Weak dollar is welcome change for McDonalds, PPG Industries

Written by Bloomberg | Updated: Oct 31 2009, 04:59am hrs
McDonalds Corp, United Technologies Corp and PPG Industries Inc are among the companies whose earnings may get a boost in the fourth quarter from a weak dollar because of foreign operations and exports.

US firms are benefiting when they convert revenue from Europe with the euro touching $1.50 this month and having climbed 16% from a year ago as of Wednesday. United Technologies, the maker of Pratt & Whitney jet engines, adds $10 million in annual operating income for every penny the euro gains against the dollar, chief financial officer Gregory Hayes said in a conference call.

A cheaper dollar is unquestionably positive for US corporate earnings, Bankim Chadha, the New York-based chief US equity strategist for Deutsche Bank AG. The share of earnings coming from the rest of the world for the S&P 500 has been increasing steadily since the 1960s.

Companies faced what PPG CEO Charles Bunch called a currency headwind through the third quarter because the dollar, while declining, was still reducing earnings compared with a year earlier. The tables have now turned, Bunch said had said in a conference call on October 15.