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The Morning Ledger: Freeing Cash is a Tough Task for CFOs |
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Royal Philips' working capital has been falling in relation to its sales in recent years. PHOTO: JASPER JUINEN/BLOOMBERG NEWS
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Good day. Finance executives are struggling to reduce the amount of excess working capital at companies around the world, resulting in about $1.5 trillion trapped on balance sheets—funds that could be spent on growing these businesses, report CFO Journal's Nina Trentmann and Ezequiel Minaya.
More radical changes needed: CFOs didn’t make much progress speeding up the cash conversion cycle in 2017, according to a study by PricewaterhouseCoopers LLP. It took them an average of 51.8 days to collect a payment after a sale, a 0.1 day improvement compared with 2016. Companies in 2017 held 58.2 days of inventory on hand, a 0.7 day gain compared with the prior year, and paid suppliers 0.3 days earlier, after an average of 67.7 days.
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Search for extra cash: The findings come as capital spending by companies in 2017 has dropped and central banks are tightening policies, resulting in higher financing costs for businesses. As a result, some companies may need more cash on hand to fund or finance certain transactions.
CFO in the driver's seat: “The biggest challenge when managing working capital is to keep strict discipline,” said Abhijit Bhattacharya, finance chief of Royal Philips NV. This can be achieved by harmonizing and standardizing processes, focusing on overdue receivables and aged inventory and working with suppliers on payment terms, he said.
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The U.S. Federal Reserve releases the minutes of its Nov. 7-8 meeting on Thursday at 2 p.m. ET, providing more detail about how officials viewed the economy and their plans to raise interest rates to keep growth expanding at a sustainable pace.
Dollar Tree Inc., Express Inc., J Crew Group Inc. and Workday Inc. are among the companies slated to report earnings Wednesday.
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Stocks: The Stoxx Europe 600 gained 0.7% in the opening minutes of trade, following a 2.3% surge for the S&P 500 on Wednesday, the biggest rise in the U.S. index since March.
Oil: The U.S. crude oil benchmark, West Texas Intermediate, dropped 1% to $49.79 a barrel Thursday, the first time it has been below $50 since October 2017. Brent crude fell 1.5% to $58.22 a barrel.
Treasurys: The 10-year U.S. Treasury yield slipped to 3.004%, compared with 3.044% on Wednesday.
Currencies: The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was down 0.1%.
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Unilever, maker of Dove products, has been searching for a successor for Chief Executive Paul Polman for a year. PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES
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Unilever PLC, the maker of Hellmann’s mayonnaise and Dove soap, named Alan Jope to replace longtime Chief Executive Paul Polman as it, like the rest of the industry, struggles to navigate a sharp shift in consumer tastes.
Amazon.com Inc. is selling medical products to patients based on one of the most private corners of the health system: electronic medical records.
Renault SA, Nissan Motor Co. and Mitsubishi Motors Corp. are “fully committed” to their alliance, the companies said Thursday, as top executives gathered for the first meeting of their global partnership since the arrest last week of its prime architect, Carlos Ghosn.
Altria MO Group Inc. is in talks to take a minority stake in e-cigarette startup Juul Labs Inc., according to people familiar with the matter, a move that could give the Marlboro maker greater access to a rapidly growing but increasingly controversial segment of the nicotine market.
Facebook Inc. considered charging third parties for access to user data several years ago, company emails show. Such a move would have departed from its policy against selling such data, court filings in a lawsuit against the company indicate.
Big American retailers are getting tough with Chinese suppliers as import tariffs bite, cutting orders, negotiating down prices and demanding faster turnarounds.
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Kansas City Southern is among the companies affected by proposed corporate tax regulations released Wednesday. PHOTO: LUKE SHARRETT/BLOOMBERG NEWS
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The U.S. Treasury Department issued long-awaited corporate tax regulations on Wednesday, partly accommodating companies’ pleas for help with an unexpected consequence of last year’s tax law.
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German prosecutors and police searched Deutsche Bank AG premises in and around Frankfurt on Thursday in relation to suspicions that the bank helped clients set up offshore tax havens and failed to alert authorities to possible money laundering.
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Amazon.com Inc. is being probed by the German Federal Cartel Office over its role as Germany's largest retailer and biggest online host for smaller stores, Bloomberg reports.
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U.S. regulators are taking steps to ease requirements for banks to submit “living will” plans for winding themselves down in a crisis without a taxpayer-funded bailout, the latest step to soften postcrisis rules on the banking industry.
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The Trump administration’s threatened shutdown of the U.S.-Mexico border could shift supply chains as companies that depend on the crossing to reach customers in California and nearby states look for ways to keep goods moving, trucking experts say.
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MillerCoors LLC said it agreed to settle a dispute with Pabst Brewing Co. over a longstanding brewing partnership that had ended up in a courtroom this month.
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Federal Reserve Chairman Jerome Powell described interest rates as low by historical standards. PHOTO: DON EMMERT/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Federal Reserve Chairman Jerome Powell ignited a market rally Wednesday by saying interest rates are “just below” broad estimates of a level considered neutral, a setting designed to neither speed nor slow economic growth.
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Growth of overseas profit at American firms is slowing, a new sign of how the faltering global economy is reverberating back to the U.S.
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U.S. tariffs have scrambled the global steel trade, with countries that can no longer sell into the U.S. sending their products into Europe at a record rate.
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The U.K.’s banking system is strong enough to ride out the shock of a disruptive Brexit, the Bank of England said Wednesday, clearing the way for bigger payouts to shareholders in the coming months.
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J. Jill Group Inc., the Quincy, Mass.-based retailer of women's apparel, announced the departure of Chief Financial and Operating Officer Dave Biese. He is scheduled to leave the company on April 30, 2019.
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Mr. Biese has been CFO for the past nine years, including the company's initial public offering in March 2017. The company did not state a reason for his departure and a call seeking further comment was not immediately returned. J. Jill Group has hired an executive search firm to conduct a search for Mr. Biese's successor.
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