Dollar comes to rescue of Corporate America
Dollar comes to rescue of Corporate America
By Francesco Guerrera and Christopher Bowe in New York
Copyright The Financial Times Limited 2007
Published: April 20 2007 23:19 | Last updated: April 20 2007 23:19
The weak dollar and strong overseas markets came to corporate America’s rescue on Friday with blue-chip companies such as industrial giants Honeywell and Caterpillar and the drugmaker Pfizer reaping the benefits of international exposure.
Several companies, including the fast food chain McDonald’s and the recruitment agency Manpower, beat Wall Street analysts expectations as the strength of foreign markets more than offset the weakness of the US economy.
Jim Owens, chief executive of the heavy construction equipment maker Caterpillar, summed up the past few months for many US companies when he said: “Exceptional growth outside North America helped us deliver good results in a tough quarter.”
The string of strong earnings and positive predictions helped the stock market to move higher. The Dow Jones Industrial index, which hit a record high twice already this week, closed in on the landmark 13,000 level, ending the day at a record level for a third successive day, climbing 1.2 per cent to 12,961.98.
The first quarter results highlighted US companies’ need to drive growth to counter the slowdown in the domestic economy.
That task has been made easier by a sharp slide in the dollar over the past few months, which benefits US groups with earnings in foreign currencies but penalises companies, especially smaller ones, that rely on imports.
The threat posed by a weak dollar, which this week briefly touched a 26-year low against the British pound, to America’s small- and medium-sized companies could fuel calls from protectionist measures by some of the 2008 presidential hopefuls.
By contrast, Pfizer, the world’s largest drugmaker, said it expected international sales to come in higher by nearly $1bn over the next two years due to ”primarily a strengthening of the euro relative to the dollar since our previous forecast in January.”
The company predicted that the stronger euro would boost this year’s sales by $450m more than expected.
Although the increase is small compared with Pfizer’s $47bn-$48bn forecast annual revenues, it will help offset the sudden loss of $1.2bn due to generic competition after a key patent expiry on a blockbuster hypertension drug.
Meanwhile, Honeywell raised its sales forecast for the year by $700m to $33.5bn. David Anderson, chief financial officer, told the Financial Times some $300m of the improved sales would come from favourable currency movements. He said $150m of that had already been achieved in the first quarter of the year, helping Honeywell to beat analysts’ expectations. The company reported a 21 per cent rise in net income to $526m in the three months to March.
At Caterpillar, a downturn in North America was partly countered by strong sales in Europe, Asia and Latin America. Overall, first quarter profits quarter fell $24m to $816m.
By Francesco Guerrera and Christopher Bowe in New York
Copyright The Financial Times Limited 2007
Published: April 20 2007 23:19 | Last updated: April 20 2007 23:19
The weak dollar and strong overseas markets came to corporate America’s rescue on Friday with blue-chip companies such as industrial giants Honeywell and Caterpillar and the drugmaker Pfizer reaping the benefits of international exposure.
Several companies, including the fast food chain McDonald’s and the recruitment agency Manpower, beat Wall Street analysts expectations as the strength of foreign markets more than offset the weakness of the US economy.
Jim Owens, chief executive of the heavy construction equipment maker Caterpillar, summed up the past few months for many US companies when he said: “Exceptional growth outside North America helped us deliver good results in a tough quarter.”
The string of strong earnings and positive predictions helped the stock market to move higher. The Dow Jones Industrial index, which hit a record high twice already this week, closed in on the landmark 13,000 level, ending the day at a record level for a third successive day, climbing 1.2 per cent to 12,961.98.
The first quarter results highlighted US companies’ need to drive growth to counter the slowdown in the domestic economy.
That task has been made easier by a sharp slide in the dollar over the past few months, which benefits US groups with earnings in foreign currencies but penalises companies, especially smaller ones, that rely on imports.
The threat posed by a weak dollar, which this week briefly touched a 26-year low against the British pound, to America’s small- and medium-sized companies could fuel calls from protectionist measures by some of the 2008 presidential hopefuls.
By contrast, Pfizer, the world’s largest drugmaker, said it expected international sales to come in higher by nearly $1bn over the next two years due to ”primarily a strengthening of the euro relative to the dollar since our previous forecast in January.”
The company predicted that the stronger euro would boost this year’s sales by $450m more than expected.
Although the increase is small compared with Pfizer’s $47bn-$48bn forecast annual revenues, it will help offset the sudden loss of $1.2bn due to generic competition after a key patent expiry on a blockbuster hypertension drug.
Meanwhile, Honeywell raised its sales forecast for the year by $700m to $33.5bn. David Anderson, chief financial officer, told the Financial Times some $300m of the improved sales would come from favourable currency movements. He said $150m of that had already been achieved in the first quarter of the year, helping Honeywell to beat analysts’ expectations. The company reported a 21 per cent rise in net income to $526m in the three months to March.
At Caterpillar, a downturn in North America was partly countered by strong sales in Europe, Asia and Latin America. Overall, first quarter profits quarter fell $24m to $816m.
posted by Carlos T Mock at 7:57 AM
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