THE euro’s slide toward parity with the U.S. dollar will provide a much-needed boost for European companies this year and force U.S. rivals to adapt their businesses or risk losing market share.

    While currency hedging arrangements mean the benefits may not be seen straight away, the currency’s weakness has already cheered European chief executives by making their products cheaper overseas and lifting the value of dollar-based sales.

    “We have been handicapped by the strength of the euro, but now it seems that the wind is turning and we intend to make the most of this very positive currency effect that will help us deliver a nice increase of our sales and our profits in 2015,” Jean-Paul Agon, CEO of French cosmetics group L’Oreal told investors last month.

    Other companies predicting a tail wind from the around 20 percent drop in the value of the euro over the past six months to US$1.06 Friday include jet manufacturer Airbus, German car and truck maker Daimler and French engineering groups Schneider Electric and Alstom.

    Some U.S companies also see positives from the weaker euro, including lower borrowing costs, better performance at European units which export, stronger demand from eurozone-based customers and, for the leisure sector, increased travel into the continent.

    However, most U.S. groups that discussed the currency in recent weeks including Apple, Dupont, Priceline, Caterpillar and General Electric, have warned they may face headwinds in Europe and elsewhere, and some, including Xerox, have cut earnings guidance as a result.

    These companies have said they are now looking to cut costs, increase the portion of inputs they source from inside the eurozone and adopt new pricing policies, to try and maintain market share and margins.

    “U.S. companies exporting goods to Europe could face margin pressure from price adjustments or promotions in Europe,” said James Targett, analyst at Berenberg.

    With euro weakness likely to persist due to the European Central Bank’s quantitative easing program and a likely hike in U.S. interest rates on the back of a stronger U.S. economy, longer term planning is a must.

    “You have to think about where your revenues are, where your manufacturing is and where you’re buying your raw materials from,” he added.

    Many companies said hedging contracts would mean the impact of the lower euro would take time to feed through. Paris-based Alstom and Swiss-headquartered engineer ABB, which has manufacturing plants in the eurozone, said it may not be felt until the second half of the year.

    Airbus said it was fully hedged for 2015, 2016 and “largely” for 2017, leading analysts to predict it could be 2018 before the group experienced any meaningful uplift.(SD-Agencies)