31st January 2018
Daniel Pfund, Senior Financial Analyst, Fund Manager
The annual results of European companies are only starting to be published, but one special theme already comes back regularly: the impact of exchange rates. The Euro has indeed strongly appreciated during the fourth quarter, gaining 1.6% against the Dollar and 2.3% against the Swiss franc. But the comparisons are much more difficult over a one-year period: +14.2% against the Dollar and +9.2% against the Swiss franc. Financial analysts always compare results from year to year, so it are the yearly movements which are of interest to us.
This impact concerns mainly the large companies, which are very active internationally. Sanofi for example has issued a communication (prior to the final publication of results), stating that the exchange rate impact causes sales to drop by about 6%-6.5% during the fourth quarter. All be it a French company, Sanofi only generates 26% of sales in Western Europe. An even more extreme example is Nestlé, a Swiss company, but which only generate 1.6% of its sales in its home country!