The recently passed tax overhaul is already having a big effect on U.S. businesses, Bloomberg reports, with a record 75 percent of companies raising their guidance on profits:
“The main takeaway at the halfway point of earnings season is that corporations are going to make more money -- lots more -- as their statutory tax rate gets axed to 21 percent from 35 percent. Corporate chiefs already are making plans for the windfall, with some detailing specific investments in infrastructure or technology along with their one-time charges and benefits.”
Highlights from recently announced results, driven by a mix of tax cuts, a strong economy and variables unique to each company, include:
- AT&T said its free cash flow will surge roughly 20 percent to $21 billion, with some of the money going toward investments in its mobile network and to worker bonuses.
- Drugmaker AbbVie expects its tax rate to drop to 9 percent in 2018, down from 19 percent last year, and to see a 13 percent jump in profits.
- Lockheed Martin expects its earnings to more than double, and the company is earmarking $5 billion to fund its pension plans through 2021.
- Apple plans to reduce its net cash position of $163 billion to zero through a combination of dividends and investments.
- Bank of America said the “vast majority” of its earnings would be returned to shareholders.