Live Markets: Weak dollar could pressure Europe's media companies

Swiss Life Holding AG

03/09/2024 11:59

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    WEAK DOLLAR COULD PRESSURE EUROPE'S MEDIA COMPANIES
    Europe's media companies  .SXMP  could be particularly sensitive to foreign exchange rates,
analysis from Citi found, especially large-cap companies, given their relatively high exposure
to North America.
    Citi estimates that circa 56% of revenue and 61% of profit for the seven largest media
companies - RELX  REL.L , Wolters Kluwer  WLSNc.AS , Informa  INF.L , UMG  UMG.AS , Publicis
 PUBP.PA , WPP  WPP.L  and Pearson  PSON.L  - are generated in U.S. dollars, presenting a
challenge due to the weaker dollar.   
    The pound  GBP=D3  and the euro  EUR=EBS  are the two best performing major currencies
against the dollar this year, with the current FX rates standing 3.2% and 1.7% above the 200DMA
respectively.
    "Given recent weakening of the U.S. dollar vs. both the euro and sterling, this suggests
there could be pressure on headline earnings," Citi analysts say in a note. 
    "We estimate that on average a 5% move in the USD rate vs. major currencies would impact
earnings by c.3%."
    Looking at individual companies, Citi notes Pearson has the most gearing to a change in the
dollar of the large-cap media companies, with around 70% of revenue and 75% of operating profit
derived in USD. 
    WPP has the lowest, Citi finds, with circa 38% of revenue and 48% of profit generated in
dollars.
    The following chart has been reprinted with permission of Citi Research. Not to be
reproduced.
    
    (Samuel Indyk)
    ***** 
    
    FOR TUESDAY'S OTHER LIVE MARKETS POSTS
    JOBS HURDLE CLICK HERE
    FRENCH EQUITIES LACKING LONG-TERM VISIBILITY CLICK HERE 
    GERMAN STOCKS AT ALL-TIME HIGHS, ROLLS-ROYCE REBOUNDS CLICK HERE
    EUROPEAN STOCKS SET TO CREEP HIGHER CLICK HERE
    ISM KICKS OFF THE DOLLAR'S BIG WEEK CLICK HERE
    

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US dollar slumps to 13-month low as Fed signals rate cut    https://reut.rs/3MmUIw9
French stocks suffering from government uncertainty    https://reut.rs/3Tezc0e
Citi Media    https://tmsnrt.rs/3TeHDZs
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