European firms have $1.3 trillion cash pile: Deloitte
LONDON, Sept 15 (Reuters) - European firms which have built up a trillion-euro ($1.3 trillion) cash hoard during years of caution since the financial crisis may finally be ready to spend some of it, according financial consultancy firm Deloitte.
Cash levels at listed companies in Europe, the Middle East and Africa have risen by 3.8 percent to 1 trillion euros since 2007, with manufacturing and energy companies hoarding most of that cash pile, Deloitte said on Monday, citing its own survey and analysis of publicly available data for listed companies.
Its survey of 271 executives at listed and non-listed companies in 14 countries in the region showed 59 percent of respondents intend to invest some of their reserves this year. Within this segment, 54 percent said growth would be the primary focus of their investment strategy in the next 12 months.
"Major businesses across the EMEA region look set for a new era of growth," the report said.
"Armed with a potent mixture of surplus cash and market opportunities, the vast majority of these businesses have reached a pivot point."
Rising cash levels have already prompted share buybacks in Europe, as well as a rebound in dividend payouts, suggesting that companies are financially healthy but seemingly reluctant to reinvest cash in a stalling economy.
"Our research suggests that the majority of large businesses across EMEA have reached a pivot point in their attitude to investing, with the impetus to use their cash reserves for growth increasing all the time," said Chris Gentle, Deloitte's head of research in EMEA.
"However, confidence remains brittle and it is likely that such activity will return gradually."
Nearly a quarter of respondents in the Deloitte survey said the main destination of their investment money will be maintenance works, with 21 percent focusing on innovation.
European Central Bank President Mario Draghi, fresh from announcing a new batch of stimulus measures over a week ago, urged governments on Thursday to match the ECB's effort with investment and structural reforms to help the flagging euro zone grow.
"There is a paradox in Europe between the firepower its companies have to invest and the ongoing requirement of the European Central Bank to announce a new stimulus package as happened earlier this month," said Deloitte's Gentle.
(1 US dollar = 0.7739 euro)
To read the report, please click: http://www.deloitte.com/view/en_GB/uk/research-and-intelligence/cash-to-growth/index.htm (Reporting by Francesco Canepa and Lionel Laurent; Editing by Ruth Pitchford)
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