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FIREapps CEO Wolfgang Koester on how investors can tell how well a company is managing its currency risks.
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There so how many foreign currencies should CEOs in the US be hedging against -- -- it depends on the company but.
Tupperware CEO they do business everywhere Rick Goings told me at the World Economic Forum in Davos.
That eight main currencies are always on his radar but overall multinationals.
Are actually staring down roughly 400 currency pairs like the dollar against the yen the dollar against the -- -- or the won in Korea.
Here with us now -- Fox Business exclusive with Wolfgang -- the chairman and CEO fire -- Fortune 100 companies pay you to help them manage all of this 'cause -- can't be all things to all people but.
A company say for example like Coca-Cola has how many currency -- -- -- deal with -- -- do business everywhere.
-- are probably is in the three to 400 currency pairs range -- -- reducing on the Tupperware parties.
He's watching eight currencies against the dollar and he's probably not watching the inter relationships of those.
And those eight currencies are probably making up only about 50% of -- the risk you won't get but they they have actually managed very well their risk but their companies that happened to this particular segment is to teach people.
What to look for in an earnings report for example of where the signs are that a company is story is not managing their currency risk as it can mean a lot of the stock -- -- -- experience a look at first and foremost.
When you look at -- -- statement look at the foreign exchange gain or loss line on the income side that by the so so -- earnings report is about.
Depending on the company and 28 as thirty pages long so you go -- you find which part of that first.
Foreign exchange -- lost line on the income -- -- crack.
That's the first one to look phone porn they'll say right there has volatility is to put -- -- -- -- -- but will clearly state that that's the first part -- Second part -- you look at is how does a CEO actually articulate that obviously in Tupperware is cases CEO is is familiar with at least the largest exposures.
And he's watching those and having having his organization watch that so he can articulate that risk.
Think that's that's really important issue then lastly.
What -- the analysts asking about what are they talking about when they asked and how does a -- then respond to that the analysts are actually looking at this very closely increasingly so.
You know what does a yen decreased mean what is the Mexican peso.
Increase mean to them and then translate that into what does it mean to earnings.
And then these that these increases and decreases change moment by moments -- sometimes it's a great day for the dollar during the quarter and -- -- horrible place at the very tough to managing requires that thought process.
In your opinion what's the company that best -- as global currency risk I think they're quite a few mean some -- No -- peak censures and they're goals of the world and then there others like it Avnet -- -- -- really -- child or tech data these companies that may have large margins they still need to manage it very well.
For the once in a tight margins like the F -- and the tech -- Also mansion really well they understand their exposures both in the balance sheet and -- statement and they know how to minimize the impact.
Now you're also going to give examples of companies that are kind of blown it on certain levels in your opinion -- Such so for example -- Chevron and Honeywell.
We exactly now to the tune of how much money have been lost in -- -- a given quarter -- Chevron last quarter 300 million dollars in the top line impact.
Honeywell hundred -- -- -- -- we've talked in the past about the IBM's but there's lots of those examples of still companies who think that's alright.
Kraft and Weatherford -- on your list of companies that didn't do this well but these are companies that have been around for a long time at least Kraft.
Wouldn't -- have somebody on it 24/7.
Managing this risk they do.
But some of them -- -- still I hate to put it this -- stuck in the pre 2008 era they were certain processes that worked in that environment they don't work today anymore.
It's not the 2080 ruled that works anymore because 80% of the exposures actually not 80% of the risk so they need to update their processes.
With technology today you're gonna be able to get to exposures -- the push of a button and really understand where they -- and -- forecast it to the end of the quarter because you're actually right.
You got to mention -- to the quarter to quarter basis yes you're looking at a daily.
But look at the end of the quarter folks we'd like to try to teach you something every day and there are there's gold and -- their earnings reports especially if you know where to look.
And -- Wolfgang does that thank you very much my pleasure Wolfgang -- fire apps CEO closing bell ring.
