Atlanta Journal-Constitution (April 22)
“The coronavirus has pulverized the balance sheets of many restaurants. But anyone with a drive-thru had a potential advantage as Americans shifted their eating habits and seating positions.” Atlanta-based Chick-fil-A is in that enviable position. Though “the vast majority” of the firm’s 2,000 dining rooms were closed due to the pandemic and remain that way, “sales and profits have soared over the last year.”
Tags: Advantage, Balance sheets, Chick-fil-A, Closed, Coronavirus, Dining rooms, Drive-thru, Eating habits, Pandemic, Profits, Pulverized, Restaurants, Sales, U.S.
The Economist (November 28)
“Investors are turning one eye away from the immediate struggle of coping with the pandemic and looking instead at the longer-term competitive picture. Who has won and who has lost? Like viruses, recessions usually come for the weakest first. Companies with sickly balance-sheets or frail margins quickly succumb. As promising startups become crushed closedowns, it is often the incumbents that have the resources to wait it out.”
Tags: Balance sheets, Companies, Crushed closedowns, Incumbents, Investors, Margins, Pandemic, Promising, Recessions, Resources, Startups, Succumb, Weakest
Euromoney (November Issue)
Despite the relative success of recent stress tests, “the financial sector remains at the core of the eurozone’s economic woes. Weak corporates and overleveraged households continue to weigh on bank balance sheets and lenders across the region remain vulnerable to write-downs.” The “flimsy” stress tests failed to “address the underlying problems of bad credit that slow growth and lowflation are compounding…. The euro banking crisis remains.”
Tags: Bad credit, Balance sheets, Economic woes, Euro banking crisis, Financial sector, Households, Lenders, Lowflation, Overleveraged, Stress tests, Write-downs
Institutional Investor (April 24)
To strengthen their balance sheets, large banks (including Deutsche Bank, Royal Bank of Scotland, UBS, Morgan Stanley, JPMorgan Chase and Barclays) have been reducing their commodities businesses, mainly through sales to independent trading companies. With these sales “to smaller players, conflicts of interest remain a potential problem” and nobody’s sure whether new problems will accompany this major shift. Given the skinnier balance sheets of the new players, market liquidity could conceivably suffer. In addition, “concerns abound that the underlying problems that have traditionally beset the commodities markets are simply being pushed onto a new and less tightly regulated set of actors.”
Tags: Balance sheets, Banks, Barclays, Commodities, Conflicts of interest, Deutsche Bank, JPMorgan Chase, Liquidity, Morgan Stanley, Regulated, Royal Bank of Scotland, Shift, Trading, UBS
Institutional Investor (September 17)
“As the global recession and financial crisis recede in the rearview mirror, companies have been acting more proactively in using their balance sheets in ways that enhance shareholder value. But we think they can do more…. By mid-2013, U.S. companies were sitting on cash that was equivalent to about 11 percent of their total assets, a three-decade high and earning almost nothing.” Fortunately, there are signs of change. Companies “have become more receptive to using debt to buy back shares, increase dividends and make acquisitions.”
Tags: Acquisitions, Assets, Balance sheets, Buybacks, Cash, Debt, Dividends, Financial Crisis, Recession, Shareholder value, Shares, U.S.
The Economist (November 3)
Even as profits have tumbled, balance sheets have soared as companies across the globe put more cash aside. “The financial crisis has made firms more skittish about relying on banks or securities markets for funds.” At least in Japan, this “urge to save may be lessening. Japanese firms, with few growth prospects at home, have been making foreign deals. Marc Zenner of JPMorgan Chase notes that in the past 18 months firms that announce acquisitions have been rewarded with higher share prices.”
Tags: Balance sheets, Banks, Cash, Foreign acquisitions, Japan, Profits, Share price
