Friday 20 July 2018

Spending spree for Ireland's PLCs as cash holdings fall to €8.7bn and firms load up on debt


Fearghal O'Connor

Major Irish companies are spending their huge cash piles and increasing debt as they seek new opportunities in a stabilising economic situation environment.

The 20 largest Irish public companies held €8.7bn in cash or cash equivalents in total on their balance sheets, according to analysis by this newspaper. The analysis, which excludes financial institutions and is based on the latest available Bloomberg financial data, shows that the combined cash pile of the ISEQ companies doubled between the start of the recession in 2008 and 2016.

In 2008, as the Celtic Tiger era came to a crashing halt, major Irish companies held just over €5bn in cash. This grew steadily over the recession as major corporates hoarded cash because of the bleak economic environment. By 2016 the cash pile had grown to over €10.1bn.

But the analysis also reveals that, since 2016, many of the companies have begun spending their cash at a faster rate. Since then, financial data shows cash on the balance sheet of big Irish corporates fell to €8.7bn. This coincided with stability in the economy compared to the highly-volatile scenario that had existed in the years before.

Similarly, debt held on the balance sheets of the same companies has now risen to €23.6bn, up from €20.4bn at the end of 2016. In 2008 the debt held by the biggest listed Irish companies was just below €17bn.

Ryanair has by far the most cash of any Irish company, with €3.6bn, although it also has debt of €4.2bn, according to the latest figures. The airline has previously used its war chest of cash to purchase aircraft but in more recent times it has given back some of it to shareholders, completing a €600m share buyback last September.

A number of new property Reits and construction companies are included in the analysis, adding close to €240m in cash and €1.1bn in debt to the overall total.

The big Irish food companies - which have undertaken major expansion and acquisition in recent times - have also seen combined cash reserves rise to €1.7bn compared to €690m in 2008. Debts at the big food companies rose to €5.8bn, compared to €3.3bn, the analysis shows.

Sunday Indo Business

Business Newsletter

Read the leading stories from the world of Business.

Also in Business