Navigating the months ahead: A working capital perspective
PwC Malaysia’s 2020/2021 Working Capital Study
In the face of the COVID-19 pandemic, our study shares key insights on how Malaysian companies can stay afloat and strive through the global pandemic and beyond through sustainable cash conservation measures. Over 400 listed companies in Malaysia were analysed in this fourth working capital study for PwC Malaysia. We also supplemented this study with a survey where 17 business leaders in Malaysia shared how they are managing their working capital and cash during the pandemic.
Overall decline in working capital performance
Our analysis shows an increase (i.e. a deterioration) in the Net Working Capital days of companies in Malaysia from 53 days in FY19 to 55 days in LTM20*, with several key industries such as oil and gas, consumer products, engineering, industrial products, trading services, apparel and luxury badly affected.
Visible cash conservation efforts to manage cash flows
Capital expenditure was the first lever for companies to conserve cash. Other cash conservation efforts include reducing operating expenses such as employee and procurement costs.
Keeping the focus on cash will help to protect businesses on the bumpy road ahead
As Malaysia gradually emerges from its various lockdown measures, the road to recovery is unlikely to be smooth, and businesses need to be in the best possible shape for the journey. Looking ahead, many of the ‘business as usual’ processes to manage working capital will therefore need to be reconfigured.
Explore our study further to understand how companies can conserve and manage their cash flows to navigate through the current business climate.
*LTM20 refers to last 12 months ended quarter 2 (Q2) 2020
Overall revenue and EBITDA declined by 7% and 14% respectively in LTM20 from FY19
Net Working Capital days in LTM20 deteriorated by 2 days from FY19
Capital expenditure has been the first lever for companies to conserve cash
More than 50% of survey respondents have cash reserves limited to 6 months