IT distributors have lower revenues but higher profits, according to Coface survey

Newsroom 17/09/2014 | 08:00

IT distributors last year posted revenues that were 22 percent lower than when the financial crisis struck in 2008, but the net result reported to their turnover was 2.4 percent, which was the highest level of the past 10 years, according to a Coface survey quoted by Mediafax newswire.

“Starting 2009, distributors of IT products saw a constant decline in their average revenues in parallel with a positive financial evolution. Thus, the average revenue per company posted in 2013 was 22 percent lower than before the financial crisis in 2008, but at the same time the net result of 2.4 percent posted at the level of the industry for 2013 is the peak of the past ten years. Following some stress simulation scenarios, Coface calculations show that the following years should bring solutions for boosting revenues. If not, the industry risks an extension of payment deadlines towards their suppliers, which fuels insolvency risks,” according to the Coface survey.

The survey looked at the 2013 financial statements of 1,263 companies in the IT and software distribution industry.

These companies posted a total turnover of RON 5.2 billion in 2013, representing a 5 percent drop compared to the previous year. However, the net profit had a better evolution, as 68 percent of companies were profitable during 2013, and half of these saw their profit rising.

The significant difference between the shrinking turnovers and the growing profit indicate a change in the financial situation of companies in this industry which have undergone massive restructuring.

“Witness to this is the number of jobs advertised by the industry in 2013, totaling 5,898, which is 7 percent higher compared to the previous year, but at the same time 18 percent lower than in 2008,” according to the survey.

Compared to the previous year, one in three companies in this industry posted insufficient capital, especially companies under the medium size.

“However, as far as the debt level goes, 2013 saw improvement, from 82 percent in 2012 to 74 percent in 2013, on the wave of reinvested profit. Payment deadlines were also reduced in 2013 by approximately 27 days due to the reduction in the average receivable collection deadline by 24 days, which means companies in this industry have directed all the sums collected rapidly into paying their short term debts,” says the survey.

The balance is still fragile when it comes to liquidity. According to the survey, “any negative shock that leads to decreasing revenues or not collecting debts can result in expanding payment deadlines, in case no supplementary redundancies are made,” says the Coface survey.

Otilia Haraga

 

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