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Milan Finance 23/10/2016

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The numbers certify it. And even if there is no need to say victory, we can begin to look with greater optimism at the Italian industrial fabric. Why, the number of bankruptcies declared by the country's courts is down nearly 3% in the first six months of this year. Non-bankruptcy insolvency procedures move along the same lines, down in the April-June 2016 period alone to 425 (-44% compared to the same quarter of the previous year). And if it still cannot be said that the crisis is behind us and that the issue of the patrimonial imbalance of part of the national production system has been resolved, we can glimpse a concrete glimmer of light. After all, no entrepreneur or manager starts a restructuring plan without first trying them all. Having perceived the first signs of the crisis and the difficulty of moving forward, he initiates every attempt to reverse the course through ordinary actions often accompanied by the hope of seeing plans and projects materialized that in some cases are realized and in others not. Only later, often too late, does he start a guided and organized restructuring process made necessary in part by the risk of running into legal actions brought by his creditors.

The restructuring plan thus also assumes the function of protection for managers and entrepreneurs. However, starting a restructuring process represents a very painful moment in corporate life, often experienced by entrepreneurs and managers with a lot of embarrassment even when they are sure they have put in place every personal and material resource to try to avoid it. In addition to the implications of a personal nature, the declaration of a state of crisis results in the immediate worsening of business difficulties: relations between the company and all the interlocutors with whom it operates worsen; banks and suppliers, generally do not believe in the effective ability of the company to be able to reduce its debts and return to performing status and try to collect their credits before the eventual launch of a procedure does not allow them to be collected on the ordinary, to be forced to renounce part of their credit and to wait for the conclusion of the procedure to collect the meager percentages generally reserved for unsecured creditors.

Excluding cases of negligence or willful misconduct, the crisis cannot necessarily be avoided as it may depend on factors external to the company or in any case not controllable by the company. Entrepreneurs and managers can instead do a lot to ride it and to ferry the company away from the causes that generated the crisis and recreate the ideal conditions to re-establish business relationships with the system.
Leanus, a company specializing in corporate financial analysis, analyzed for Milano Finanza the 2015 financial statements of six companies with well-known names and histories that have launched a restructuring plan. The goal is to understand where the relaunch process is and who is close to the exit from the tunnel. These are Giochi Preziosi (giant in the toy sector), Infracom (tlc and Ict), Beghelli (lighting), Util Industries (molds). Cuki Group (aluminum) and Limoni (perfumery) Companies very different from each other in terms of history, product sector and size and which, precisely because of their diversity, confirm that it is possible to emerge from the state of crisis.

This is the case of Giochi Preziosi and Infracom which generate enough operating cash to be able to repay debts in a period of less than two to three years. Important results if we take into account that in 2013 Giochi Preziosi recorded a loss for the year equal to 20.6% of revenues (-179 million euros). As shown in the tables, the company controlled by Enrico Preziosi together with the Chinese partner Ocean Global grew in 2015 by 1,5% and generated an EBITDA of 4.2%. Despite the minimal loss (0.8%), thanks also to its level of capitalization, it maintains a good economic, equity and financial profile.

Infracom, on the other hand, despite the growth and excellent margins (EBITDA margin of 25,7%) shows an excessive level of indebtedness (net financial position negative for 76,7 million) compared to the turnover but which, thanks to the high operating cash flow (€ 22,5 million), it seems to be able to recover from the exposure in two to three years.

The opposite situation, however, for Beghelli, the only one listed on Piazza Affari of the analyzed lot, which despite the good margins (11,1%) and the growing turnover (+ 12,67%) generates little operating cash flow (2,9 million), an excessively reduced value considering the debt exposure (total pfn of 78 million on a turnover of 168,1).

Cuki Group, like Beghelli, has a good economic profile (EBITDA at 8,6%) but a cash flow (4,7 million) not sufficient to allow a quick recovery from the debt situation (90,4 million).

Util Industries grows significantly (+ 32,4%) and produces good margins (EBITDA at 6.5% of revenues and profit at 1%) but is still unable to generate enough cash to support sustained growth. Taking into account that the current average collection times are on average close to 90 days, an improvement in the financial profile of the company is to be expected in correspondence with the stabilization of the growth in turnover. The company's capital endowments, low compared to turnover and debt, worsen the relative risk profile.
It does not seem to have ridden the crisis with a plan to restart the Limoni perfumery chain, unique among the six cases analyzed, which, judging by the 2015 data, still presents unresolved critical issues: revenues -4,98%, EBITDA -5,9%, loss for the year of 9,7 million euros on a total turnover of 221,6; financial debts are close to 108 million (net financial position negative for 76), equal to 49% of revenues, a value that is not excessive, in relation to the turnover, but difficult to cover considering the operating cash flow (contrary to what would expect negative for a retail business of more than 14 million euros, 10 of which intended for the repayment of shareholder loans. (All rights reserved)


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