The price of a strong EURO

The Euro has gained some 13% versus the USD since its September low. According to Goldman Sachs, a 10% rise in the euro shaves 2% to 3% off earnings-per-share growth for European companies. The more global sectors like telco, healthcare and media are particularly exposed as they generate roughly 40% of their sales in North America. In our European portfolio, we think of companies like Deutsche Telekom and Sanofi. The CFO of one of our holdings, food retailer Ahold Delhaize, which generates 60% of sales in North America, already cites the weak USD as a possible reason for flattish earnings growth this year. Currencies, while not directly influencing our investment cases in the long run, matter for companies in the short term.