January 22, 2013 / 9:14 PM / 5 years ago

TEXT-Fitch: slower growth environment enhances need to balance uses of cash

Jan 22 - U.S. corporations companies are grappling with how best to deploy
excess cash, balancing the need to maximize shareholder value while also
increasing capital spending, according to a new Fitch Ratings report.

Fitch's analysis is based on a compilation of public comments on cash deployment
and possible shareholder-friendly activities among 15 companies in the energy,
chemical and mining/basic material industries. The report provides each of the
companies' statements.

While corporate managements share the overarching goal of maximizing shareholder
value, the tactical question of how to use cash flow to best achieve that goal
continues to lack a fixed answer. For most management teams, this has meant
striking a balance between reinvestment in the business and return of capital to
shareholders.

Slower global growth and reduced speculative demand have resulted in a pullback
for a number of commodity prices, including oil, most base metals, steel and
steel raw materials, and select agricultural products. A scenario of softer
demand and moderation in prices for key commodities would underscore the need to
choose among competing uses of cash, potentially reducing investments in growth,
payouts, or other initiatives, or changes in balance sheet leverage. Fitch notes
that while a number of regular dividends were cut in the last downturn,
commitments to regular dividends tend to be relatively inconsistent.

The full report 'Cash Deployment in a Slower Growth Environment' is available at
'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Cash Deployment in a Slower Growth
Environment (What U.S. Corporates Are Saying)

Our Standards:The Thomson Reuters Trust Principles.
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