COFACE ECONOMIC

23 JUNE 2020

PUBLICATIONS

FOCUS

By Marcos Carias,
Economist for Southern Europe,
based in Paris, France.

Are corporate balance sheets in Spain

and Italy ready for the COVID-19 shock?
EXECUTIVE SUMMARY
Spain and Italy will be amongst the economies hardest hit by COVID-19, contracting by 12.8% and 13.6%
respectively in 2020, according to Coface’s forecasts. To approximate the potential impact of this contraction
on corporate balance sheets, we ran simulations on the evolution of firm solvency, using central bank data that
accounts for differences across sectors and firm sizes. Results suggest that some large firms in the automotive
and metals sector in Spain could suffer from small liquidity buffers. In both countries, construction and retail
will be dragged down by higher debt, as well as textile-clothing SMEs in Italy. Overall, we observed a higher
prevalence of vulnerable firms in Italy, a factor that will weigh on the recovery. In 2021, the Spanish and Italian
GDPs should rebound by 10.2% and 8.9%, leaving the economies 3.9% and 5.9% below 2019 levels, respectively.
While Q2 2020 should be the most challenging quarter of the year, there are now good reasons to think
that the road to recovery will be long and arduous. Despite the immediate tax deferrals, liquidity guarantees,
payroll subsidies and debt moratoria, it is likely that many vulnerable firms will not survive: for the 2020-2021
period, Coface forecasts corporate insolvencies to increase by 22% in Spain and 37% in Italy, relative to 2019
levels. Furthermore, many companies would survive only at the cost of substantially higher leverage. Even
with ultra-low interest rates, higher debt will lead to durably depressed investment1. Therefore, the temporary
COVID-19 crisis could exert durable downward pressure on a country’s growth potential, accelerating the
“japanization” of the Eurozone. With this in mind, it is worth taking a closer look at the health of Spanish
and Italian corporate balance sheets. This should help identify pockets of vulnerability where widespread
defaults are more likely to materialize.

TABLE 1
QoQ growth rate Latest reading (Q1 2020) Lowest previous reading
GDP quarter on quarter
(QoQ) % change
Italy GDP -4.7% -2.7% (Q1 2009)

Spain GDP -5.4% -2.2% (Q1 2009)

Spain GDP-Construction -11% -8.9% (Q1 2010)

Spain GDP-Manufacturing -8.8% -3.7% (Q1 2009)

Spain GDP-Services -6.2% -2.3% (Q4 2012)

Sources: INE, ISTAT, Refinitiv Datastream, Coface

1 - “Corporate debt overhang and investment: firm-level evidence” by Borensztein et al. (World Bank Policy Working Paper, 2018);
“Corporate debt and investment: a firm level analysis for stressed euro area countries” by Gebauer et al. (ECB working paper, 2017).

ALL OTHER GROUP ECONOMIC PUBLICATIONS ARE AVAILABLE ON:

http://www.coface.com/Economic-Studies
 2 COFACE ECONOMIC PUBLICATIONS ARE CORPORATE BALANCE
FOCUS SHEETS IN SPAIN AND ITALY READY
FOR THE COVID-19 SHOCK?

CHART 1
The bird’s eye view: deleveraging Gross debt as a % of total assets, non-financial corporations
86%
aligns Spain’s debt with its low
Germany 22%

83%
productivity, Italy’s zombie SMEs 65%
Germany Spain France Italy

are cause for concern 21%

80% 60%

77%
In their spring 2020 financial stability reports, both
Banca d’Italia and Banco de España underline20% that the
55%
74% current financial position of firms is healthier than on the

71%
eve of the global financial crisis . An initial look at the
2&3

aggregate data supports this argument for Spain, 19% but 50%
68% is less clear for
Sha re of l Italy. Indeed,
ong -term loa ns (>1 while comparing the main
ye ar maturity)
EurozoneGFCF economies
as a % of GDP (Chart
(rhs) 1), we noticed that in Q2
65% 18% 45%
2008, Spanish, Italian and German corporates all had
2005 2007 2009 2011 2013 2015 2017 2019
leverage ratios of around 50%. Since then, Spanish firms
have managed to substantially deleverage, reducing the 40%
aggregate leverage ratio to 37% in Q3 2019, comparable
to the low levels ofItaly French companies. Italian firms, 35%
75% 23%
admittedly, have also improved their financial position
since the Q4 2011 peak of 59%, but to a much 22% lesser
70%
degree. At around 50%, the Italian corporate21% sector is 30%
now the most indebted of the big 4, only slightly 20% above
65%
Germany but with a weaker value generating capacity. It 25%
19%
is important to always think of debt as a promise of future

2 0 -Q1
2 0 -Q1
1
2 0 -Q1
2 0 1 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
1
1
1
05 1
1
2 0 6 -Q1
1
09 1
2 0 -Q1
00 1
60%

-Q
2 0 1 -Q
2 0 2 -Q
2 0 3 -Q
2 0 4 -Q
2 0 -Q

2 0 7 -Q
2 0 8 -Q
2 0 9 -Q
value creation: debt is not unsustainable in the18% absolute,

18
19
10

12
13
14
15
16
17
1
0

0
0
0

0
0
9

0
but relative to the expected path of future 17%income.

19
55%
Average yearly value added per worker (AVA) 16% in Italy Source: ECB, Coface

50%
stands at EUR 48,000, 17% lower than Germany’s 15%
(EUR
58,000)4. The disparity
2005 2007 2009 2011
becomes
2013 2015
more
2017
concerning
2019
when corresponding increase in investment, which remained
accounting for differences across firm sizes. In fact, the stagnant and well below the pre-financial crisis peak.
higher end of the Italian productive apparatus is quite For Spain, a charitable reading suggests that this could
performing: AVA for large companies (250+ employees) just be a side-effect of broader deleveraging: all types of
is on par with2020 that of (f)Germany2019 (both
(e) around EUR 75,000) debt fell, short-term debt just decreased faster. For Italy,
Textiles, Italy (0.82 elasticity)
14 and well
Number above
of firm Spain’s (EUR 58,000). However, at the SME however, deleveraging was not strong enough for this
populations 10%
level, the AVA gap with Germany is 12 of 18% in Italy and 29% interpretation to hold. This growing mismatch between
12 in Spain. Italy’s higher stock of corporate debt therefore
11 investment
5% and financing suggests a high prevalence
looks more worrying at the SME level. From this aggregate of zombie firms: a large population of firms are using
10 0%
perspective, the mismatch between leverage and value long-term funds to cover up for lackluster growth in the
8
8 generation among Italian SMEs is particularly significant. present,
-5% rather than sowing the seeds of future growth.
Another way to assess balance 6 sheet health is to examine Much of this debt can easily become
Operating non-performing
expenses,
6 loans with a strong enough shock
-10% to revenue.
the consistency 5 between the5 maturity structure of debt YoY% growth

4 and the behavior of private investment: we want to check -15% Turnover, YoY%
if firms are borrowing funds in a way that is consistent growth
2 with their use of them. In a healthy economy, firms
1
borrow long-term funds to invest in 0long-term assets
The granular view:
-20%
Germany
2009 2010 2011 2012 2013 2014 2015 2016 2017
0
and short-term
0-10
funds to20-30
10-20
cover working 30+
capital needs. a86%closer look reveals pockets 22%
65
83%
Therefore, acash-adjusted
lengthening ofICR the maturity structure of of risk in automotive, metals,
corporate liabilities (i.e. more long-term, less short-term) 21%
should be a sign of companies getting ready to expand construction and retail
80% 60

productive capacity. 2020 (f) This 2019 is (e)

the behavior observed 77% Construction, Spain (0.8 elasticity)
20%
in Number
France and Germany (Chart 2), where firms used
of firm
Macroeconomic
15%
74%
aggregates are useful for a bird’s eye 55
14 ultra-low
populationsinterest rates to restore pre-crisis levels of view
10% of the economy, but the whole need not reflect
investment. 13 In13the South, we noticed the same skewing the
71% state of its components. To account for this, we
5%
19%
12 50
of liabilities towards long-maturity debt, but without the use
0% granular data to simulate the potential effect of the
68% Sha re of l ong -term loa ns (>1 ye ar maturity)
10 -5%
GFCF as a % of GDP (rhs)
9 -10%
65% 18% 45
8 Operating expenses,
CHART 82 -15% 2005 2007 2009 YoY%2015
growth 2017
2011 2013 2019
Investment-financing mismatch: maturity profile of debt and Gross Fixed Capital Formation
6 -20%
Turnover, YoY% 40
-25%
4 Germany growth
86% 3 22% -30%
283%
2 2011
75% 65%
2012 Germany
2013 2014 Italy
Spain 2016
2015 France
2017 Italy
23% 35

0 0 22%
0 21% 70%
80% 60% 30
0-10 10-20 20-30 30+ 21%
77% cash-adjusted ICR 65% 20%
20%
55% 19% 25
74%
60% 18%
71%
19% 50% 17%
55%
68% Sha re of l ong -term loa ns (>1 ye ar maturity) 16%
GFCF as a % of GDP (rhs)
65% 18% 50% 45% 15%
2005 2007 2009 2011 2013 2015 2017 2019 2005 2007 2009 2011 2013 2015 2017 2019

40%
Source: ECB, Eurostat, Coface

2020 (f) 2019 (e)

75% Italy 23% 35%
Number of firm
14 populations 10%
22%
2 - Banco de España, Financial Stability70%Report Spring 2020, Chart 1.10, page 41. 12
3 - Bank of Italy, Financial Stability Report Spring 2020, Figure 1.10 page 17. 21% 12 30% 5%
11
4 - Based on data from Eurostat’s structural business statistics database.
65% 20%
10 0%
19% 25% 8
8
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
 65% 18% 45%
2005 2007 2009 2011 2013 2015 2017 2019
2020 (f) 2019 (e)
40%
COFACE ECONOMIC PUBLICATIONS ARE 14
CORPORATE BALANCE
Number of firm
populations
3
FOCUS SHEETS IN SPAIN AND ITALY READY 12
75% Italy 23% 35% 12 11
FOR THE COVID-19 SHOCK?
22% 10
70%
21% 30% 8
22% 8 Gross debt as a % of Total Assets
Germany Spain France Italy 20%
65% 65% 6
25% 5 6
ES-Construction
expected 2020 revenue contraction on firm solvency. operating 19% income as a multiple 5
of interest expenses: a
21%

2 0 -Q1
2 0 -Q1
1
2 0 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
1
03 1
1
05 1
1
2 0 6 -Q1
1
09 1
2 0 -Q1
2 0 -Q1
2 0 1 -Q1
00 1
Our sample 60%
distinguishes small, medium-sized and large cash-adjusted
18% interest coverage ratio (ICR). Charts 3

-Q
2 0 -Q
2 0 8 -Q
2 0 1 -Q
2 0 2 -Q
2 0 -Q
2 0 4 -Q
2 0 -Q
2 0 9 -Q
60% 4
IT-Construction

18
19
12
13
14
15
16
17
07

10
firms across 8 sectors5, resulting in 48 firm populations and 4, show the projected distribution of this indicator

1
0
0

0
0
9

0
19
17%
20% (1 population =55%1 sector/size category pair in a country, across the sample. We see a2 widespread
ES-Retail 1 degradation
55% 16%
e.g. small Italian textile firms)6. Given the unusually of solvency with 8 and 13 firm populations falling to the 0
0
abrupt nature 50% of the shock, cash reserves will be lowest category 15% (an ICR between
IT-Retail 0 and 10) in Spain and
0-10 10-20 20-30 30+
19% determinant
50% for debt service.
2005 2007 We
2009measured
2011 solvency
2013 2015by 2017
Italy,2019
respectively7.
looking at the sum of cash reserves and projected gross
ES-Auto cash-adjusted ICR
IT-Auto Small
18% 45%
9
CHART 3 2020 (f) 2019 (e) CHART 4 ES-Textile 2020 (f) 2019Medium
(e)
Distribution
40% Distribution Textiles, Italy (0.82 elasticity)
Number of firm Number of firm Large
of firm 14 populations of firm 10% 14
IT-Textile populations
populations 12 populations 13 13
according to Germany
23% 35% 12 1122% 5% 12 Gross debt
86% according 0 50 100
Germany Spain France Italy
22% ICR*, Spain 65% to ICR, Italy
83%
10 0% 10
30% ES-Construction
21% 8 9
Source: Banque 8 21% Source: Banque de -5% 8 8
80%
20% 60%
de France, Coface IT-Construction
France, Coface Operating expenses,
19% 25% as
* Calculated 6
77% 6 5 -10% 6 YoY% growth
(cash and equivalents 5 ES-Retail
2 0 -Q1
2 0 -Q1
1
2 0 1 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
2 0 6 -Q1
1
09 1
2 0 -Q1
2 0 -Q1
2 0 -Q1
1
03 1
1
1
1
00 1

20%
-Q
2 0 -Q
2 0 8 -Q
2 0 1 -Q
2 0 2 -Q
2 0 -Q
2 0 4 -Q
2 0 5 -Q
2 0 9 -Q

18% + projected gross 55%

74%
18
19
12
13
14
15
16
17
07

10

4 -15% 4 48.1
1

Turnover, YoY%
0
0

0
0
9

ES-Large
operating 3
19

17% 3.6 growth IT-Retail

71% income)/interest 2
16% expenses. 2 19% 50% -20% 2
1 ES-Auto
68%
15% Sha re of l ong -term loa ns (>1 ye ar maturity) 0 0 2011
2009 2010 2012 2013 2014 2015 44.22017
2016 0
ES-Medium
0
9 GFCF as a % of GDP 0 (rhs) 24.7
65% 0-10 10-20 18% 20-30 45% 30+ 0-10 10-20 20-30 30+ IT-Auto

2005 2007 2009 2011 2013 2015 2017 cash-adjusted ICR

2019
ES-Small
cash-adjusted41.3
ICR ES-Textile
40% 28.5
IT-Textile
Textiles, Italy (0.82 elasticity) Construction,10.8
Spain (0.8 elasticity)
10% Italy 2020 (f) 2019 (e)
35% IT-Large
75% 23% 15% 2.7 0
SIMULATING THE
14 SECTORAL
Number of firm IMPACT OF COVID-19 ON FIRM SOLVENCY
10%
5% populations 22%
70% 22.6
13 13 30% 5%
To formulate
0% projections
12 of firm solvency 21%(measured as the capacity to service debt), we need IT-Medium
to consider the 13.7
depth of revenue contraction and
the extent to which firms could adjust their
20% costs. First, we use an ARIMA model with 0%exponential smoothing - developed by Coface
double 2019 - to
65%
-5%
determine assumptions
10 on revenue contraction
19%
for each sector
25%
8
. Second, we need to account -5% for the fact that firms cannot fully absorb the shock
17.0
Operating expenses, IT-Small 2020
to-10%
revenue by adjusting expenses, YoY% and that
9 the capacity to adjust costs also differs among -10%industries. Studying
11.7a cross-country sample of firms,
2 0 -Q1
2 0 -Q1
2 0 -Q1
1
2 0 -Q1
2 0 1 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
2 0 -Q1
1
1
04 1
05 1
1
2 0 6 -Q1
1
09 1
2 0 -Q1
00 1

60% growth
-Q
2 0 1 -Q
2 0 2 -Q
2 0 3 -Q
2 0 -Q
2 0 -Q

2 0 7 -Q
2 0 8 -Q
2 0 9 -Q

8 18% 8 Operating expenses,

the BIS found that, on average, firms only manage to reduce expenses by 6% for every-15% 10% contraction in turnover in a given quarter (i.e. a
10

12
13
14
15
16
17
18
19
1
0

YoY% growth
0
0
0

0
0
9

ES-Large
19

cost
-15%elasticity of 0.6) . To examine Turnover,
9
sectoral
17% differences in cost elasticities, the growth rates of turnover and operational expenses are compared.
YoY% 3.6
55% 6 growth -20% 0 20 40 60
For instance, the construction sector in Spain 16% tends to exhibit a much more sluggish cost adjustment behavior than the textile sector
Turnover, in Italy
YoY%
-20% -25%
(see charts below). We also noticed that, despite tight cost management in most years, Italian textile firms had a lot of trouble adjusting
growthto the strong
50% 42011 2012 2013 2014 2015 201615%
shock of2009
2012, when
2010 revenue declined by 12.47%
2017 but operating costs only by 4.46%. ES-Medium
2005 2007 2009 2011 2013 2015 2017 2019
3 -30%
2011 2012 2013 2014 2015 2016 2017
2
2
Therefore, we assign relatively weak cost elasticities wherever costs contract at a slower rate than turnover for prolonged periods (construction
0 0 ES-Small
in Spain between 0 2011 and 2014) or wherever we notice weak cost adjustment in particularly bad years (textile in Italy in 2012). To guide our
2020 (f) 2019 (e)0-10 10-20 20-30 30+ calibration, we measure the degree
Construction, Spain (0.8 elasticity) Textiles, Italy (0.82 elasticity) of correlation as well as the absolute
14
Number of firm
populations 15%
cash-adjusted ICR 10% value difference between these two IT-Large
10
2.7
10% 12 time-series. Using the BIS estimate as
12 11 5%
5% a benchmark, adjusting it for annual
10 0% 0% frequency 10 and accounting for IT-Medium
8 -5% sectoral differences, we calculate
8 -5% estimates for 2020 gross operating
-10%
6
6 Operating expenses, Operating expenses,
income, which are then used as a IT-Small 1
-15%5 5 YoY% growth -10% YoY% growth
basis to project the cash-adjusted
-20%
4 Turnover, YoY% -15% Turnover, YoY% interest coverage ratio.
-25% growth growth 0
2 -30% -20%
1 2011 2012 2013 2014 2015 2016 2017
0 2009 2010 2011 2012 2013 2014 2015 2016 2017
0
0-10 10-20 20-30 30+
cash-adjusted ICR

This simulation is subject to a number of caveats. First not systematically

Construction, verified,
at least not by all measures.
Spain (0.8 elasticity)
2020 (f) 2019 (e)
and foremost, measures such as subsidized furlough 15% For instance, large automobile manufacturers could be
Number of firm
14 schemes should help businesses adjust overhead
populations 10% heading for trouble due to their habit of keeping little
expenses
13 13 to a greater degree than usual. As such, the5% cash: at end-2018, cash reserves as a percentage of
12
results of our simulation are best understood as an 0% turnover stood at only 2.73% in Italy and 0.55% in Spain11.
10 approximation of the fundamental damage to firm -5% As a result, the shock to revenue has had a strong
solvency, independently
9 of public intervention. More
-10% impact on solvency across this segment (Chart 5 -
8 Operating expenses,
8 broadly, the forecasts are subject to the significant
-15% see next page). This isYoY%
an illustration
growth of how practices
6
uncertainty inherent to extraordinary circumstances.-20%
that optimize efficiency in normal times (not letting
That being said, it seems like the popular conception
-25%
cash sit idle in the company’s
Turnover, YoY% coffers) can backfire
growth
4 according to which large firms
3
are less vulnerable is when low-probability, high-stakes risks materialize. nnn
-30%
2011 2012 2013 2014 2015 2016 2017
2
2
0 0
0
5 - Textiles, Automotive,
0-10 10-20 Chemicals,
20-30 Metals,30+
Construction, Retail, Transport and Hospitality. Due to possible irregularities in the data, we will not comment on the latter two.
6 - Firm size categories: Large : turnover > 50 M€, Medium-sized: 10 M€ <turnover< 50 M€, Small: turnover< 10 M€.
cash-adjusted ICR
7 - Italy: all populations in retail and construction, large and small automotive firms, large metals frims. Spain: small and medium-sized metals firms, large and medium-sized construction firms and large auto producers.
8 - See “From a massive shock to a differentiated recovery” Coface Barometer Q2 2020 (June 2020).
9 - See “Covid-19 and Corporate Sector Liquidity” by Banerjee et al. (BIS bulletin, 2020).
10 - We should expect smoother cost adjustment at the annual frequency.
11 - The corresponding figures for medium-sized (small) companies are 7.35% (14.5%) in Spain and 8.08% (11.99%) in Italy.
 ES-Auto

IT-Auto Small

Medium
4 ES-Textile COFACE ECONOMIC PUBLICATIONS ARE CORPORATE BALANCE
FOCUS Large SHEETS IN SPAIN AND ITALY READY
IT-Textile
FOR THE COVID-19 SHOCK?
0 50 100

CHART 5 Since this is common among companies with buyer

Cash-adjusted Interest Coverage Ratio*, Automotive sector (NACE code C29) power over their suppliers, it is a type of liquidity
risk that tends to affect large companies rather than
48.1
* Calculated as smaller ones. Finally, debt service costs are being
ES-Large (cash and equivalents
3.6
+ projected gross
significantly compressed by ultra-accommodative
operating income)/ financial conditions. In a low interest rate environment,
44.2 interest expenses. the relationship between gross indebtedness and debt
ES-Medium
24.7 service pressure becomes flattened: two companies with
very different levels of leverage can have relatively close
41.3 debt servicing costs. Conversely, if financial conditions
ES-Small become tighter (for example because of a sudden rise
28.5
of sovereign spreads), the firm with the higher debt
10.8
burden would be disproportionately affected.
IT-Large Chart 6 plots leverage ratios for a handful of the most
2.7
indebted firm populations in our sample. The retail
22.6 and construction sectors, both with high leverage and
IT-Medium
13.7 weak projected interest coverage ratios, emerge as
2019 particularly vulnerable from this perspective, as well as
17.0
small textile manufacturers in Italy.
IT-Small 2020
11.7

0 20 40 60 Broadly speaking, Italian firms are

Source: Banque de France, Coface in a weaker position, but metals
and automotive in Spain are also
CHART 6 vulnerable cash wise
Distribution of debt burden, selected sectors (2018)
As a general rule, we observe higher prevalence of
Gross debt as a % of Total Assets
potentially vulnerable firms in Italy, which is consistent
with the aggregate data examined earlier: 15
ES-Construction
populations with a cash adjusted-ICR under 1212 in 2020
were projected, against 7 in Spain. Most of the time,
IT-Construction
this can be explained by lower initial cash holdings,
weaker profitability and slightly more sluggish cost
ES-Retail FIRM SIZE CLASSES:
adjustments. However, some specific populations in
LARGE: turnover > 50 M€ Spain have some of the lowest scores in the sample:
IT-Retail MEDIUM-SIZED: 10 M€ <turnover< 50 M€
SMALL: turnover< 10 M€
large firms in the automotive and metals sectors13,
both under 5. This is what happens when sectors with
ES-Auto
low cash buffers also suffer large declines in turnover.
Small Spanish auto sales have so far declined at an average
IT-Auto
of 80% YoY in March-May, and we expect a contraction
Medium of turnover of roughly 60% in Q2 for the metals sector.
ES-Textile
Does this mean that these large producers are at a
Large larger risk of insolvency? Not necessarily, as there are
IT-Textile
at least two reasons that explain how these firms can
mobilize resources smaller players cannot.
0 50 100 First, these units are often members of larger international
Source: Banque de France, Coface groups, which can arbitrate liquidity between divisions
across the globe, and have better access to capital markets.
Second, due to their systemic importance in terms
DISCLAIMER

June 2020 - Layout: Cécile Bélonie - Photo © Shutterstock

of employment, governments have strong incentives
This document reflects the opinion of Coface’s Economic Research Department at the time to provide life-saving assistance despite fundamental
of writing and based on the information available. The information, analyses and opinions weaknesses, as illustrated in Italy by the recent EUR 6
been prepared on the basis of multiple sources considered reliable and 48.1
contained herein have ES-Large billion state-backed loan to FCA.
3.6 Furthermore, the construction and retail sectors also
serious; however, Coface does not guarantee the accuracy, completeness or reality of the data
contained in this guide. The information, analyses and opinions are provided for information
appear as vulnerable, with high levels of debt and rather
44.2 sluggish cost adjustment in both countries, though
purposes only and are intended to supplement the information otherwise available to the reader.
ES-Medium
24.7 reasonable efforts retail firms in Spain benefit from stronger cash buffers.
Coface publishes this guide in good faith and on the basis of commercially Chemicals and textile, both expected to suffer strong
as regards the accuracy, completeness, and reality of the data. Coface shall not be liable for any turnover contractions, appear resilient compared to the
damage (direct or indirect) 41.3
or loss of any kind suffered by the reader as a result of the reader’s
ES-Small rest of the sample, as only small Italian textile producers
use of the information, analyses and opinions. The reader is therefore solely28.5
responsible for the ended up with an ICR below 1214.
decisions and consequences of the decisions he or she makes on the basis of this guide. This
handbook and the analyses 10.8are the exclusive property of Coface;
and opinions expressed herein
IT-Large
2.7
the reader is authorised to consult or reproduce them for internal use only, provided that they
12 - The standard ICR (operating income/interest expense) is typically benchmarked against a value of 1,
are clearly marked with the name «Coface», that this paragraph is reproduced and that the but is not a very meaningful indicator in the presence of a very large and sudden shock to revenue.
modified. Any use, extraction, reproduction for22.6
data is not altered orIT-Medium public or commercial use Since there is no benchmark for the cash-adjusted ICR, we use the value of the 1st decile of the 2019
13.7 distribution, roughly equal to 12.
is prohibited without Coface’s prior consent. The reader is invited to refer to the legal notices 201913 - The same pattern is present in Italy, but with a much lower intensity: large metal producers end up
on Coface’s website: https://www.coface.com/Home/General-informations/Legal-Notice. with a projected ICR of only 0.8 in Spain, vs 6.4 in Italy.
IT-Small 17.0 202014 - Besides other resilient sectors not included in this sample, such as agri-food and pharmaceuticals.
11.7

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0 20 40 60
1, place Coste et Bellonte
92270 Bois-Colombes
France
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