The total reported negative currency impact in the second quarter of 2014 was $3.9 billion, according to the 2014 Q2 Currency Impact Report from FiREapps.
After analyzing the earnings calls of 1,200 publicly traded North American and European companies, FIREapps found that the second quarter of 2014 was a period of relatively low volatility. As a result, aggregate negative currency impact was at its lowest in more than two years. However, there was a resurgence of volatility in the third quarter, which could produce currency impact surprises for multinational corporations that have not instituted modern currency risk management programs.
A greater number of North American corporations (132) than Europeans (124) reported negative currency impacts in Q2. However, the aggregate impact quantified by companies in Europe was larger (€2.1bn, or $2.7bn) than in North America ($1.2 bn). Ninety-four US companies reported positive currency impacts in Q2 for a combined $824m profit from currencies, which is up 80% from Q1 (52 companies). Also in Q2, the net negative currency impact was $389m; In Q1, the net negative currency impact was $3.26bn.
The currency impact reported by European corporations was larger than that reported by North American companies in absolute and relative terms. The average per-company negative impact – both as a number and as a percentage of revenue – was significantly larger for European businesses ($135m, 0.39% of average annual revenue) than North American businesses ($41.8m, 0.23% of average annual revenue).
Fully 23% of the North American companies reporting currency impact fielded currency impact-related questions from analysts; 44% of the European companies did. Analysts are more likely to ask about currency impact when more companies are reporting more significant impacts. In line with their relatively higher levels of impact in Q2, European companies fielded analyst questions at about twice the rate of their North American counterparts.
Both North American and European corporates reported continued challenges from emerging market currencies. Overall, none of the ‘2014 Q2 Currency Culprits’ – the top five currencies most mentioned in 2014Q2 earnings calls as impactful – were particularly surprising: the BRL, EUR, VEF, ARS and JPY for North America, and the USD, BRL, RUB, EUR and AUD for Europe.
Rising interest rates, excitement around blockchain use cases and cross-border payments were all hot topics at this year's AFP conference in San Deigo.
On-Demand Treasury Management Solutions continue to gain increased adoption in the US and EMEA regions.
The US dollar and debt yields falling on the North Korea missile test, treasury being a top target for cyber criminals and why treasurers aren't into real-time payments all hit the latest headlines in the world of treasury this week. Don't miss our ten top news stories from around the world.
Treasurers are being expected to do more work with fewer resources than ever before, so it is little wonder that the automation of day-to-day operations was highly discussed on the second day of EuroFinance, the annual treasury event held in Barcelona this week.