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.