Given that companies have for three years in a row seen significant negative impacts to EPS from currency volatility, and given the fact that those currency surprises are coming from a growing list of countries around the world, it makes sense that analysts are beginning to ask increasingly pointed and sophisticated questions of CFOs and CEOs during corporate earnings calls.Ĭonsider, for example, the following exchanges between analysts and CEOs/CFOs. Increasingly Pointed and Sophisticated Analyst Questions Yet the average EPS impact reported by corporates in 2013 was three times that. Within that context, it becomes clear how important currency risk management is risking EPS is dangerous business because investors tend to react (usually negatively) first and ask questions later on earnings surprises.įX managers from leading multinationals increasingly have management objectives of less than 1 cent EPS impact.

That currency impact ultimately flows down to earnings per share (EPS) and – as a consequence – affects shareholder value. In 2013, the total negative currency impact quantified by corporates in their earnings calls was $17.8 billion. Surprise Currency Impacts to Earnings per Share At the same time, corporates were reporting impacts from the euro to a lesser and lesser extent in the last quarter of 2013, the euro was not on the list at all.

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