Sectorial analysis: Construction of roads and motorways

Based on the financials published by the Ministry of Finance, the companies activating in Construction of roads and motorways have generated a consolidated turnover of 11.7 BRON, down by 22% compared to previous year.

2013 highlighted a massive decrease of revenues, amid superior profitability, as compared to 2012. Because of this, the long term investments have ceased, the level of CAPEX being negative.

Multiple mixes of financial indicators should have led to better liquidity for the companies activating in the appraised sector: extending the payment terms to suppliers up to 269 days, decreasing the average period of receivables collection down to 225 days, investments sacrifice and net result improvement. Despite this, the tangible liquidity is lowering, with short term debt coverage ratio by net treasury decreasing down to 13%. This can only mean one thing: the surplus capital has been directed to paying dividends of group financing.

Based on stress test scenario analysis, Coface has identified the fragile liquidity position of companies activating in the construction of roads and motorways 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, only 16% from the active companies being rated with low insolvency risk. Moreover, Coface has analyzed during 2013 a total number of 335 individual companies activating in the construction of roads and motorways sector, that generate a 88% value weight from the total sector revenue, one of the principal conclusions drawn being that less than one third of the sample companies settle payments to suppliers according to the contractual terms.