Kyriba’s Currency Impact Report: Record $47 Billion in FX Headwinds for Multinationals

January 2023 Report Shows FX as a Material Drag on Financial Results at North American and European Corporations with Total Impacts Reaching $64.22 Billion

Kyriba’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, sustained $64.22 billion in total impacts to earnings from currency volatility. The combined pool of corporations reported $47.18 billion in headwinds and $17.04 billion in tailwinds in the third quarter of 2022. North American companies reported $43.15 billion in headwinds, a 26.6% increase over the previous quarter. European companies reported a 33.3% increase in negative currency impacts, with companies reporting in FX-related headwinds.

“We have seen currency exchange and interest rates move more in the past year than they have in the past decade and we expect more volatility in 2023”

“We have seen currency exchange and interest rates move more in the past year than they have in the past decade and we expect more volatility in 2023,” said Wolfgang Koester, Chief Evangelist of Kyriba. “FX volatility is costing corporations record amounts as we saw this past quarter with headwinds and tailwinds totaling $64 billion, a clear signal for CFOs to examine their FX risk management practices. CFOs and Treasurers must take a modern approach to address these unpredictable shifts in the market which make earnings season more challenging as certainty around future cash flows is less clear.”

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Highlights from the January 2023 Kyriba Currency Impact Report include:

• The average earnings per share (EPS) impact reported by North American companies in Q3 2022 was $0.05.
• Publicly traded North American companies reported $43.15 billion in headwinds
• Publicly traded North American companies reported $0.26 billion in tailwinds.
• 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 Russian ruble (RUB) was third with 20% of North American companies identifying it as impactful.
• The euro was the currency most mentioned as impactful by European companies on earnings calls, followed by the krona and the dollar.
• The top five industries that experienced the greatest impact from currencies in North America were (in ranked order): health equipment & supplies, professional services, biotech & pharmaceuticals, machinery, trading & distribution, and life sciences tools & services.

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“More than ever, industry analysts are asking questions during earnings calls about how CFOs are protecting shareholder value and scrutinizing FX-driven vulnerabilities to financial results. Large, unexplained impacts to earnings indicate an opportunity to improve corporate FX risk management through capturing the full spectrum of FX exposures, mitigating EPS at risk, and reducing hedging costs,” said Koester.