Constant-currency reporting
Constant currency is the standard way multinationals separate operating performance from currency movement. It is also a single number that quietly assumes you did nothing about your exposure.
How it is computed
Take the current period’s results in local currency and translate them using the prior period’s exchange rates instead of the current ones. The difference between that figure and the reported figure is presented as the currency effect. What is left is described as growth on a constant-currency basis.
Why companies use it
It answers a fair question. If a business grew 8% in local terms and the dollar strengthened, reported growth might be 2%, and management would reasonably want to show the 8%. It is a non-GAAP measure, but it is close to universal in multinational reporting and investors expect to see it.
The assumption underneath
Constant currency assumes the full rate movement was experienced. For a company that hedged a meaningful share of its exposure, that is not what happened — the hedges fixed part of the rate, so the actual economic effect was smaller than the constant-currency adjustment implies. The presentation therefore overstates the currency drag, in the direction that flatters the operating line and makes the currency line look worse than reality. A small number of filers have begun adjusting for this by applying hedge rates to the hedged portion.
The other limitation
It produces one figure for the whole group. It can tell you that currency cost you four points of growth. It cannot tell you which entities produced those four points, which currency pairs, which contracts, or how much of it was structural rather than transitory — which are the questions that follow immediately in any serious review.
See this on your own numbers.
The attribution map is free and built from public filings — the drivers that move the number in your industry, and where peers took the hit. No data required, nothing to sign.