Gazprom In Top Five Global Companies With Largest Cash Pile – Moody’s

Posted: December 18, 2014 in Econ 101, Technology and Energy

SEE ALSO:  Cheaper Oil Could Be a Gift for Big Energy Companies – Baron’s


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Company cash balances surge since financial crisis

By Colm Kelpie

18/12/2014

Car manufacturer Volkswagen has a healthy cash pile
Car manufacturer Volkswagen has a healthy cash pile

The cash balances of some of Europe’s biggest companies have jumped by about 40pc since the crash as they wean themselves off bank funding.

Ratings giant Moody’s said companies including Volkswagen, Gazprom, Electricite de France and BP, held a trillion dollar cash pile in total.

The ratings agency said that the cash is predominantly held by traditionally cash-rich sectors like oil and gas, utilities and cars.

Jean-Michel Carayon, the author of the Moody’s report, said that while the amount of cash held dipped by 2.8pc in the first six months of this year, it still remains well above the levels held during the financial crisis.

“While many companies built up their war chests in the wake of the 2008-09 financial crisis to lessen their dependence on banks and weather potential capital market closures, current macroeconomic stability has made it less critical to hold substantial cash balances,” Mr Carayon said.

“Nevertheless, we expect that companies will continue to do so as a liquidity buffer and to refinance upcoming debt,” he added.

In the report, Moody’s notes that the top 10 holders of cash account for $228bn (€183bn), or 22pc, of the total cash pile.

The top five cash kings are Volkswagen, Gazprom, BP, Electricite de France and Total, all of which have at least $22bn in cash, the ratings agency said.

The energy sector, including oil and gas, as well as the car, telecommunications and utilities sectors are the most cash-flush industries in Europe.

They have $645bn or 61pc of the corporate cash total.

The energy sector has the largest cash pile, at $185bn, or 17pc of the total.

“The up-tick in M&A activity in 2014 has had a limited impact on cash balances as companies have taken advantage of low interest rates and the ample liquidity to finance a large proportion of such transactions through debt (or equity in some cases) rather than cash,” Moody’s said.

The ratings agency also notes that operating cash flows are mainly used to finance capex, or capital expenditures.

Despite cutting back spending on capex in 2009 and 2010, it still remained the single largest item of expenditure for companies from 2008 to 2013.

The rating agency expects that spending on capex will remain fairly flat amid weak economic growth in the Eurozone.

In October, the Financial Times reported that Britain’s largest companies are sitting on cash piles of £53.3bn (€67bn).

SOURCE: http://www.independent.ie/business/world/company-cash-balances-surge-since-financial-crisis-30845321.html

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Comments
  1. I guess they talk only about public companies. Since Surgutneftegaz had 35 bln USD in cash in the beginning of the year. (You can buy their stock in Moscow Exchange but they really don’t care so it is not really public.)

    Like

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