BAKU, Azerbaijan, June 23
By Leman Zeynalova – Trend:
Hit by the oil price crash at the beginning of 2020, oil and gas multi-national enterprises (MNEs) saw a 30 percent drop in sales, Trend reports with reference to UNCTAD.
“Extractives, heavy industry and construction MNEs suffered an average drop in foreign sales of more than 15 percent. Hit by the oil price crash at the beginning of the year, oil and gas MNE sales dropped by 30 percent. This led to a halt in foreign investments and, in some cases, restructuring and asset divestment programs, leading to a smaller foreign presence. For example, Royal Dutch Shell (Netherlands–United Kingdom) shed about 15 percent of foreign assets during 2020, and Equinor (Norway) and BP (United Kingdom) about 10 percent. ExxonMobil (United States) is expecting to generate $15 billion from divestments in 2021 (mostly abroad) and up to $25 billion by 2025. Major energy MNEs such as TC Energy (Canada) and Repsol (Spain) reduced their overseas operations and production to the extent that they slipped out of the top 100 ranking,” said the organization in its latest report.
“MNEs in energy and heavy industry reduced their presence abroad. Others, including pharmaceuticals and telecommunication, expanded their international operations. Light industries, utilities, and automotive and trading companies, while also suffering lower sales during the year, kept their international production structure stable.
Despite falling revenues and earnings, MNEs managed to maintain constant cash from operations. They also secured additional financing, mostly in the form of debt. The average rate of new issuance of corporate debt doubled in 2020. At the same time, acquisitions decreased and capital expenditures remained stable, leading to soaring cash balances. Many corporations also raised equity capital, reversing a recent trend to buy back shares. In 2020 the top 5,000 non-financial listed MNEs increased their cash holdings by more than 25 per cent to $8 trillion,” said UNCTAD.
---
Follow the author on Twitter: @Lyaman_Zeyn