While Italy is starting Phase 3 of the restart, the economic effects on companies “are currently only partially visible”, warns a study by Crif, Centrale Rischi Financiri, a company that provides support for disbursement and management of consumer credit.
On the basis of the classification of Crif Ratings, which analyzes all Italian companies in the various product sectors at the macro level for homogeneity of the Ateco codes that compose them, the Crif Pulse Observatory attributes to each sector a score from 1 (the worst) to 5 ( the best) representative of the ability to absorb the impacts related to the Covid-19 emergency.
The synthetic indicator takes into account two components: the effects on the economic and financial level that the pandemic is expected to have on the accounts of the companies in the sector (Financial Impact from 1 to 5) and two indices relating to the capacity and speed of recovery of the sector, allowing to intercept the phenomena underway in the economy from credit and commercial point of view (Pulse Credit and Pulse Trade, always on a scale from 1 to 5).
Based on these parameters, the economic sectors have been divided into four categories: Top, Upper, Middle and Bottom.
The analysis shows that only a small number of sectors, called the Tops, shows, both in terms of Financial Impact (with a score from 4 to 5) and of Pulse Credit and Pulse Trade (between 3 and 4), a resistance compared to the effects of the pandemic.
These sectors include the pharmaceutical, telecommunications, ICT and media, chemistry and consultancy sectors. However, the number of companies that fall into this category is rather limited both in numerical terms (around 15% of the total) and per turnover (around 11%). Among the characteristics that unite them, there is a limited impact of the restrictions deriving from the lockdown thanks to essential activities or in any case that can be carried out in a smart working mode, a resilient or even growing demand due to the nature of the products and services provided, a holding of margins and generation cash flow thanks to the maintenance of production volumes, a relative stability of creditworthiness and regular commercial operations.
Within the Top segment, there is an extremely limited number of appeals to the moratoriums by pharmaceutical companies compared to the total figure of Italian companies (around 4% in March 2020 and 15% in April 2020).
Sectors classified as Upper followed, characterized by a low impact of the restrictions deriving from the lockdown for essential products, by a favourable long-term trend of demand and by an improved ability to absorb short-term negative impacts. From a credit point of view, they are not particularly critical and are regularly operational from a commercial point of view. This category includes Transport and Logistics, Food, Beverages and Tobacco and Electronics. For these sectors, the Financial Impact is between 3 and 4, while Pulse Credit and Pulse Trade between 2 and 3. The Middle sectors instead show a greater impact of the restrictions deriving from the lockdown and various areas have strong exposure to foreign demand. All this leads to pressure on operating profitability and already relatively weak financial structures, a reduction in commercial operations and an extension of payment times to suppliers. Retail, Textiles and Clothing and Instrumental Mechanics belong to this category, with Financial Impact around 2 and Pulse Credit and Pulse Trade around 3. The fourth category includes the Bottom sectors, which are expected to suffer a strong negative impact. These are sectors that have been heavily affected by the restrictions deriving from the lockdown but which are also suffering in the restart phase due to weak demand due to the new normality of social distancing or a lower propensity to invest and to purchase durable goods connected to the overall consumer confidence. In these sectors, the cost structure, with a strong component of fixed costs and the high incidence of working capital, weigh on the financial profile and consequently, there is a deterioration in creditworthiness and a significant reduction in commercial operations and longer payment times to suppliers. Among them, Crif has identified the tourism / Leisure, Automotive Trade, Mining / Oil & Gas, Civil Engineering and Construction, Mechanics / Means of Transport and Metal Products. Compared to the limited concentration of companies within the Top category, the Bottom category sees the presence of about 28% of Italian capital companies, for an aggregate turnover of 24% of the total. In this category, the Financial Impact has a value between 1 and 2 and Pulse Credit and Pulse Trade on average between 2 and 3. The difficulties of these sectors are also found in the performance of new businesses, with a greater negative variation compared to the same period the previous year, in particular in the Tourism (-2.8%) and Automotive trade (-2.2%) segments. Similarly, in the first three months of the year, the sale of cars, Mining / Oil & Gas and Tourism and Leisure activities recorded a contraction in the invoices issued, approaching 40%.