Aggregate free cash flow among Europe, Middle East and Africa (EMEA) corporates should turn positive in 2014 as revenue and margin figures also show modest improvement, according to Fitch Ratings.
The credit ratings agency (CRA) says that total cash holdings will probably fall further from their 2012 post-global financial crisis high, but this will be due to companies using the cash for debt repayments, rather than a reversal of the conservative financial policies to combat weak market conditions since the onset of the crisis.
In its special report, entitled
‘EMEA Corporate Cash Generation: 2014 a Turning Point’,
Fitch forecasts that improving free cash flow (FCF) in the consumer and healthcare, telecom media and technology, and industrial sectors should drive the return to aggregate positive FCF after two years of negative figures. The turnaround will be driven by a combination of recent investment in faster-growing emerging markets and aggressive cost-cutting, also leading to stronger margins.
The Belgian-Brazilian multinational beverage group Anheuser Busch InBev, Swiss pharmaceuticals group Roche Holding and French healthcare group Sanofi will be among the biggest generators of FCF, helped by stable demand in the healthcare and food retail sectors. Conversely, significant capital expenditure by transport companies such as JSC Russian Railways and South Africa’s Transnet SOC will contribute to negative FCF in the utilities and transport sectors, which will be the main drag on the aggregate figures.
The CRA’s analysis, which discusses over 40 Fitch-rated EMEA corporates, forecasts total cash holdings to drop by over US$130bn over 2013 and 2014. This will help pay off around US$140bn of gross debt, leaving companies’ net debt position largely unchanged from 2012.
Fitch adds that this could change if companies were to implement less cautious financial policies and delay their debt repayment, for example in response to shareholder demands or to make the most of improving market conditions as the eurozone shows early signs of returning to growth. However, overall the CRA believes that a sustained euro area recovery remains fragile and that corporates will maintain their focus on conservative policies and balance-sheet strength in the short term.
The US money market fund reforms came into effect in 2016 and are already dramatically shaping US fund industry with investors flooding out of prime funds and into government securities. While the reforms are similar, they are not the same. GTNews interviews Yeng Bulter, global head of the cash business at State Street Global Advisors on the differences.
With the end of 2017 fast approaching, many finance professionals might be counting down the days with some degree of dread. Year End is just around the corner and with it comes the many long hours accountants will spend going over balance sheets and profit and loss accounts, investigating account irregularities and chasing sign offs.
The top five sectors Asian fintech investors are interested in are data analytics, blockchain, lending, payments and regtech, according to Gary Hwa, EY regional managing partner.
On the third day of the Singapore Fintech Festival conference, there was a focus on specific applications of fintech innovation. One was trade finance, which is clearly is ripe for a revolution.