US firms that generate substantial UK revenues faced severe currency headwinds through the second quarter as repatriated sterling earnings were hit by a sharp depreciation of the pound. To cushion that blow, US utility PPL cashed out of deeply in the money currency hedges, sacrificing short-term earnings growth for a lump sum payment. PPL, which generates more than 30% of its revenues in the UK, booked a US$310m gain in its second-quarter earnings after monetising foreign exchange forward contracts that hedged sterling-based revenue through to 2018. The hedges, struck around US$1.60, moved US$450m into the money as a result of sterling's fall from US$1.50 to US$1.30 following the UK's vote to leave the European Union in June.
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