Venezuela President Hugo Chavez has rained on the U.S. consumer goods parade.
His government’s decision this month to devalue the Venezuela bolivar promises to hurt the profits of many leading U.S. consumer products makers this year even as they seem to be turning a corner.
On Friday, Newell Rubbermaid said the devaluation – which basically creates a two-tiered system that sells U.S. dollars for 4.3 bolivars in one market, and a separate parallel market where the greenback is going for about 6 bolivars- would shave 4-5 cents per share off of its 2010 earnings, sending its shares down.
The news follows Colgate-Palmolive and Procter & Gamble also saying on Thursday that Hugo’s tinkering with exchange rates would hit their 2010 profits, putting a little damper on the news that both companies had done better than expected last quarter.
More bad news may be on the way as we make our way through earnings season: companies exposed to Venezuela could feel an average earnings hit of about 2 percent from translating business from that country into U.S. dollars, Bill Pecoriello of Consumer Edge Research warned us earlier this month.