“Following stress tests, Coface has found companies in the road transport sector face fragile liquidity and are exposed to negative shocks such as non-collection of receivable or declining sales. Should these scenarios play out in 2014, these companies face insolvency unless they are restructured. Considering industrial production growth has slowed in the first half of 2014, these scenarios, especially that of declining revenues, are highly likely,” Coface Romania country manager Constantin Coman said in a press release Wednesday.
The sector risk analysis shows 4,295 companies in the cargo road transport sector have gone out of business in 2013 and 41 of them had turnovers of more than EUR1 million. The sector remains competitive, however, as the volume and caliber of companies that went out of business was evened out by new companies in the sctor, set up in 2011 and 2012.
Coface analyzed the payment behavior of 2,752 companies in the road transport sector, which account for around 61% of the sector, and found three out of four businesses was at an above-average risk of insolvency and one third were at high risk of insolvency. Around 55% of analyzed companies make payment very slowly or fail to observe contractual terms and only 20% register no payment delays.
Romania’s Finance Ministry has records of 27,252 companies whose main field of activity is cargo road transport. These companies generated a total turnover of RON26.6 billion in 2013, 8% higher than in 2012. By turnover, a quarter of these companies had no activity last year, while 1,010 companies have annual turnovers of more than EUR1 billion, accounting for 64% of the total turnover in the sector.