By Theo Francis
The turmoil in emerging markets is creating unwelcome headwinds
for U.S. companies that continue to count on the developing world
for much of their growth.
Companies in industries as varied as consumer products and
chemicals say demand in emerging markets remains strong. But
currency volatility such as that seen in recent days complicates
planning and can reduce the value of overseas sales.
"Last week, there were significant currency movements, primarily
in some emerging markets," Theodore Crandall, chief financial
officer of Rockwell Automation Inc., said in a Wednesday morning
conference call with analysts. "And if those rates remain at
current levels through the balance of the year, that would create
some additional currency headwind for us."
Donald Allan Jr., chief financial officer at toolmaker Stanley
Black & Decker Inc., told analysts in a call Friday morning
that continued volatility in emerging markets would lead the
company to pare back discretionary spending, including for travel
and telephone calls.
"That's something that will be one of our top five priorities
for the year until we see more stabilization, especially in
emerging markets," Mr. Allan said.
The dollar's strength has weighed on U.S. companies' results for
some time. Consumer products manufacturer Procter & Gamble Co.,
for instance, said its sales grew by 3% in the three months that
ended Dec. 31 if currency movements are set aside. Including
currency moves, sales were flat.
So far, companies aren't complaining much about demand. While
Unilever PLC warned weakness in developing countries could hurt its
sales growth this year, P&G said sales in emerging markets grew
7% to 8% excluding currencies and remained strong.
"We've all gotten used to the retrenchment, if you will, in the
emerging markets around the world," John Luke, chief executive of
packaging and chemicals maker MeadWestvaco Corp., said in an
earnings call Wednesday morning. "But I think even against that
backdrop, we're seeing good firm demand."
Executives at Ametek Inc., a maker of electronic instruments,
remained upbeat about the company's emerging-market prospects.
Chief Executive Frank Hermance told analysts that sales excluding
currencies were up about 11% for 2013 in Brazil, Russia, India and
China, and that 2014's prospects were positive.
Visa Inc. executives noted that about half the company's
business comes from outside the U.S., and is growing about twice as
fast as within the U.S.
History suggests that emerging-market currency declines hit
companies that depend on commodities hardest, said Gina Martin
Adams, an equity strategist at Wells Fargo Securities. Those
industries include oil and gas, machinery, personal products, road
and rail, tobacco, and hospitality and leisure.
The turmoil in emerging markets was clearly on the mind of Rick
Goings, chairman and CEO of container-maker Tupperware Brands Corp.
Throughout his presentation on the company's earnings call
Wednesday morning and while answering analysts' questions, Mr.
Goings emphasized the potential for sales in emerging markets.
"We're well-positioned, particularly in the emerging markets,
for these middle-class that people want to have a different
lifestyle," Mr. Goings said at one point.
But in his final comments he said, "I hope some of this currency
settles out."
Write to Theo Francis at theo.francis@wsj.com