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Revenue at SMEs back to pre-crisis levels

by Enrico Netti

Last year — based on the financial statements of the companies that have reported so far — has many faces.

The industrial sector is happy as can be, with signs of health that first appeared after the recovery took hold in 2014 and continued for the following 12 months. The service sector has finally managed to overcome its impasse and is a bit more serene.

And, after a long period of stasis, construction has finally managed to come up with a smile, according to the 2016 Cerved SME Report, which analyzed the 2015 balance sheets of more than 110,000 SMEs with between 10 and 250 employees.

SMEs made progress in productivity and competitiveness, although figures were still well below pre-crisis levels. Most of the recovery is due to the expansive monetary policy of the ECB, which jump-started investment plans, and the positive effects of lower prices for raw materials, crude oil and energy. That helped revenue at SMEs rise 3.1%, with an increase of two percentage points from 2014.

But there are caveats. The increase mostly involves small and mid-sized companies, while large groups saw revenue fall, for the fifth consecutive year, by 1.5%, led by energy companies that were on the wrong side of lower oil prices.

Revenue was up 3.9% for industrial companies; 3.6% for service companies; and 1.8% for construction—versus a 1.7% loss in 2014.

The energy and utility sector alone were in negative territory (-3.6% in 2015) on lower crude oil and gas prices.

“SMEs have lived through the natural selection phase, with those too weak gone from the market and the others holding on, said Marco Nespolo, CEO of Cerved Group.” Now, we see a widespread recovery, with revenue that's practically returned to pre-crisis levels.Regarding profitability, however, there's still work to do.”

Compared with 2008, EBITDA is down 23% “due to a a cycle of a slower recovery and a violent and persistent crisis,” Nespolo added.

There's been improvement on the asset front since 2008.

“The financial solidity of SMEs that survived the crisis is stronger,” he said. “They are the most highly capitalized and the best equipped to face an eventual recessionary cycle.”

On average, one in four is severely undercapitalized, while a few years ago it was near 30%.

The upbeat trend was confirmed by the smaller number of companies that ended 2015 in the red. On average it was one SME out of five, and for the medium and large groups that fell to just over 15%.

“We are close to physiological levels, only a bit above the pre-crisis levels,” said Nespolo.


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