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Natuzzi SpA Message Board

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  • Rickson9 Rickson9 Oct 2, 2004 2:38 AM Flag

    What If

    "What if the dollar continues to fall against the euro? Just a what-if."

    Half the sales are in Europe, the other half, in the U.S.

    The value of one goes up, the other goes down.

    What happens? I'm not sure, but then again, I was never really good at math.

    IMHO, Jim

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    • Already stated, sales are @ 1/2 & 1/2

      The rate of change is what will swing eps short term. If there was a rapid USD decline then margins would be compressed short term because it takes time for consumers to adjust to retail prices. A falling USD by axiom means the US standard of living (purchasing power) is declining.

      The compensation hedge for NTZ is its China/Yuan/USD pegged manufacturing of low end product. Sales of EURO cost high end product would likely decline in the US market but the growth in USD/Yuan cost low end product may well accelerate even faster in the US market than the present 20% p.a. as it would have more price/point 'space' in the market.

      The US is 30% of world GDP, NOT more or less. If you are a global company you always have these issues. It's better being exposed to a 30% Fx effect than a 0% effect (your not global) or a 100% effect (your only domestic), that's business.

      What's more important is paying a cheap price for the company especially given most global companies are exposed to the same Fx possibility.

      If you have a long time horizon most of these issues become insignificant. It took 40 years for NTZ to become the world leader with @ 10% market share. What's the problem holding them for 10+ years and watching them grow to 20% market share.

      Cheers WBplc

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