Companies Reporting Negative Currency Impact

Percentage of European Companies Quantifying Impacts

Number of Companies Quantifying Size of Impact

Number of Companies Not Quantifying, but Reporting Impact



Most Impacted European Industries

21 43 5

Q3 2017

Q2 2017

Q4 2017


Clothing & Apparel

Retail & Apparel Airlines

Q1 2017

Medical Equipment & Supplies Beverages

Chemical Manufacturing


0%

19%

38%

56%

75%

Q3 2015 Q2 2016 Q1 2017 Q4 2017

38%

30%

40%

14%

23%25%

33%

53%

67%

56%

In Q4 2017 earnings calls, 38 percent of European companies that quantified impacts fielded analyst questions, as compared to 30 percent in Q3 2017.

Auto & Truck Parts


Misc. Capital Goods

Auto & Truck Parts

Misc. Capital Goods

Auto & Truck Parts



Percentage of European Companies Reporting Impacts That Fielded Analyst Questions

Chemical Manufacturing



Misc. Capital Goods



Comparison of Q4 2017 Currency Impact to North American

& European Companies



75 European


Average Quantified Negative Currency Impact in Q4 2017 (Millions)

North America Europe

Mill

ions

(USD

)

0

48

96

144

192

240$194

$69

$7.83 Billion Total Negative Q4 Impact

Size of Quantified Negative Currency Impact in Q4 2017 (Billions)

115Q4 North American &

European Negative Impacts

40 North American

Number of Companies Reporting Negative Currency Impacts in Q4 2017

0%

20%

40%

60%

80%

100%

37.8%23.4%


Summary: FiREapps Q4 2017 Currency Impact Report™› The total quantified negative impact in Q4 2017 was nearly 49 percent higher than Q3 2017, totaling $7.83 billion, with $6.79 billion of that impact having been reported by European companies.

› 115 North American and European companies reported global headwinds in Q4 2017. Of those companies, 50 quantified FX impacts.

› The euro was most mentioned as being impactful by North American companies, while the U.S. dollar was most mentioned by European companies as being impactful.

› North America saw a decrease in the number of companies reporting negative currency impacts as quantified negative impacts remain low. Meanwhile European companies continued to see an increase in companies reporting negative impacts as the amount of sustained negative FX impacts has increased.

Percentage of Companies Reporting Impacts That Fielded Analyst Questions in Q4 2017

Billi

ons

(USD

)

0

1

2

3

4

5

6

7 $6.79

$1.04




FiREapps is the leading provider of corporate currency analytics and FX exposure management technologies. Established in 2006, FiREapps developed the first solution to automate foreign exchange exposure management for multinational companies. Through a combination of software solutions and expert analysis, FiREapps helps companies ensure they’re accurately measuring and managing their FX exposures. Numerous Fortune 500 companies rely on FiREapps technology to help them reduce FX risk and increase efficiency every day.

FiREapps is headquartered in Scottsdale, Arizona, with offices in Portland, London and Frankfurt.

Copyright © 2018 Rim Tec Inc. All rights reserved. 051018

Documents

FiREapps Q4 2017 · FiREapps Q4 2017 Each quarter, FiREapps analyzes the earnings calls of 1,200 publicly traded North American and European companies as part of a continued effort