Australian companies are sitting on a record $246 billion of cash following a stronger-than-expected reporting season. But boards remain cautious about how to spend it.
leaves Australian companies sitting on a record pile of cash reserves, providing boards with greater flexibility to capitalise on opportunities in a post-COVID-19 world, even if those acquisitive instincts are tempered by the war in Ukraine.P/ASX 200 companies had reported results which revealed that their aggregate cash holdings increased 60 per cent to a record $246 billion as of December 31, according to disclosures tracked by CommSec.
Of the 138 companies that reported interim results , just under 67 per cent recorded a rise in profit, above the long-term average of 60 per cent. And almost 88 per cent of businesses delivered a statutory profit – the most in two years. But while boards are well-placed to distribute the rewards via dividends, companies displayed a clear sense of caution with just over 52 per cent of businesses electing to increase dividends, 18 per cent reduce them, 11 per cent keep payouts stable, and 19 per cent decline to declare any dividend.The 81 per cent of companies that promised a distribution is still short of the 85 per cent long-term average.
“We continue to notice commentary to the effect that this was an investment to account for supply chain disruptions and rising input costs,” Macquarie said.“But we still see rising inventories as being potentially problematic given a slowing cycle. A period of inventory destocking in the first half of 2022 is likely to show up in a falling ISM,” referring to the closely followed Institute for Supply Management survey.
“Cost inflation pressures for the most part are being managed well, with many businesses indicating that cost increases are being passed through, which has allowed profit margins to be maintained,” Mr Schellbach said.