Increased corporate revenue growth from Amazon to McDonald’s
USD(dx = f, dx-y.nyb) It has skyrocketed over the past six months – and That rapid rise This season has affected many corporate revenues so far.
Companies ranging from the big tech giants to consumer brands have mentioned forex headwinds in both fourth quarter results and future-looking guidance. A trend that analysts warned earlier may occur.
“In addition to the recent strength of the US dollar, the share of S&P 500 companies referring to FX has risen in 4Q revenue calls,” Goldman Sachs analyst David Kostin wrote in a note to client last week. I wrote it.
Historically, strong dollars have a negative impact on companies that carry out most of their business overseas, as adverse foreign exchange conversions lead to slower revenue and revenue growth.
At that point, Megacap Tech is generating a significant amount of revenue overseas. apple (aapl)) We reported about 58% of our total revenue From the most recent quarter international sales. And the percentage of overseas sales from seven other epic players like Alphabet (Goog, googl), Microsoft (msft), Tesla (TSLA), and meta (Meta) It was ranked more than 50% in all 2024.
In effect, these companies issued warnings of the dollar’s strength in their respective revenue releases and calls. Even on Amazon (amzn) reported a headwind of around $900 million from foreign exchange in the fourth quarter, a slightly higher than 23% of revenue overseas in the recent quarter, “is about $700 million higher than expected.” I reported that.
As a result, the e-commerce giant said first quarter revenue should only increase between 5% and 9%, potentially making it the slowest revenue growth quarter in history.
“This guidance expects an unusually large and unfavourable effect of approximately $2.1 billion or 150 basis points from the foreign exchange rate,” the company said in its revenue release.
However, this does not mean that tech companies alone are feeling an impact.
McDonald’s (MCD) “We expect foreign currency to be headwinds for the 2025 EPS,” he said. coca cola (that)) Similar guidance has been issuedforecasts comparable EPS percentage growth, including “6% to 7% currency headwinds,” Johnson & Johnson (JNJ) It predicted a $1.7 billion hit in annual sales.
Green Back Positive price action It has been driven primarily by two main catalysts. Trump’s election and the subsequent Republican sweepsalong with readjustment of future FRED mitigation Faced with strong economic data.
After reaching September lows, the US dollar index, which measures the value of dollars related to baskets of six foreign currency (euro, Japanese yen, British pound, Canadian dollar, Swedish crona and Swiss franc) is over 7% It has been hovering near the two-year high that reached January. Since the election, the index has risen by around 4%.