International Business : The Falling Dollar Clouds European Companies’ Profit Picture : Trade: Large multinationals do as much as half their business in U.S. dollars. When the greenback falls, so can profits.

In late April, Mercedes-Benz Chief Executive Helmut Werner strode into a meeting, overjoyed with a big bank’s latest forecast: The dollar was heading toward 1.80 marks from 1.66 by year’s end, a hike that would add $263 million to the revenue of Mercedes’ North American car operations.

Werner isn’t overjoyed anymore.

With the dollar having fallen about 6% against the mark in the last six weeks, to 1.5405 on Wednesday, and declining against other major European currencies, the profits of multinationals that depend on the U.S. market are threatened.

Large companies across Europe, such as Mercedes parent Daimler-Benz in Germany, Elf Aquitaine in France and Hanson in Britain do as much as 50% of their business in U.S. dollars. When the dollar falls, profits can follow.

“It’s in the nature of U.K. public companies to have big international exposure,” said Rob Buckland, European equity strategist at NatWest Securities Ltd. “Some 25% of the earnings of U.K.-listed companies come from the U.S., so the dollar must have a very important impact.”

British companies’ total exposure to swings in the dollar can be even higher. Currencies in many Asian areas, such as territory of Hong Kong, are pegged to the dollar to make trade easier. So when profits from Asian operations are included, some large British corporations wind up with 40% to 50% of their earnings in dollars.

To be sure, European companies have also been reaping the benefits of the ravaged dollar to go on shopping sprees in the United States, snapping up companies whose price tags have fallen along with the currency. For example, Roche Holdings of Switzerland is in the middle of purchasing U.S. firm Syntex Corp. for $5.3 billion.

British companies have been fortunate that the dollar has not fallen as much against the pound as it has against the mark or the yen. The pound is up only about 3% against the dollar since June 1, trading at $1.5660 on Wednesday.

In Germany, particularly in the auto industry, it’s another story. Some analysts say the falling dollar may put more pressure on Mercedes and other German auto makers to rescind some earlier price cuts and raise U.S. prices for the 1995 model season, which starts this fall.

When the dollar falls below 1.65 marks, car makers don’t easily make a profit on their exports to the United States and dollar-pegged Asian markets, said Joachim Bernsdorff, an analyst at Bank Julius Baer in Frankfurt.

“They lost money last year because of the exchange,” which averaged 1.65 marks to the dollar in 1993, Bernsdorff said.

“You don’t see what they lost, because the German parent sells at a loss to a U.S. subsidiary so that the subsidiary can show a profit,” he said.

Although Mercedes and counterparts BMW and Porsche hedge against currency fluctuations, those hedges cover only six- to nine-month periods.

“The longer this goes on, the more we would be worried,” said Hans Christian Haas, a trader at Dresdner Bank who closely tracks the car industry.

The United States takes 12% of Mercedes’ sales and 15% of BMW’s output. Most of Volkswagen’s VW brand cars sold in the United States are made in Mexico, but its Audi brand models are built in Germany and also face pressure from a falling dollar.

Dutch aircraft maker Fokker will also be significantly hurt by the weaker dollar. Though its production is based in guilders, aircraft sales are generally denominated in dollars. Fokker spokesman Leo Stein said the persistently low dollar is the main reason behind its cost-cutting efforts.

Fokker “adapted its cost structure when it became clear that the dollar fell structurally below 2 guilders,” he said. The dollar has been below 2 guilders since July, 1991. The company’s two major stake holders, Deutsche Aerospace and the Dutch government, said recently that they would inject $566 million into cash-strapped Fokker.

At Benetton, the Italian clothing manufacturer and retailer, about 70% of revenue comes from outside of Italy. One-fifth of its sales are in dollars.