TC Energy FX Increases Ebitda, Increases Costs and Expenses in 2021 – Currency Commentary


By Adriano Marchese

TC Energy Corp. said fluctuations in exchange rates in 2021 increased costs and expenses of its operations in different countries, while boosting earnings before interest, taxes, depreciation and amortization.

On currency effects:

“Comparable EBITDA denominated in US dollars increased by $92 million to $1.2 billion from $1.1 billion in 2020; however, this translated to a rate of 1.26 in 2021 compared to 1.30 in 2020.”

“Although the weakening of the U.S. dollar in the fourth quarter of 2021 compared to the same period in 2020 had a negative impact on comparable EBITDA for the three months ended December 31, 2021, the corresponding impact on comparable earnings does not was not significant due to natural compensation and economic hedges.”

“The foreign exchange impact of a weaker US dollar on the Canadian dollar equivalent segment profit of our US dollar-denominated businesses.”

“Higher tax expense primarily due to the impact of lower foreign tax differentials, inflationary adjustments in Mexico, as well as increased flow-through income taxes on Canadian pipelines to regulated prices.

“Higher interest expense primarily due to lower capitalized interest following its shutdown for the Keystone XL pipeline project following the revocation of the Presidential permit on January 20, 2021, partially offset by the impact of exchange rate of a weaker US dollar on the conversion of interest denominated in US dollars.”

“Higher interest and other income primarily due to higher realized gains in 2021 compared to 2020 on derivatives used to manage our net exposure to exchange rate fluctuations on US dollar-denominated income.”

Write to Adriano Marchese at [email protected]


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