Exchange Rates

The Turbo-Charged Profit Machine

A bottling plant in Neutraubling. Source: Handelsblatt
A bottling plant in Neutraubling.
  • Why it matters

    Why it matters

    Many German companies have benefited from the weak euro, even those that would otherwise have seen little earnings growth. Those likely to benefit the most are companies that produce in Germany and sell a large proportion of their products in the United States.

  • Facts


    • In the third quarter of 2015, the euro was down by more than 15 percent over the same period last year.
    • Three-quarters of publicly traded companies in Germany benefit from the combination of a weak euro and the fact that they produce in Europe while selling at least some of their products in Asia or the United States.
    • The weak euro has also led to sharp increases the share prices of many German companies.
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Fresenius  is having a good run. The price of its shares has risen by more than 50 percent this year and the health-care company is bringing in a series of record profits. In the third quarter, sales grew by 16 percent, to €6.9 billion ($7.5 billion), while pre-tax profit increased by 25 percent, to €1 billion.

But the weak euro, and not the company’s lucrative business involving hospitals and infusion therapies, is behind these strong earnings figures.

In the third quarter, the euro was trading at more than 15 percent less than it was a year ago. Fresenius creates added value the minute it converts its sales in U.S.-dollar markets into euros. Without the weaker currency, Fresenius sales would have increased by “only” 7 percent and profits by 12 percent, or about half as much as the actual figures.

Thanks to the currency effect, companies that produce in Europe but sell at least some of their products in Asia or the United States are seeing additional revenue growth. Three-quarters of publicly-traded companies in Germany benefit from this combination.

In other words, Fresenius is not the exception but the rule.

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