Mediterranean Trade and Payment Practices

Transcription

1 Mediterranean Trade and Payment Practices France, Italy, Spain, Portugal and Greece ICTF Symposium Atradius Global Samuel Pengel

2 Topics About Atradius Regional Macro Indicators Payment Practise Barometer Conclusion Questions? ICTF Lisbon Symposium Samuel Pengel- Atradius Global

3 3,257 employees and a total income of more than 1.6 billion more than 20,000 credit limit decisions daily 160 offices in50 countries access to information of100 million companies Atradius Group - Facts & Figures The most international and integrated credit insurer in the world More than 160 offices in 50 countries Worldwide 3,257 employees Products are customer oriented and tailor made More than 88 years of experience in the credit insurance business Total revenue of more than 1.6 billion in 2014 Financial ratings: A.M. Best: 'A (excellent) outlook stable' and Moody's: 'A3 outlook stable Access to information on 100 million companies worldwide Headquarters in Amsterdam, the Netherlands ICTF Lisbon Symposium Samuel Pengel- Atradius Global

4 Atradius ICTF Lisbon Symposium Samuel Pengel- Atradius Global

5 Shareholders Structure ICTF Lisbon Symposium Samuel Pengel- Atradius Global

6 Southern Europe (France, Italy, Spain, Portugal and Greece) ICTF Lisbon Symposium Samuel Pengel- Atradius Global

7 Macro Information on the main countries in the region Spain France Italy Portugal Greece GDP (PPP- Eur BN) Public Debt/GDP 101.5% 97.1% 133% 124.5% 170% Inflation Rate (yoy) -1.0% 0.0% -0.3% 0.1% -0.3% Expected Growth 2.3% 1.0% 0.6% 1.6% 2.5% Productivity (2013) 32,2 45,6 32,2 17,1 20,2 Unemployment Rate 22.5% 10.4% 12.8% 13.4% 25.0% ICTF Lisbon Symposium Samuel Pengel- Atradius Global

8 France, Italy, Spain, Portugal & Greece Total population of the area Number of enterprises active Total GDP of the area Goods imported from EU countries : 200 Mln (39% of EU population) : >12.5 Mln : Euro 6.2 Trillion (34% of EU GDP) : Euro 487 Billion ICTF Lisbon Symposium Samuel Pengel- Atradius Global

9 Map of Italy with main Industrial centres & landmark ICTF Lisbon Symposium Samuel Pengel- Atradius Global

10 Italy industries performance outlook ICTF Lisbon Symposium Samuel Pengel- Atradius Global

11 Outlook Italy 2015 We expect the fiscal deficit to remain around 3% of GDP, but public debt exceeding 130% of GDP. Real GDP is set to expand by 0,5% in 2015, after contracting by 0,4% in 2014 and 1,9% in Unimployment rate will increase with 0,1% to return to last December s level of 12,7% Industrial production under pressure ICTF Lisbon Symposium Samuel Pengel- Atradius Global

12 Italy s Growth & Competitiveness in 2015 ICTF Lisbon Symposium Samuel Pengel- Atradius Global

13 Unit Labor cost development Italy s competitive position against some other Southern European countries further worsened in 2013 and 2014, as those markets implemented more reforms to reduce their unit labor cost The loss of market share is borne out by Italy s Real Effective Exchange Rate (REER) development. The REER measures a country s international competitiveness as costs and prices change ICTF Lisbon Symposium Samuel Pengel- Atradius Global

14 Insolvencies Italy Construction and retail still show a negative trend in probability of default in 2015 Italian business insolvencies are expected to increase 10 % ICTF Lisbon Symposium Samuel Pengel- Atradius Global

15 Sales on credit terms Italy On average, 55.7% of the total value of domestic B2B sales in Italy was transacted on credit terms (the average for Western Europe is 44.9%). According to this finding, in Western Europe, Italy is the third most inclined country to use trade credit in domestic sales, after Denmark (70.5%) and Greece (65.1%). ICTF Lisbon Symposium Samuel Pengel- Atradius Global

16 Italy Just over half (50.2%) of the total value of domestic B2B invoices in Italy remained outstanding past the due date. This is the highest proportion of domestic overdue levels across the countries surveyed, and well above the average for Western Europe 40.2%. Over the past two years, there was an increase in the level of overdue domestic payment in Italy (by around 13 percentage points). ICTF Lisbon Symposium Samuel Pengel- Atradius Global

17 Italy Domestic market: the most relaxed payment terms averaging 60 days from the invoice date) were given to B2B in the construction sector, which had the highest overdue payment levels (50.2%). Longest time to pay: chemicals and consumer durables (past due invoices around 35 days). Over the coming 12 months, a marked deterioration in customers payment practices is expected in the domestic chemicals sector (30% of respondents). A slight deterioration is expected in the construction materials (50%) and consumer durables sectors (46%). ICTF Lisbon Symposium Samuel Pengel- Atradius Global

18 Core results Payment Practices Barometer Italy Most of the respondents in Italy (nearly 73.0%) reported that late payment from domestic B2B customers is mainly attributable to insufficient availability of funds. This is the highest percentage of respondents citing this reason across the countries surveyed in Western Europe, and it is notably above the 51.4% of respondents in the region. Just over half (50.2%) of the total value of domestic B2B invoices in Italy remained outstanding past the due date. This is the highest proportion of domestic overdue levels across the countries surveyed, and well above the average for Western Europe 40.2%. 2.5% of the total value of Italian respondents B2B receivables was written off as uncollectable (survey average for Western Europe: 1.2%). Failure of collection attempts were reported by more respondents in Italy (34.5%) than in Western Europe (25.1%). Write-offs due to the high costs of pursuing trade debts were reported by more than one in four Italian respondents (27.1% of Italian respondents, compared to 16.4% in Western Europe). ICTF Lisbon Symposium Samuel Pengel- Atradius Global

19 Spain ICTF Lisbon Symposium Samuel Pengel- Atradius Global

20 Outlook Spain 2015 The Eurozone's fourth-largest economy is likely to grow 2.5% on an annual basis in the first quarter, the Bank of Spain said in a monthly report. The bank also raised its forecast for economic growth this year to 2.8% from 2% previously. In 2016, the central bank said it expects the economy to grow 2.7%. The jobless rate may be 22.2% at the end of this year, a slight decline from almost 24% at the end of 2014, and 20.5% in 2016, despite strong growth in employment, the central bank said Among the reasons for Spain s unexpectedly strong economic takeoff, the Bank of Spain cited solid international demand for Spanish products amid a weaker euro and a continued slide in borrowing costs for Spain s companies, as well as developments that are largely the result of monetary policy easing by the European Central Bank. ICTF Lisbon Symposium Samuel Pengel- Atradius Global

21 Purchasing Manager s Index (PMI) Spain ICTF Lisbon Symposium Samuel Pengel- Atradius Global

22 Evolution of the Spanish Public debt and budget balance ICTF Lisbon Symposium Samuel Pengel- Atradius Global

23 Spanish industries performance forecast 2015 ICTF Lisbon Symposium Samuel Pengel- Atradius Global

24 Insolvency environment trend Spain Since 2008, corporate defaults have closely reflected economic conditions, with high year-on-year increases of 100 % in 2008 and 50% in After an annual decrease in 2010 insolvencies increased again in 2011 (15.4 %), 2012 (28.4 %) and 2013 (16.3 %, to 9779 cases), due mainly to the drop in internal demand and generally high pressure on businesses liquidity because of their limited options for external financing. However, with the economic rebound insolvencies started to fall again: with sequential quarterly declines of 14.4 % in Q1 of 2014 and 19.5 % in Q2. In the first half of 2014 insolvencies decreased 29.0 % year-on-year. Nevertheless, despite this decrease and a further improvement in the second half of the year, business insolvencies will remain at a high level, not yet ICTF Lisbon Symposium Samuel Pengel- Atradius Global

25 Spain Trade credit appears to be used less often on the Spanish domestic market than two years ago. Based on responses in the country, an average of 49.3% of the total value of domestic B2B sales was made on credit. Respondents in Spain, like those in Western Europe, appear to grant trade credit terms more often to domestic customers than to B2B customers abroad ICTF Lisbon Symposium Samuel Pengel- Atradius Global

26 Spain Late payment of invoices is reflected (DSO) in figure posted by Spanish respondents, which averaged 58 days (compared to the survey average of 48 days). This is the second longest of the countries surveyed, after Greece and Italy (both averaging 72 days). DSO figure in Spain appears to be heavily impacted by high delinquency rates (invoices unpaid after 90 days past due). These are averaging 10% of the B2B receivables value, mainly on the domestic market (survey avg 7%) ICTF Lisbon Symposium Samuel Pengel- Atradius Global

27 Top Challenge 2015 Spain Domestically, over the coming 12 months, a slight deterioration of customers payment practices is expected in the construction and consumer durables sectors (two in five respondents each). Payment behavior of Spanish respondents foreign B2B customers is forecast to remain stable in all industries. ICTF Lisbon Symposium Samuel Pengel- Atradius Global

28 Core results Payment Practices Barometer Spain The DSO figure in Spain (averaging 58 days) appears to be heavily impacted by high delinquency rates (invoices unpaid after 90 days past due). These average 10% of the B2B receivables value, mainly on the domestic market, and are well above the average for Western Europe (7%). On average, 43.8% of the total value of respondents domestic B2B sales made on credit terms were not paid by the due date (survey average for Western Europe: 40.2%) 26.4% of Spanish respondents (18.5% in Western Europe) reported that the formal insolvency of the buyer (i.e. liquidation, receivership, bankruptcy) is the primary reason for late payment on domestic sales Failure of collection attempts were reported by more respondents in Spain (35.3%) than in Western Europe (25.1%). This may explain why respondents in Spain (13%) appear to be ore concerned about collections of outstanding invoices than their peers in Western Europe (11%). ICTF Lisbon Symposium Samuel Pengel- Atradius Global

29 Portugal ICTF Lisbon Symposium Samuel Pengel- Atradius Global

30 Positive Developments & Challenges Portugal June 2014 : Exit from the European Adjustment Program Q : Household savings from disposable income rose to 10% (from 7% 08) Indebtness Bankruptcy : Private indebtedness fell from circa 95% to just over 80% of GDP : Private bankruptcies fell 2% compared to 2013 (but 13K is > EU) Indebtness : Private corporate indebtedness fell 18% to 149,25% (from 167%) Indebtness Challenge : Private corporate debt + Non Financial Corporate debt + intercompany debt amount to 172% of GDP, the highest corporate debt in the EU. : stimulating growth and deleverage debt Source: Source: Banco de Portugal ICTF Lisbon Symposium Samuel Pengel- Atradius Global

31 Portugal corporate indebtedness & performance Only two out of eight leading industries are below debt/equity acceptable levels of Leading sectors in the Portugal have been unprofitable over a long period ICTF Lisbon Symposium Samuel Pengel- Atradius Global

32 Portugal Structure of the Portuguese economy and the role of the Small and Medium Enterprises as in absolute terms and compared to other EU member states ICTF Lisbon Symposium Samuel Pengel- Atradius Global

33 Portugal ICTF Lisbon Symposium Samuel Pengel- Atradius Global

34 Greece ICTF Lisbon Symposium Samuel Pengel- Atradius Global

35 Outlook Greece High country default risk if Greece does not manage to reach an agreement with the creditors and negotiate new financing. Difficult situation of the Greek banks and subsequent further tightening of lending rationale, affecting business in general and SME s in particular. Further deterioration of the possibilities to obtain financing due to S&P downgrade from (B- to CCC+) Further loss of export markets if Greece does not restore credibility in the international markets. ICTF Lisbon Symposium Samuel Pengel- Atradius Global

36 Purchasing Manager s Index ICTF Lisbon Symposium Samuel Pengel- Atradius Global

37 Sales on Credit Terms in Greece Greece is the second most inclined country in Western Europe, to use trade credit in domestic B2B transactions after Denmark (70.5%) While Greece used trade credit most often as a financing tool, the highly competitive market of Denmark used trade credit mostly as a marketing tool. ICTF Lisbon Symposium Samuel Pengel- Atradius Global

38 Sales on Credit Terms Greece Domestic B2B suppliers in Greece receive payment on invoices 100 days after the invoice date (55 days Europe), ultimately showing further slipping up to 45 more. Foreign past due invoices, in contrast, are paid within around five days past due. ICTF Lisbon Symposium Samuel Pengel- Atradius Global

39 Top Challenge 2015 Greece An average of four in five respondents reported that domestic B2B buyers delay invoice payment most often because of financial difficulties. The perception of the respondents in Greece is that the payment behavior of domestic B2B customers will remain the same over the next 12 months. ICTF Lisbon Symposium Samuel Pengel- Atradius Global

40 Core results Payment Practices Barometer Greece When asked to indicate the greatest challenge to business profitability in 2015 two in five Greek respondents indicated maintaining adequate cash flow and collection of outstanding invoices. In both cases, the percentage of respondents is above that in Western Europe overall (18% indicated cash flow and 11% collection of outstanding invoices). A sizeable proportion of the total value of domestic B2B invoices in Greece (45%) was overdue. Over the past two years, the level of overdue domestic payments in Greece increased notably (by around 13 percentage points). An average of 3.3% of the B2B receivables in Greece was reported as uncollectable. This is nearly three times the average for Western Europe (1.2%). Uncollectable domestic B2B receivables were primarily reported from the services and consumer durables sectors. ICTF Lisbon Symposium Samuel Pengel- Atradius Global

41 France ICTF Lisbon Symposium Samuel Pengel- Atradius Global

42 Trends France Q Industrial production capacity utilization improvement in the Q as compared to Q Perceived improvement of competitiveness on non-eu market, improving export prospects also due to improving global demand. Slight stabilization of job losses and thus stabilization of the workforce. Household consumption increased with 1.6% in Q as compared to the previous quarter. ICTF Lisbon Symposium Samuel Pengel- Atradius Global

43 French industries performance forecast ICTF Lisbon Symposium Samuel Pengel- Atradius Global

44 Sales on credit terms France Respondents in France also show quite a strong aversion to the risk of using trade credit in B2B transactions, both Domestically and abroad. The downward trend in the use of trade credit in domestic B2B sales in France appears to be in contrast to the overall trend in Western Europe. ICTF Lisbon Symposium Samuel Pengel- Atradius Global

45 Over due accounts France Over the past two years, there was an upward trend in the domestic overdue payment levels in France (increase of around 10 percentage points), which is consistent with the trend observed in Western Europe. Based on responses in France, an average of 0.9% of B2B receivables was written off as uncollectable. This is lower than the average for Western Europe (1.2%). Consistent with the survey pattern, domestic write-offs outweigh foreign ones. ICTF Lisbon Symposium Samuel Pengel- Atradius Global

46 Top Challenge 2015 France Above-average (for the country) invoice payment terms are extended to B2B customers in: - construction (averaging 23 days domestic and 27 days foreign), - consumer durables (22 days domestic and 26 days foreign) - and chemicals sectors (22 days domestic and 29 days foreign). ICTF Lisbon Symposium Samuel Pengel- Atradius Global

47 Core results Payment Practice Barometer France Late payment on domestic and foreign B2B invoices is reflected in the Days Sales Outstanding (DSO) figure posted by French respondents, averaging 52 days (nearly two weeks longer than two years ago). This is above the 48 days average for Western Europe Domestically, two-fifths of the total value of B2B sales on credit in France remained unpaid after the due date. Over 30% of French respondents (much more than the 18.5% of respondents in Western Europe) reported that domestic payment delay is mainly due to the formal insolvency of the buyer, This would point to a difficult domestic business climate in France Failure of collection attempts were reported by more respondents in France (31.0%) than in Western Europe (25.1%). This is also the case for write-offs due to a trade debt which is too old (27.1% of French respondents, compared to 16.4% in Western Europe). ICTF Lisbon Symposium Samuel Pengel- Atradius Global

48 Conclusion Encouraging signals of economic recovery and stability in Spain, Slow-down of down turn in Italy but lagging behind some countries with structural reforms. Portugal is reaping benefits from the structural reforms but both private and corporate debts are still very high. Greece in risk of default but there are signals of a possible solution for the current dead-lock with the ECB/EU France ultimately shows increased household spending, higher degree of utilization of industrial capacity and improved foreign demand for French products All countries have in common that companies payment behaviour has shown deterioration over the past years with and some countires expect the number of insolvencies to increase in ICTF Lisbon Symposium Samuel Pengel- Atradius Global

49 Thank you for your attention!