“Earnings revisions from Venezuela are likely to be negative rather than positive,” BMO Capital Markets consumer analyst Connie Maneaty said. “Worse still, the Sicad rate is floating and may devalue more.”
P&G and Colgate-Palmolive last month said that using a weaker, secondary rate would cut their assets by as much as $280 million and $200 million, respectively.
“Companies are assuming they won’t receive any more money at the official rate,” Luis Andueza, administrative law partner at legal firm Norton Rose Fulbright told Bloomberg. “They are taking loses by adopting conservative accounting to calm the markets worried by negative news in Venezuela.”