Why does a strong dollar mean lower sales for the Global 500? The reason is twofold. First, exports for U.S. corporations—the largest group on the list, with a total of 134 companies—weakened because the surging dollar meant that their prices were higher in foreign markets. Second, sales outside the U.S.—whether by U.S. or non-U.S. multi-nationals—in foreign currencies such as euros, yen, and yuan translated into far fewer dollars than they did last year. For instance, 1 billion euros in sales added up to $1.3 billion in 2014 and just $1.1 billion in 2015. Part of this is technical, of course, driven by the fact that the Global 500 is calculated in dollars. To determine rankings, we use an average of exchange rates over the previous year to convert, say, Toshiba’s sales from yen into dollars. Incredibly, no fewer than 19 of the 21 currencies represented on the list retreated against the dollar in 2015. The euro fell 16.4% vs. the dollar, the yen slid 8.4%, and the yuan dipped 2%. Emerging-market currencies took the biggest hits—notably the Brazilian real (–29.4%) and the Russian ruble (–36.9%). The best measure of how U.S. multi-nationals fared against foreign competitors is to strip out the conversion effect and compare revenue growth in home currencies. Overall, Asian companies performed the best last year, lifting their average sales in yen, rupees, and the like by 11%, vs. a 5.8% gain after conversion to dollars. China was an exception, however: Though the yuan fell slightly against the dollar, it appreciated strongly vs. most of the world’s currencies, pummeling exports of Chinese companies. European companies on average had flat sales in their local currencies. But many that did large volume in the U.S. performed brilliantly, as they got a boost from being able to produce their goods in euros or pounds and sell them in dollars.
strong dollar mean lower sales First, exports for U.S. corporations—the largest group on the list, with a total of 134 companies—weakened because the surging dollar meant that their prices were higher in foreign markets. Second, sales outside the U.S.—whether by U.S. or non-U.S. multi-nationals—in foreign currencies such as euros, yen, and yuan translated into far fewer dollars than they did last year.