Q2 2025 Foreign Exchange Impact: Winners and Losers
š± Macro FX Backdrop
In Q2 2025 (AprilāJune), the U.S. Dollar Index fell sharply by ~6.5%, contributing to a total 9ā10% YTD declineāits steepest quarterly drop in over 30 years. This created both tailwinds and headwinds for global companies depending on how they generate and report revenues:
- S&P 500 multinationals: Analysts estimate a +2% earnings boost per 10% dollar drop, due to favorable translation of foreign earnings.
- Exporters in Europe and Switzerland: Typically report in local currencies (e.g., EUR, CHF), so a weak dollar reduces converted revenue and earnings.
š Major Companies that Benefited from Dollar Weakness
1. Netflix, PepsiCo, 3M, Levi Strauss
- Outlook Revisions: Each revised Q2 or FY25 guidance upward, citing the dollar drop as a tailwind.
- PepsiCo: ~40% of revenue comes from international markets. FX tailwinds helped soften previously projected profit declines.
- CocaāCola: Cited FX as a key driver in targeting the upper end of its 2ā3% EPS growth range.
2. Lufthansa (Germany)
- Q2 Operating Profit: ā¬871M (ā$995M), up 27% YoY.
- FX Role: Weak USD among the supportive factors, alongside lower oil prices and strong logistics.
š« Companies Negatively Impacted by Dollar Weakness
1. Sika (Switzerland)
- Half-Year Sales: CHF 5.68B (ā2.7%), despite +1.6% growth in local currencies.
- FX Impact: A 10% USD depreciation caused a ā4.3% translation hit, dragging down revenue and EBITDA.
2. Spotify
- Q2 Revenue: ā¬4.19B (ā²10% YoY), but net income turned negative.
- FX Losses: ā¬104 million directly tied to unfavorable dollar exchange rates.
3. Nordic Industrials (SKF, Atlas Copco, Trelleborg, Epiroc)
- Cited translation losses and weaker dollar-driven competitiveness.
- Atlas Copco: Shares fell 10%āworst drop in 9 years.
4. Berkshire Hathaway
- Q2 operating profits likely flat after adjusting for FX losses.
- Core operations showed resilience, but the strong foreign presence weighed on USD-reported numbers.
š§¾ Estimated FX Impact Overview
| Entity Type | FX Move | Estimated Earnings Impact |
|---|---|---|
| S&P 500 multinational firms | ā10% USD | ~+2% earnings tailwind |
| Switzerland-based exporters | ā10% USD | ~ā4.3% CHF-reported revenue |
| Spotify | Q2 FX hit | āā¬104M operating income |
š Specific Case Study: Tech & Travel Giants
š§³ Booking Holdings (BKNG)
- Revenue: $6.8B (ā²16% YoY)
- Constant Currency Growth: ~12%
- FX Impact: +4% tailwind
- Gross Bookings: ā²13%
- Adjusted EBITDA: Received equivalent FX boost
Verdict: Booking clearly benefited, with FX adding +4 pp to top-line and profitability.
š Meta Platforms (META)
- Revenue: $47.52B (ā²22% YoY)
- FX Contribution: ~$80M only; neutral overall
- Outlook: ~+1% FX tailwind expected in Q3
Verdict: Minimal FX impact in Q2; possible mild tailwind next quarter.
š§ Alphabet (GOOGL)
- Revenue: $96.4B (ā²14% YoY)
- EPS: $2.31 (ā²22% YoY)
- FX Commentary: Not mentioned in filings
Verdict: Currency effects not material to reported growth.
š» Microsoft (MSFT)
- Key Drivers: AI/cloud (Azure, Copilot, Enterprise demand)
- FX Commentary: No major impact noted
- Growth: Strong across segments, FX-adjusted deltas minimal
Verdict: FX was negligible; core drivers were operational.
š Company FX Summary Table
| Company | YoY Revenue Growth | Estimated FX Impact |
|---|---|---|
| Booking (BKNG) | +16% | ~+4% tailwind |
| Meta (META) | +22% | Neutral in Q2; +1% in Q3 |
| Alphabet (GOOGL) | +14% | No material impact |
| Microsoft (MSFT) | Strong growth | Minimal FX influence |
š Key Takeaways
- Winners: Booking, PepsiCo, CocaāCola, Netflix, Leviās, Lufthansa.
- Losers: Spotify, Sika, Nordic industrials, Berkshire Hathaway.
- Booking was the standout FX winner among large-cap U.S. stocks, while Meta, Alphabet, and Microsoft remained largely insulated from FX swings.
- U.S. consumer-facing multinationals gained the most from favorable translation effects.
- European firms reporting in stronger home currencies felt a negative FX drag.
ā Conclusion
Q2 2025 revealed that U.S. multinationals with high international exposure enjoyed tangible FX-driven boosts. For companies like Booking and PepsiCo, the 6.5% Q2 dollar drop amplified top-line growth and improved earnings visibility. However, not all companies benefited equally. Spotify and Swiss/Nordic exporters absorbed meaningful translation losses, and tech giants with diversified revenue streams or currency hedging appeared largely immune to currency volatility.
As FX continues to evolve, investors should factor currency sensitivity into forecastsāparticularly in sectors like travel, consumer goods, and industrial manufacturing.