Wilh. Wilhelmsen Holding (OB:WWI) Seems To Use Debt Quite Sensibly

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. As with many other companies Wilh. Wilhelmsen Holding ASA (OB:WWI) makes use of debt. But is this debt a concern to shareholders?

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When Is Debt Dangerous?

Debt is a tool to help businesses grow, but if a business is incapable of paying off its lenders, then it exists at their mercy. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. By replacing dilution, though, debt can be an extremely good tool for businesses that need capital to invest in growth at high rates of return. When we think about a company's use of debt, we first look at cash and debt together.

What Is Wilh. Wilhelmsen Holding's Net Debt?

The image below, which you can click on for greater detail, shows that Wilh. Wilhelmsen Holding had debt of US$281.0m at the end of September 2025, a reduction from US$428.0m over a year. However, it does have US$613.0m in cash offsetting this, leading to net cash of US$332.0m.

A Look At Wilh. Wilhelmsen Holding's Liabilities

We can see from the most recent balance sheet that Wilh. Wilhelmsen Holding had liabilities of US$682.0m falling due within a year, and liabilities of US$424.0m due beyond that. Offsetting these obligations, it had cash of US$613.0m as well as receivables valued at US$263.0m due within 12 months. So its liabilities total US$230.0m more than the combination of its cash and short-term receivables.

Since publicly traded Wilh. Wilhelmsen Holding shares are worth a total of US$2.24b, it seems unlikely that this level of liabilities would be a major threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. While it does have liabilities worth noting, Wilh. Wilhelmsen Holding also has more cash than debt, so we're pretty confident it can manage its debt safely.

See our latest analysis for Wilh. Wilhelmsen Holding

Fortunately, Wilh. Wilhelmsen Holding grew its EBIT by 5.4% in the last year, making that debt load look even more manageable. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Wilh. Wilhelmsen Holding can strengthen its balance sheet over time. So if you want to see what the professionals think, you might find this free report on analyst profit forecasts to be interesting.

Finally, a business needs free cash flow to pay off debt; accounting profits just don't cut it. While Wilh. Wilhelmsen Holding has net cash on its balance sheet, it's still worth taking a look at its ability to convert earnings before interest and tax (EBIT) to free cash flow, to help us understand how quickly it is building (or eroding) that cash balance. Happily for any shareholders, Wilh. Wilhelmsen Holding actually produced more free cash flow than EBIT over the last three years. There's nothing better than incoming cash when it comes to staying in your lenders' good graces.

Summing Up

Although Wilh. Wilhelmsen Holding's balance sheet isn't particularly strong, due to the total liabilities, it is clearly positive to see that it has net cash of US$332.0m. And it impressed us with free cash flow of US$79m, being 120% of its EBIT. So is Wilh. Wilhelmsen Holding's debt a risk? It doesn't seem so to us. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately, every company can contain risks that exist outside of the balance sheet. We've identified 2 warning signs with Wilh. Wilhelmsen Holding (at least 1 which is significant) , and understanding them should be part of your investment process.

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.