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TC Energy FX Boosts Ebitda, Increases Costs, Expenses in 2021 — Currency Comment

By Adriano Marchese

 

TC Energy Corp. said foreign exchange fluctuations in 2021 increased costs and expenses across its operations in different countries, while giving a boost to earnings before interest, taxes, depreciation and amortization.

On foreign exchange effects:

"U.S. dollar-denominated comparable EBITDA increased by $92 million to $1.2 billion compared to $1.1 billion in 2020; however, this was translated at a rate of 1.26 in 2021 versus 1.30 in 2020."

"While the weakening of the U.S. dollar in fourth quarter 2021 compared to the same period in 2020 had a negative impact on comparable EBITDA for the three months ended Dec. 31, 2021, the corresponding impact on comparable earnings was not significant due to offsetting natural and economic hedges."

"Foreign exchange impact of a weaker U.S. dollar on the Canadian dollar equivalent segmented earnings in our U.S. dollar-denominated operations."

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

"Higher interest expense primarily due to lower capitalized interest as a result of its cessation for the Keystone XL pipeline project following the revocation of the Presidential Permit on Jan. 20, 2021, partially offset by the foreign exchange impact from a weaker U.S. dollar on translation of U.S. dollar-denominated interest."

"Higher interest income and other mainly attributable to higher realized gains in 2021 compared to 2020 on derivatives used to manage our net exposure to foreign exchange rate fluctuations on U.S. dollar-denominated income."

 

Write to Adriano Marchese at adriano.marchese@wsj.com

 

(END) Dow Jones Newswires

February 15, 2022 11:26 ET (16:26 GMT)

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