Slowdown in FX volatility more than halves negative impacts in Q4 2023 for North American and European companies

North American and European negative impact decreased 57.5% from Q3 2023; the Euro was the currency most mentioned as impactful

Kyriba’s latest Currency Impact Report (CIR) finds that the currency impact on earnings reported by multinational companies totaled $14.67 billion in Q4 2023 ($6.8 billion headwinds and $7.87 billion tailwinds). The total annual currency impact for 2023 reached $95 billion compared to 2022, which totaled $169 billion in a year which saw a record rise in interest rates. The CIR analyzes the earnings calls of 1,700 publicly traded North American and European companies as part of a continued effort to provide insight into how foreign exchange impacts the revenue, earnings, and cash flow of global organizations.

“Global organizations are sensing some relief and optimism. Following two consecutive quarterly rises in negative currency impacts to North American and European companies, we saw currency impact begin a downward trajectory to close out 2023,” said Melissa Di Donato, Chair and CEO at Kyriba. “This is an opportune time for CFOs to break out of liquidity gridlock. Furthermore, given what we are seeing with the currency markets in 2024, businesses need to heighten their vigilance when managing and monitoring their currency risk.”

“What we saw in Q4 was a byproduct of relative weakening of the US dollar, which is why we saw a significant decrease in headwinds and increase in tailwinds, both in line with the expectation,” added Andy Gage, senior vice president of FX Solutions and Advisory Services, Kyriba. “If we contrast that to what we are seeing in the first half of 2024, which is showing surprising US dollar strength, we expect more headwinds to be reported for US corporations in particular in 2024.”

Highlights from the April 2024 Kyriba Currency Impact Report include:

• Publicly traded North American companies recorded a 62.7% decrease in headwinds to $2.63 billion and tailwinds of $9.63 billion, down 52.1% from Q3 2023.
• The average earnings per share (EPS) impact reported by North American companies in Q4 2023 was $0.04, four times greater than the industry standard MBO of less than $0.01 EPS impact.
• The Top 5 North American industries most impacted include: Machinery, trading, distribution; healthcare equipment & supplies; life sciences tools & services; chemicals and packaged foods & meals.
• In North American earnings calls, the euro was the most mentioned currency, the Chinese renminbi the second-most mentioned. The Great British pound, the Canadian dollar, and the Mexican peso were the next most. The Mexican peso was the most volatile currency.
• European companies reported $4.17 billion in FX-related losses, about 53.5% less than the previous quarter. Of the 850 Europe-based multinationals analyzed, 12.4% reported headwinds in Q4 2023. Of those, 25.7% quantified their negative impacts.
• The euro was the most mentioned currency in earnings calls for Europe, followed by the United States dollar and the Swedish krona. The euro and the pound are the most volatile.

To learn more about FX impacts to specific industries and which currencies were most impactful to multinationals, download the April 2024 Kyriba Currency Impact Report here.

About Kyriba Corp.

Kyriba is a global leader in liquidity performance that empowers CFOs, Treasurers and IT leaders to connect, protect, forecast and optimize their liquidity. As a secure and scalable SaaS solution, Kyriba brings intelligence and financial automation that enables companies and banks of all sizes to improve their financial performance and increase operational efficiency. Kyriba’s real-time data and AI-empowered tools empower its close to 3,000 customers worldwide to quantify exposures, project cash and liquidity, and take action to protect balance sheets, income statements and cash flows. Kyriba manages more than 35 billion bank transactions and $15 trillion in payments annually and gives customers complete visibility and actionability, so they can optimize and fully harness liquidity across the enterprise and outperform their business strategy.

For more information, visit https://www.kyriba.com

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