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06/13/2018
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Residential and non-residential construction works

Residential and non-residential construction works

For the current analysis, the data of 30,835 companies that submitted their financial data for 2016 and generated a consolidated turnover of RON 29.45 million, were studied. The companies in the analyzed sector (4,120 constructions of residential and non-residential buildings) registered a negative evolution of the revenues in 2016, decreasing with 8% from 2015, but with an increase in profitability.

 

 

STRENGHTS

  • Increase the sector's profitability from 4.8% in 2015 to 6.5% in 2016
  • The level of moderate debt on a consolidated basis (from 74% in 2015 to 72% in 2016)
  • Declining the money conversion cycle (from -48 to -31 days)
  • Increasing current liquidity at 1.13
  • Positive evolution of return on equity (from -8.4% in 2012 to 23.1% in 2016), with a 28% capitalization level at a consolidated level.
  • Coverage of interest expense by operating result at consolidated level has a positive trend across periods, reaching 11.71 in 2016
  • Increasing investment over the last four years seen in 2013 - 2016. (CAPEX: 2.8%, 4.9%, 6.6%, 11.7 vs. Depreciation: 6%, 6.3%, 6.3% 6.7%)
  • More than two-thirds of the companies made investments in 2016, recording a Capex report / oversubscription
  • A decrease by about 65% in the number of companies that had debts to the State Budget in 2017
  • Increase in the number of homes built in 2017 and building permits in the first two months of 2018.

VULNERABILITIES

  • Declining consolidated earnings of the sector by more than 8%
  • More than half of companies recorded a decrease in the net result
  • Almost a third of companies operating in the sector do not get profit from their core business
  • More than a third of companies have current liquidity below 1
  • 57% of companies pay their debts later than their business cycle (the negative money conversion cycle)
  • Short-term focus on financing (73% of total debts are current debts), with 70% of companies having only current debts
  • 39% of companies have a debt ratio of over 80%
  • Almost half of the companies in the sector have an insolvency risk above average
  • Higher polarization in terms of turnover achieved by Top 10% players
  • Increase in the number of companies that recorded bank incidents in 2017.
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