A headline in today's Financial Times reads "Profitability becomes king for US shale industry." Needless to say this caught my eye.
Isn't profitability always king for any business, especially public companies? Apparently, not necessarily: "In the boom years of the US shale oil industry, profitability was something of an optional extra. Companies were focused on growth, it was easy to raise capital, and making a decent return on investment could be put off for another day. Now that growth is grinding to a halt because of the slump in oil prices, investors may become less tolerant of persistently low returns."
Didn't (the collective) we learn anything from the dot.com bubble?
Those trying to put a silver lining around the grey clouds of lower commodity prices say the downturn will allow the industry to retreat to better practices and sounder fundamentals. Perhaps the greater focus on profitability will indeed be such a silver lining.
Profitability matters? Who knew?
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.