Which European companies are set to benefit from a stronger dollar?

As the euro collapses At its weakest level against the dollar in more than a year, spurred by Donald Trump’s presidential victory, some European companies may be headed for unexpected profits. Trump’s victorycombined with Republican control of Congress, has paved the way for a possible policy overhaul: higher tariffs, increased defense spending and a reassessment of foreign aid, all of which are sending signals across global markets.

In this changing economic landscape, Bank of America has highlighted a select group of European companies in a unique position to benefit from a stronger dollar. These companies offer European investors both a hedge against the weakness of the euro and a buffer against the uncertainties of the political changes of the Trump era.

European winners in a strong dollar environment: Who benefits and why?

European companies that derive a significant portion of their revenue from the United States but maintain relatively low exposure to North American assets tend to obtain good results when the dollar strengthens. This imbalance between revenue and assets allows these companies to enjoy increased revenue from North American sales while minimizing exposure to rising dollar-based asset costs.

A stronger dollar inflates the value of income generated in USA when converted to euros, directly improving the profits of European companies with significant sales in North America. This means an increase in profits without the need to adjust prices or production levels.

Risk reduction with high income and no assets

On the other hand, the low exposure to US tangible assets helps reduce risks of operating costs linked to the appreciation of the dollar. Companies with smaller operations in the United States can focus on benefiting from higher revenues without the burden of higher costssuch as real estate, salary or regulatory issues, which can erode profitability.

In contrast, companies with significant asset exposure to the United States face greater sensitivity to dollar-based costs. In short, European companies with a more balanced or minimal asset presence in the United States can overcome these challengesfocusing instead on reaping the rewards of higher dollar-denominated income.

Bank of America: ““We are the capitalist capital of the world.”

In a report released Thursday, Bank of America analyst Paulina Strzelinska selected a group of European companies positioned to benefit from the strong dollar.

“The first thing we must do is take advantage of our strengths. We are the innovation capital of the world. We are the capitalist capital of the world“Bank of America CEO Brian Moynihan said of what he would advise the incoming Trump Administration.

Top 15 European Companies Benefiting from a Stronger Dollar

These companies, identified by their high income exposure in North America and its few tangible assets in the region, are ideally suited to capture rising foreign exchange earnings without incurring significant dollar-based operating costs.

1. Nordisk: This Danish pharmaceutical giant tops the list with 59% of its revenue coming from North America and no tangible assets in the region. The company is well protected against dollar operating costs and will benefit from currency conversion gains.
2. British American Tobacco: BAT is in second place with 44% of its sales in North America and no physical assets in the region, allowing it to take advantage of the strong dollar without dollar-denominated cost pressures.
3. Ferrovial: The Spanish infrastructure company derives 36% of its revenue from North America, with zero tangible assets in the region, making it very sensitive to dollar gains without exposure to asset-related costs.
4. Beiersdorf: Known for brands like Nivea, this German company generates 26% of its revenue in North America, but has no physical assets in the United States.
5. Kongsberg: The Norwegian maritime and defense technology company derives 24% of its revenue from the US, but only has 3% of its assets there.