Ibex35 non-financial companies hoard €40 billion in cash, cash equivalents

MADRID | Large Madrid-listed non-financial firms accumulate cash positions at year-end record, as data released Monday showed. A study by El País over the consolidated balance sheets of the 26 Spanish non-financial companies on the Ibex 35 unveiled that the corporations closed last year with €21.827 billion in cash and €18.344 billion more in cash equivalents. In total, €40.171 billion, to which it must be added undrawn credit lines.

Spain’s most creditworthy companies, with access to debt markets, have taken advantage of windows in which investors have been receptive to expand credit. Finance directors have piled cash so firms have at their disposal sufficient liquidity to meet all 2012 deadlines, the report says.

The Spanish newspaper comments that this practice has been caused by potential credit difficulties risen from customers’ late payments, including public administrations’, which has reached between €30 billion and €40 billion.

The more comfortable cash position of all Spanish firms is that of Inditex. Until July it had €2.9bn, a staggering number considering that the group Zara has no financial debt. In absolute terms, the group that declared a higher cash position, bank account and cash equivalents is ACS, with €4.155bn. However, ACS has short-term commitments of €1,14bn to cover Iberdrola’s equity swap resulting ratios.

The next best cash-ready is Telefónica: €4.135 billion position in cash and cash equivalents, although the company chaired by Cesar Alierta during 2011 increased its credit lines by €1 billion. Endesa has €2.8 billion in cash and equivalents, and €8.9 billion in credit lines available unconditionally. Iberdrola has a total cash position of over €9,3 billion. Gas Natural Gas has not only grown its cash position to €3.1 billion, but also has bank financing and credit lines of €4.2 billion.

In the report, more than half of the companies exceed the €1 billion level in cash. Yet, a reduced cash position is not always synonymous with weakness. Companies with little debt as DIA, Ebro and Mediaset or highly predictable cash flows as Red Eléctrica can afford small cash positions.