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Coface: Half of the Romanian firms will disappear in five years

Half of the companies set up in 2017 will no longer be in operation in 2022 – 2023, as those flowers that go out after the storm but are fragile, said Iancu Guda, Services Director, Coface Romania, in a press conference on Wednesday.

According to him, the companies established in the recession have a growing survival rate and lower losses.

”There are companies that have been set up in a tough period with more conservative plans and some of them have found opportunities because in recession there are the most opportunities. The best performing companies are those set up during the initial recovery and early recovery,” Coface Romania official explained.

Coface data shows that the industries with the highest number of insolvent companies in 2017 in comparison to 1,000 active companies are textiles, manufacturing and electricity supply. Moreover, the insolvencies in Romania remain at a level two times higher than the average in Central and Eastern Europe (CEE).

In turn, Eugen Anicescu, country manager Coface Romania, added that one in three companies in Romania is ’zombie’, meaning it has zero profitability and solvency. In a highly competitive economy they would not have the place.

According to him, in France, the number of zombie companies is growing, in Germany it is stagnant, as well as in Italy, slightly rising, while in Spain it decreases.

”In Romania, the figures are somewhat sadder. In Romania, companies with these zero profitability and zero solvency characteristics are somewhere at 35 percent, so one in three companies in Romania has these characteristics if we look at the financial statements. There are many companies in Romania that do not have a totally white balance,” Anicescu stated.

Coface representatives also forecast the inflation in January could reach 4 percent, and in the first half will reach 5 percent, followed by deceleration to 3.5 percent by year-end.

”From the inflation perspective, we see a price increase at basic products. All this increase in wages will also translate into price increases. (…) The companies are already at a low profitability level and will have to transfer some of the cost increases to the price,” Country Manager Coface Romania explained.

 

 

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