Agro Sector Analysis
Based on the financials published by the Ministry of Finance, the companies activating in Cereal, vegetables and oil seeds crop sector have generated a consolidated turnover of 13.3 BRON, down by 7% compared to previous year.
2013 highlighted a decreasing trend of revenues, amid inferior profitability, as compared to 2012. Despite this context, the long term investment policy continued, the CAPEX rate being double as compared to the amortization level. Nevertheless, the long term investment resources are not sustainable: extending the payment term to suppliers up to 256 days, increasing weight of short term debt in total borrowed capital up to 72%. Thus, amid increasing receivables collection period up to 155 days in 2013 as compared to 122 days in the previous year, the liquidity position on sectorial level has deteriorated significantly, the short term debt coverage ration by net treasury decreasing down to 9%.
Based on stress test scenario analysis, Coface has identified the fragile liquidity position of companies activating in the cereal, vegetables and oil seeds crop sector, highly prone to negative shocks from default receivables or decreasing revenue. Under this framework, financial analysis models employed during the study confirm the high insolvency risk of companies activating within the appraised sector, with 9 out of 10 companies rated with above average risk. Moreover, Coface has analyzed during 2013 a total number of 1.010 individual companies activating in the cereal, vegetables and oil seeds crop sector, that generate a 70% value weight from the total sector revenue, one of the principal conclusions drawn being that only one third of the sample companies settle payments to suppliers according to the contractual terms.
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