Nordea On Your Mind: Capex II – Running to stand still

Twelve months ago, we said that the capex/sales ratio was unsustainable at 30-year lows. The needle may not yet have moved, but momentum is shifting.

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You’ll remember we argued a year ago that Capex/sales ratios were unsustainable. Well guess what. We were kind of right and we were kind of wrong. Capex did indeed rise but a parallel jump in sales means the ratio is still locked into those 30-year lows.

But the conclusions we drew in December 2017 are still valid. Here we argue that the timeline towards the end of under-investment has merely shifted. In this issue of NOYM, we’ll cover the following:

» Reality bites: Capex is up from one year ago, but so too are sales
» The outliers: In Capex terms, Energy and Materials are different. Why?
» Feed me: Demand is rising and, risk aside, investment will need to step up
» Dividends: Normalised ratios would boost global capex by 28% in 2020

You might also like to join Johan Trocme and Hemming Svensson for our follow-up webinar for NOYM: Capex II – Running to stand still at 10:00 CET, November 28.

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