Corporate profits surged by up to a quarter last year, with 69 per cent of fourth-quarter results outstripping market expectations and companies increasingly optimistic about 2011, a survey from consultancy Deloitte says.
The US far outstrips Europe. Respondents from the EU report average profits growth of 25 per cent. But those in the US have seen profits boomed by 45 per cent, Deloitte says.
With profits rising, companies are moving from hoarding cash to spending it, Deloitte chief economist Ian Stewart said. "2010 was a year of balance sheet rebuilding and cost-cutting; 2011 looks likely to be the year in which corporates start to spend again," he said. "Over the next year companies will use their cash to raise capital spending and pay dividends."