Three out of four companies in FMCG, at risk of insolvency

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Three out of four companies in the fast-moving consumer goods (FMCG) sector are at average risk of insolvency over the next 12 months, according to EY-Coface market analysis in partnership with Bucharest University of Economic Studies (ASE), informs.

In the last seven years, FMCG revenues grew by 26 percent, while the number of companies in the sector fell by 17 percent. At the same time, two out of ten companies operating in FMCG record higher revenues of EUR 1 million.

Despite the consolidated increase of companies’ revenues by 5 percent in 2015, the evolution is unequal among FMCG sectors. Thus, wholesale of sugar, chocolate and sugar confectionery recorded a decrease in revenues by 20 percent while the highest increases were reported by wholesale of fruit and vegetables (22 percent), mainly due to VAT decrease.

Moreover, according to the study, Romania has an economic growth based on consumption, which generates imports.

“(..) The retail confidence is at a historic high these days. Despite this high level of confidence, we don’t see investments, although they often go together,” Iancu Guda, services director at Coface Romania stated.

He pointed out that in the consumer goods sector, the rich get richer and the poor get poorer, and the consumption is supported mainly by unsustainable wage increases and consumer loans.

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