CITR announces that the number of impact companies – with assets greater than one million euros – in imminent insolvency increases by 18%, from 6,949 to 8,190, and that of impact companies in difficulty reaches the highest level since 2013 to at present.
A new study of the company specialized in the practice of insolvency was carried out based on the most current official financial data, related to the financial situation of the companies at the beginning of 2024.
“The analyzed figures represent a relevant x-ray to understand the business environment in Romania. We are not talking about a crisis or an external factor that disrupted the activity of companies in 2023, we are talking about an acute, multi-year and statistically relevant lack of performance, materialized in poor results and sub-optimal indicators. The conclusion is that we are at an essential point, where all these companies must adopt adaptation and consolidation measures, in order to continue in the long term and have the ability to respond to new challenges,” says Paul-Dieter Cîrlănaru, CEO, CITR.
Of the impact companies, approximately 17% are newly entered into this category and include both newly established companies and companies that, in the previous year, did not reach the threshold of assets greater than EUR 1 million. 7,161 new companies entered the impact category, and 26% of them are already in an imminent insolvency situation. Companies newly entering the zone of imminent insolvency, by migrating from one category to another, or newly entered among impact companies, mainly come from five industries: Construction (25%), Agriculture, forestry and fishing (14%), Real estate transactions (13%), Wholesale and retail trade (12%), Real estate transactions (13%). Thus, in 2023, the ranking of the industries with the most affected companies is maintained,
Moreover, 47% of the impact companies in difficulty, according to the statistics, postpone for three years the access to a restructuring measure.
The liabilities of impact companies increased by 8%, from 211 billion Euros to 228 billion Euros.
The total turnover of distressed companies at the beginning of 2024 was 140 billion Euros, equivalent to 33% of the total turnover of distressed companies.
The number of impact companies has grown steadily over the past 10 years, reaching a total of 43,241 at the beginning of 2024. Of these, 24,748 are considered “financeable” companies, able to manage their debts and access new sources of financing. On the other hand, 8,190 companies are in a situation of imminent insolvency.
Performance of impact companies: Increases turnover, decreases profitability
“Despite a 4% increase in turnover, the companies’ net profit fell by 8%, suggesting a significant pressure on operating costs and a difficulty in effectively managing financial resources. Also, the total assets of these companies increased by 6% – a situation in which difficulties are observed in the recovery of receivables – and the debts increased by 8%, thus underlining the trend of increased indebtedness. All these aspects reveal increased fragility and a build-up of debt that can have a knock-on effect in certain industries or along supply chains.” concluded Paul-Dieter Cîrlănaru, CITR CEO.
Almost half of the impact companies in a state of difficulty
Romanian impact companies generate 83% of turnover at the national level.
Currently, 43% of all impact companies, the equivalent of 18,493 companies, are restructuring or in imminent insolvency.
The economic situation worsened during the analyzed period for most companies, only 16% of them managed to improve their financial position, migrating from the difficulty area to the financeable area.
Most distressed impact companies come from industries such as:
- Companies in the construction industry represent 21% of the total number of companies in difficulty;
- Commercial companies represent 21% of the total number of companies in difficulty;
- 11% of the total number of companies in difficulty is represented by companies in the real estate transaction industry;
- 10% of the total number of companies in difficulty is represented by companies from the manufacturing industry;
- 10% of the total number of companies in difficulty is represented by agricultural companies.
