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Euro firms protest dollar's slide

    21 January 2021 Thursday

    European firms are becoming more and more voluble about the damage the weak dollar, and strong euro, is doing to their profits. On Friday, French defence contractor Thales became the latest to warn of lower sales and profits.



    Its comments come a day after luxury goods firm LVMH and Volkswagen both said the euro's surge against the dollar was hurting their plans.



    The euro has gained more than 50% over the past three years.



    On Friday morning, one euro was worth $1.34, not far below late December's all-time high of $1.3637.



    Bearing the brunt



    In its annual results, Thales said its pretax profit after exceptionals for 2004 rose 80% to 256m euros ($344m; Ј179m), despite sales which fell 2.7% to 10.3bn euros.



    I am rather pessimistic on how the dollar will evolve



    Bernard Arnault, LVMH chairman





    See euro/dollar value



    But it said its forecast for 2005 was being cut due to the weak dollar.



    Its previous estimates had expected an exchange rate of $1.15 to the euro, while it was now having to base its calculations on a rate of $1.30.



    A day earlier, LVMH had reported strong profits, but said the the dollar's weakness had slowed earnings growth.



    "Over the last two years, we have had to wipe 500m euros off our operating profit due to the decline in the dollar alone," said chairman Bernard Arnault.



    "I am not super-confident about the year; I am even rather pessimistic on how the dollar will evolve," the LVMH chairman said.



    And VW said the feeble dollar had forced it to ditch plans to bring to the US a successor for its iconic minivan, once much favoured by hippies.



    Other companies, such as Italian clothes firm Benetton, have responded by moving production outside the 12-nation eurozone, since the dollar's decline has been less steep against other currencies.



    And aerospace firm EADS has said that it will now have to build 300 of its new Airbus A380 super-jumbos to break even - a rise of 20% on its previous forecast.



    BBC NEWS

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