Euro's falling value will be a problem for some US companies

Discussion in 'Economics' started by S2007S, Jun 8, 2010.

  1. S2007S

    S2007S

    Earnings for companies who have many sales in Europe are going to feel the impact of the euros double digit percentage drop over the next couple of quarters. I think some companies will be guiding lower due to this, today MCD released this news (Based on current exchange rates, McDonald's expects currency conversion to hurt full-year net income per share, versus its previous expectation for a slight benefit. The company, which gets more than half of its revenue and profits from outside the United States, gave no further details.)



    Guess, which garners 35% of sales from Europe, on May 27 lowered its second-quarter earnings guidance. "The euro has now weakened significantly below our planning assumptions," said Carlos Alberini, Guess' chief operating officer who left later to join Restoration Hardware as co-CEO.

    Big-cap companies on average generate 14% of sales in Europe, while small-cap stocks generally have less exposure, with 4% of sales, says S&P analyst Howard Silverblatt. The top 20 U.S. companies in European sales include General Electric (NYSE:GE - News), Ford (NYSE:F - News), Johnson & Johnson (NYSE:JNJ - News), Pfizer (NYSE:pFE - News), Kraft (NYSE:KFT - News), McDonald's (NYSE:MCD - News), Cisco Systems (NMS:CSCO), Coca-Cola (NYSE:KO - News), Best Buy (NYSE:BBY - News), Intel (NMS:INTC) and cruise ship operator Carnival (NYSE:CCL - News).


    Other companies include

    CAT
    MMM
    HPQ
    ORCL
    VMW