Exchange Rate Fluctuations Affected Enterprises Such As Adi Prada And Suffered Heavy Losses

With the appreciation of the euro, adidas, Prada and other domestic European enterprises focusing on overseas business began to face exchange risks.

At home, due to the continuous appreciation of RMB against the US dollar, aviation enterprises enjoy huge profits brought by exchange.

According to the data, in the first half of this year, the domestic airlines gained 4.3 billion yuan in exchange earnings, so they still remained profitable despite the loss of 4.1 billion yuan in their main business.

Under the double-edged sword of exchange rate, some people are happy and others are sad.

Prada people who suffered heavy losses

At the end of September, Miss Liu transferred a sum of money to the credit card for repayment. What made her a little depressed was that the money was a little more than expected. When traveling to Europe in early September, Miss Liu swiped her card to buy some personal belongings. "This credit card can only be repaid in RMB, and it can only be repaid after the bill is issued, which will take 18 days." Miss Liu said that she could only watch the euro exchange rate rising these ten days.

It is not only Miss Liu who is worried about the soaring euro exchange rate.

On September 19, Adidas lowered its 2013 full year profit forecast by 7.9%, mainly due to the stronger euro exchange rate. Data shows that nearly 73% of Adidas' revenue comes from markets outside Western Europe.

Prada's situation is similar to that of Adidas. Prada recently disclosed that in the first half of 2014, the company's net profit was 308.2 million euros. This figure was significantly lower than analysts' expectations. According to the estimation of relevant institutions, Prada's foreign exchange loss in the second fiscal quarter up to the end of July was 5.83 million euros, the highest in two years.

In the context of the appreciation of the euro, some European local enterprises mainly engaged in overseas business are facing exchange risks.

JPMorgan Chase has made a downward adjustment of about 3% to Adidas' 2013 earnings forecast, and believes that the strengthening of the euro exchange rate will be the main reason. Citigroup analysts said in the report that Adidas' expected net profit may drop by 9% to 10%.

Exchange risk is a risk that every enterprise with overseas business needs to face. Its unpredictability often causes enterprises to suffer "irresistible" losses.

The most typical example comes from Sony in Japan. In 2011, due to the devaluation of the euro against the yen significantly exceeded expectations, Sony, which exported a large number of products to Europe, suffered a serious impact on its performance. Some commentators described this as "having worked hard for half a year, but because the exchange rate has changed, they have not made money and are working in vain."

Companies that were once "dismal" because of the exchange rate

In addition to Sony's experience, there are many people who have suffered from exchange rate "disasters".

On July 30 this year, Yanzhou Coal Industry released a "performance forecast correction" that shocked the market. The company's performance forecast for the first half of the year turned from a profit of about 1.02 billion yuan to a loss of 2.35 billion yuan.

In 2009, Yanzhou Coal Industry invested A $3.333 billion to acquire Felix, an Australian mining enterprise, making it the largest acquisition case of China in Australia. The company's board secretary said that the acquisition fund was loaned from the bank in the form of US dollars, which was equivalent to about US $3 billion at the exchange rate at that time. In addition, Yanzhou Coal Industry Co., Ltd. has also been providing funds to Yanzhou Coal Australia through entrusted loans and other means. At present, the total loan of Yanzhou Coal Australia is about 4.5 billion US dollars.

In the second quarter of this year, the exchange rate of the Australian dollar against the US dollar dropped from 1.04 to 0.90, with a change of about 10%. According to the scale of 4.5 billion US dollars, the exchange loss generated is 450 million US dollars, equivalent to about 2.7 billion yuan.

In the huge exchange loss event of Yanzhou Coal Industry, foreign exchange experts pointed out that the event exposed the financial management risks of Yanzhou Coal Industry. "As early as the emergence of dollar loans, enterprises could lock in risks through financial derivatives."

In addition to the recent Yanzhou Coal Industry, there was also the famous CITIC Pacific case of huge losses.

On October 20, 2008, CITIC Pacific, a component of Hong Kong's Hang Seng Index, suddenly suffered a huge exchange loss of HK $15.5 billion.

Before the bankruptcy of Lehman in 2008, the Australian dollar was 0.9 against the US dollar, and the Australian dollar was widely optimistic about the prospect of appreciation. Therefore, CITIC Pacific became the long leader of the Australian dollar at that time. Finally, the Australian dollar fell to 0.6, causing huge exchange losses.

Exchange earnings of the aviation industry "make up" the main business losses

It is not only the euro that is strengthening. Since the reform of the RMB exchange rate in 2005, the RMB has always maintained a long-term appreciation trend against the US dollar.

Airlines that need to import are very happy with the rise of RMB, while exporters are suffering from the problem of exchange rate.

For domestic airlines, in the first half of last year, there was a rare devaluation of the RMB, and exchange losses caused poor performance of the industry as a whole. In the first half of this year, the RMB returned to the appreciation track, and the financial reports of the four major domestic airlines in the first half of this year, without exception, showed very eye-catching exchange gains, again contributing to the company's profits.

The financial report shows that in the first half of this year, Air China achieved a net profit of 1.119 billion yuan, an increase of 7.31% year on year. Among them, the figure of exchange earnings is exactly 1.119 billion yuan. Air China, with a net profit of 1.062 billion yuan in the first half of last year, had a net exchange loss of 341 million yuan. That is to say, the balance of exchange conceals the negative growth of Air China's net profit and beautifies the statement.

In this regard, Li Lei, the deputy director of the National Securities Research Institute, who has studied the aviation industry for many years, told reporters that although the exchange earnings of Air China were equivalent to the net profit figure, it could not directly explain that the exchange earnings contributed to all profits. But there is no denying that "the appreciation of the RMB has indeed contributed to most of the profits."

In addition to Air China, the situation of China Eastern Airlines, China Southern Airlines and Hainan Airlines is similar.

According to the data, China Eastern Airlines' net exchange income in the first half of the year was 1.174 billion yuan, and its net profit was 763 million yuan. If exchange is excluded, we can know the main business loss of China Eastern Airlines after simple calculation. The net exchange income of China Southern Airlines in the first half of this year was 1.435 billion yuan, and the net profit was only 302 million yuan. The main business also suffered losses. HNA's net exchange income in the first half of this year was 329 million yuan, with a net profit of 645 million yuan. Exchange contributed nearly half of the profit.