Negative effective of currency rates on company results fall in third quarter
CURRENCY market fluctuations in the third quarter of 2016 had the smallest negative impact on North American companies’ financial results since 2014, FIREapps said in a report.
The companies that quantified an exchange-rate effect reported a negative impact totaling $ 6.81 billion, the smallest for any quarter since the third quarter of 2014, when the effect was US$ 4 billion, according to FIREapps, a currency risk consulting firm.
While the firm does not estimate the effect on future results, US corporate reports on the fourth quarter already are showing signs of a stronger impact from US dollar strength.
Colgate- Palmolive said on Friday its quarterly sales were hurt by a strong dollar, and PayPal Holdings also said currency fluctuations hit fourth- quarter results.
The US dollar index rose 7.1 per cent in the fourth quarter, while it was down 0.7 percent in the third quarter of 2016.
The number of North American companies citing a negative impact from currency fluctuations in the third quarter was 218, below the prior three quarters’ average of 307 companies, the FIREapps report showed.
US multinationals’ foreign currency earnings are worth less in dollars when the dollar is stronger. Nearly half of US S&P 500 companies’ sales come from overseas, according to S&P Dow Jones Indices data.