Strong Dollar Affecting Earning Forecasts of US Companies

January 27, 2015 Share Print 0

Procter & Gamble CFO Jon Moeller told CNBC on Tuesday was the strong dollar the major factor in the company’s disappointing earnings report.

P&G reported before the opening bell adjusted quarterly earnings of $1.06 a share, 7 cents below estimates. Revenue of $20.16 billion also fell short of expectations, down 4 percent versus the prior year, including a negative 5 percentage-point impact from foreign exchange.

“There were definitely challenges, and FX was the prime one,” Moeller said in “Squawk Box” interview moments after the earnings were released. “We were able to accelerate and increase some savings work to offset part of that.”

P&G said its outlook for the year will remain challenging, with foreign exchange reducing fiscal 2015 sales by 5 percent and net earnings by 12 percent, or at least $1.4 billion after tax.

P&G derives roughly two-thirds of its revenue outside the United States, and the stronger dollar proves difficult for multinational corporations.

On the positive side, “we returned $4 billion in cash to shareholders,” Moeller said. “We tighten our strategy by divesting some businesses. We increased our productivity and cost profile.”

via CNBC

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.