How significant is the favorable foreign exchange translation effect, and is it sustainable?

Significance of the FX translation gain

In the Q2‑2025 release, Ampco‑Pittsburgh (AP) said “higher sales of forged engineered products and favorable foreign‑exchange translation offset weaker mill‑roll sales.” Net sales for the six‑month period moved from $221.2 M in 2024 to $217.4 M in 2025 – a decline of roughly 2 %. The only positive driver that prevented a larger drop was the translation benefit, which therefore represents a modest, non‑core boost (well under 5 % of total revenue). It is not a growth catalyst; it merely cushions a weakness in the mill‑roll segment.

Sustainability

The translation effect is tied to the U.S. dollar’s relative strength against the currencies in which Ampco’s overseas operations generate revenue. As long as the dollar stays strong, the company will continue to record a modest upside; a swing back to a weaker dollar (or a shift in the mix of foreign‑currency exposure) would instantly turn the same translation into a drag. Moreover, the company’s primary business is domestic‑focused, so the foreign‑currency footprint is limited and likely to stay volatile and non‑recurring rather than a durable earnings driver.

Trading implications

• Short‑term bias: The recent beat is largely cosmetic. With mill‑roll sales still lagging and the FX gain unlikely to grow, the price‑action that has rallied on the earnings beat may be overstated.
  
• Watch the USD index: A weakening dollar would remove the translation tailwind and could pressure AP’s margins further.
  
• Positioning: Consider a neutral‑to‑slightly‑bearish stance until the company demonstrates genuine top‑line growth (e.g., sustained forged‑product volume or a turnaround in mill‑roll). A short‑term pull‑back on any rally‑induced over‑optimism, or a defensive hedge if you are long, would be prudent.