Shares in RWS (RWS) took a hit on Tuesday morning after the group announced weakness in the dollar could lead it to miss profit estimates for the full financial year. The average exchange rate for the six months to March 2018 was $1.37 to the pound, compared with $1.24 in the first half of the previous financial year.
The translation and intellectual property specialist is more exposed to the dollar at present following its acquisition of Moravia late last year. The localisation specialist makes over 95 per cent of its revenues in dollars, against a cost base primarily in euros and Czech korunas. Unless the exchange rates improve, the group expects to fall short of consensus profit estimates.
However, there was also some good news in the announcement. Management has identified additional synergies with Moravia, increasing the savings that will be made once integration is complete. Also, the cut to the US federal tax rate has lowered the effective tax rate to 21 per cent, from expectations of 23 per cent, which will be earnings-accretive.
