The 100 largest companies include 75 multinationals, nine entrepreneurial businesses and the rest are state-owned companies. The number of locally owned companies is greater in the entire economy.
“The largest companies in the economy have a higher profit margin, so they transfer some of the profit to their equity capitals, hence the balance between debt and equity capitals,” says a banking industry executive.
“Moreover, multinational companies have an optimal financial policy, while the businesses of Romanian entrepreneurs have a higher indebtedness because they do not have equity capitals.”
The revenue of the 100 largest companies in Romania’s economy taken together is about EUR65 billion. Multinationals’ revenue stands at about EUR55 billion, which is almost half of the revenue derived by foreign-held companies in Romania.
The debt ratio of a company is an important indicator of its financial health. Although the ideal debt ratio would be 50%, it varies with the industry.
“Payment terms are long on the pharmaceutical wholesale market, the CNAS (national health insurance house) pays at 120 days, for instance,” says Iulian Trandafir, general manager of pharmaceutical wholesaler Farmexpert.
“One needs working capital and that comes from loans. Moreover, one has important investments that take five to seven years to recoup but one needs the money to start them in the first place.”
Banks are willing to lend but they look at the risk profile of each company. Since large companies get funding, they are more indebted than the industry average, Trandafir added.
The major companies in pharmaceutical wholesaling and agriculture sector have a higher debt ratio than the average of their industry, while international retailers and large food producers are in a better position than the rest of their market, a ZF analysis base on Trade Registry and Finance Ministry data shows.
The indebtedness was calculated as a ratio of total debts and total assets for the largest 100 companies in Romania and for each industry. Each company was compared with the industry average based on the NACE code reported to the Finance Ministry.
Four companies among the ten largest in Romania have a higher indebtedness than their industry average, that is Rompetrol Downstream (gas stations), Petrotel Lukoil (refinery), Lukoil Romania (gas stations) and E.ON Energie Romania (electricity and gas supplier).
On the other hand, the largest company in Romania, Renault-owned Automobile Dacia’s debt ratio is 46% compared with the industry average of 53%. OMV Petrom Marketing (gas stations) and the leading retailer in the country, Kaufland, have lower than average debt ratios.
(English version by Loredana Fratila-Cristescu)