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Global profits fell 12.2% in 2020 to $ 1,255 billion, down less than expected thanks to savings in the fourth quarter, according to a study published on Monday.
Despite the healthy context, two-thirds of companies worldwide have managed to increase or maintain their profits, says a report by asset manager Janus Henderson.
However, one in eight companies eliminated their dividends completely and cut their dividends to one in five.
The study notes that “the impact of the epidemic on earnings came in the wake of the classic recession trend and its spread, at the international level, was less severe than it was in the wake of the global financial crisis” of 2008.
In the fourth quarter alone, global dividends (-9.4%) fell less sharply than expected, and many companies have recovered their payments in full or in part.
Statistically significant differences were observed from one region to another and between the different sectors of activity.
In North America, for example, dividends rose 2.6% to a “new record” ($ 546 billion, nearly half of the global total) in 2020, particularly because companies protect their earnings by suspending or reducing buybacks. Stocks instead, the study explains.
The American software giant Microsoft has become the world’s largest profit driver in 2020.
China, Hong Kong and Switzerland also performed well with half of the worldwide earnings cuts in 2020 in Europe.
And with good reason: at the request of regulators in 2020, the European banking sector has been forced to stop dividend distribution for some time. The same ban was imposed in the UK.
Thus, banks accounted for, by value, a third of the earnings cuts internationally, three times as much as oil producers, the second most affected sector.
Conversely, defensive companies such as food and drug retailers and skincare companies “held up well.”
France, along with Spain, is the country that canceled most dividends last year, mainly due to banks.
For 2021, Janus Henderson estimates that dividends should resume “from April” and in the most optimistic scenario he expects an increase in global profits of up to 5%, to $ 1.320 billion.
However, the more pessimistic scenario envisages a drop of around 2%.
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