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 That was a 39 percent increase from the third quarter. With the
exception of the second and third quarters of 2012, at the peak of
the euro zone crisis, the fourth-quarter losses were the highest
since FiREapps started tracking the effects of currency on earnings
in 2011.
Phoenix-based FiREapps analyzes the currency effects on quarterly
earnings of 846 publicly traded companies, a subset of the Fortune
2000 companies that generate at least 15 percent of international
revenue in two or more currencies.
The average hit to earnings per share from foreign exchange among
the companies disclosing impact on EPS was $0.03 in the fourth
quarter, the same as in the previous quarters of 2013. Since FX
managers from leading multinationals typically have a target of less
than $0.01 in EPS impact, a hit to EPS that averages $0.03 is
material, FiREapps said.
More and more companies have made a conscious effort to hedge
against sharp currency movements because sudden gyrations in major
crosses can eat away at a company's bottom line. The dollar in 2013
managed to eke out a gain of 0.3 percent, but for the most part of
this decade, the greenback has been on a downtrend.
For 2013, the total reported negative impact was $17.8 billion, a 64
percent drop from the previous year, the report said. In 2012, the
negative hit to earnings was $50 billion.
"The trend is definitely improving, but there are still a lot of
companies that are unprepared," Wolfgang Koester, chief executive of
FiREapps, told Reuters.
He added that the improvement in 2013 relative to 2012 was due to
the fact that the euro zone debt crisis abated, stabilizing the
euro. Last year, the euro gained 4.2 percent against the dollar.
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For the fourth quarter last year, the Brazilian real, Japanese yen
and Canadian dollar had the largest negative impact on corporate
earnings. The yen lost nearly 7 percent of its value against the
U.S. dollar in the last quarter. The Brazilian real fell more than 6
percent, while the Canadian currency dropped 3 percent against the
greenback.
The FiREapps report also showed that 196 companies reported material
negative currency issues in the fourth quarter. That represented a
4.4 percent decline from the third quarter and a 7 percent decrease
from the 2012 average.
Fifty-eight companies, meanwhile, reported positive currency effects
in the fourth quarter. In total, the net quarterly impact from
currency volatility totaled at least $5.65 billion in losses, the
highest in 2013, FiREapps said.
(Reporting by Gertrude Chavez-Dreyfuss;
editing by Steve Orlofsky)
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