EMEA listed companies' cash reserves almost $1 trillion
The 1,200 listed companies in the region have added a further €47 billion to this surplus in the last 12 months alone, whilst the total has increased by around €250 billion since 2007. More than 75% of this sum is held by just 17% of companies, mirroring the global trend where around a third of companies hold 80% of the $3.53 trillion in cash reserves.
In addition to analysing publicly available data for listed companies, Deloitte also surveyed 271 C-level executives at listed (73 respondents) and non-listed companies (198 respondents) in 14 countries. The analysis of listed companies’ cash positions is supported by this survey, with 77% of respondents reporting a cash surplus in 2014, with 20% holding more than €250m.
This suggests that both listed and non-listed companies across EMEA have been behaving in a similar fashion, preserving their cash instead of investing. This is a radical change since the financial crisis and a behaviour which looks set to stay. It comes at a time when business competitiveness in Europe appears to be under threat. Since 2010, a net balance of 41 European companies has exited the Global Fortune 500, the sharpest fall on record.
Fifty-nine percent of those surveyed intend to invest some of their reserves this year, whilst 31% say their focus will be on continuing to strengthen the balance sheet. Of those companies intending to invest, 54% say that growth will be the primary focus of their investment strategy in the next 12 months.
However, one in five companies’ investments will be directed at maintaining existing assets. Staff training and development is seen as an investment priority by 69% of companies, with the same proportion feeling likewise about investing in new markets and 64% intending to invest in new technology. ■