8 Big US Companies With High E.U. Exposure (CCL, ERTS, FLSR, FLS, HAR, IFF, MIL, PM)

The implosion of the Euro is going to make it difficult for large American multinational corporations to be competitive in selling in Europe.  The currency adjustments are just too fast and too strong for the headwinds to be ignored.  We pulled several big US industry leaders out with deep exposure to the European Union to see which had the largest risks.  While these are certainly not all the companies with Europe (and EMEA) exposure, we took a look at Carnival Corp. (NYSE: CCL), Electronic Arts, Inc. (NASDAQ: ERTS), First Solar Inc. (NASDAQ: FSLR), Flowserve Corp. (NYSE: FLS), Harman International Industries Inc. (NYSE: HAR), International Flavors & Fragrances Inc. (NYSE: IFF), Millipore Corp. (NYSE: MIL), and Philip Morris International, Inc. (NYSE: PM).  We have tried to identify the specific European exposure where applicable, although some of this is EMEA or international on each.

Carnival Corp. (NYSE: CCL) said in its latest annual report, “Our European brands represent 33% of our total capacity at November 30, 2009, and we expect them to increase to 37% of our total capacity by 2012, assuming no new acquisitions, transfers or withdrawals are announced other than as previously discussed.”

Electronic Arts, Inc. (NASDAQ: ERTS) said in its year ago annual report that international net revenue increased by 4% to $1.8 billion, which it listed as 43% of total net revenue in fiscal year 2009.  Unfortunately, that was listed as  Europe, Australia, Asia and Latin America by the company.  Reuters listed the EMEA amount as 38% of revenues.

First Solar Inc. (NASDAQ: FSLR) has over half of its business tied to the E.U. region. Its 2009 annual report noted that Blizstrom GmbH, EDF EN Development, Gehrlicher Solar AG, Juwi Solar GmbH, and Phoenix Solar AG in 2009 each accounted for between 10% and 19% of all component segment sales.  Reuters noted that its revenue exposure to EMEA (Europe, Middle Esat and Africa) was 77%.  This is getting the double-whammy as oil prices are heading further south each day along with the Euro.

Flowserve Corp. (NYSE: FLS) for its flow controlled equipment said that Europe accounted for 25% of its 2009 revenues in its annual report.

Harman International Industries Inc. (NYSE: HAR) has significant exposure.  The Stamford, Connecticut-based maker of audio products and electronic systems said, “Sales to Audi/Volkswagen accounted for 15%, sales to BMW accounted for 15% and sales to Daimler accounted for 8% of our total consolidated net sales for the fiscal year ended June 30, 2009.”  That is 38% tied to those three E.U. manufacturers.

International Flavors & Fragrances Inc. (NYSE: IFF) said in its latest annual report, “For the year ended December 31, 2009, 35% of our sales were to customers in Europe, Africa and Middle East (“EAME”), 26% in North America, 24% in Greater Asia and 15% in Latin America.”

Millipore Corp. (NYSE: MIL) showed in its 2009 Annual Report that some 40% of its $1.65 billion in revenues came from the European Region.  This is in life sciences tools.

Philip Morris International, Inc. (NYSE: PM) had over 27% of its 2009 cigarette shipment volume tied to the European Union.  The difference is that over 40% of its operating companies’ income was tied to the E.U.  The 2009 cigarette shipments were down 3.3%, revenue was down 6.6% and income outside of currency grew 4.4% in 2009.

JON C. OGG