march marketmonitor
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The immediate outlook for key markets and sectors Every month, Atradius brings you an up to the minute snapshot report on a range of export markets and key trade sectors. Our underwriters have a specialist view of the world economy – and the industries that make that economy tick - that you won’t find in the general press coverage of events. Even more importantly, our underwriters use their expertise and experience to look to the future. In each edition of Atradius Market Monitor you’ll find our outlook for a number of key market economies. In this issue… …we feature the following markets: Italy – with a spotlight on the metals and textiles sectors Switzerland – with a spotlight on the banking and automotive sectors Sweden Hungary Russia Canada China AustraliaTRANSCRIPT
Atradius 1
March 2009 The immediate outlook for key markets and sectors Every month, Atradius brings you an up to the minute snapshot report on a range of export markets and key trade sectors. Our underwriters have a specialist view of the world economy – and the industries that make that economy tick - that you won’t find in the general press coverage of events, so we hope that you will find our summary reviews a useful addition to your Atradius credit insurance. Even more importantly, our underwriters use their expertise and experience to look to the future. In each edition of Atradius Market monitor you’ll find our outlook for a number of key market economies.
In this issue… …we feature the following markets:
Italy – with a spotlight on the metals and textiles sectors Switzerland – with a spotlight on the banking and automotive sectors Sweden Hungary Russia Canada China Australia
marketmonitor adapting to the challenging economic environment
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Expected default in Western Europe and USA
One of the most important factors that any business needs to know is the trend of insolvencies in their
markets.
The following Expected Default Frequency (EDF) chart is based on listed companies in the markets referred
to, and the likelihood of default across all sectors within the next year. In this context, default is defined as a
failure to make a scheduled payment, or the initiation of bankruptcy proceedings. Probability of default is
calculated from three factors: market value of a company’s assets, its volatility and its current capital
structure. As a guide, the probability of one firm in a hundred defaulting on payment is shown as 1%
Source: Atradius Economic Research and KMV Credit Monitor
The deteriorating global economic environment translates into an increase in insolvencies. As confirmed by
the EDF indicators, insolvencies are predicted to increase steeply across all major economies in 2009. The
heightened default expectation has been evident since mid-2007 (see chart above). This development
suggests an accelerating default risk for all major Western economies.
In January 2009, the median EDF of nearly all major Western economies rose again compared to the
previous month, with sharp increases recorded for Italy and the US, while Germany and the Netherlands
recorded modest increases. The EDF for the UK has decreased somewhat, but there is no reason for
complacency, as it still remains very high.
On the following pages, we assess the impact of expected default in key
markets
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Italy The current business environment After years of stagnation or simply modest growth, Italy is facing its most severe economical and liquidity
crisis for 60 years. According to Consensus Forecasts, real GDP-growth contracted by 0.5% in 2008 and is
forecast to shrink further by 1.6% in 2009. The Italian Central Bank has even forecast a 2.6% contraction this
year. Despite the dynamism of Italian entrepreneurism the business environment has deteriorated sharply
over the last 6 months. Private consumption is down (retail sales decreased by -1.9% at the end of 2008)
and exports as a traditional asset of the Italian economy are dropping, as its main export partners like the
USA, Germany and the Eastern European countries experience their own downturn. The industry is facing
severe overcapacity, showing high inventory levels and orders down by 40 to 50%. In 2008, industrial
production decreased by 14.3% year-on-year. A remarkable sign of the difficulties seen at all levels is the
number of hours of temporary work lay-offs, which doubled between October 2008 and January 2009. As the
Italian government is heavily indebted (public debt amounts to 110% of GDP), it is constrained in helping the
economy with stimulus packages.
In 2008 the number of insolvencies doubled compared to 2007, with Southern Italy being hit particularly
badly, and small companies mainly affected. We are now seeing an explosion of the number of late
payments and payment plans, mainly in the metal sector. In general, debtors prefer to leverage suppliers
rather than mobilising more of their own bank facilities. Even blue chip companies are ignoring due dates
and massively delaying payments to their suppliers.
The outlook for Italy In the forthcoming months business sentiment will show no improvement. It is expected that industry orders
will continue to drop until the fourth quarter of 2009.
This year we forecast a continuous increase in payment issues and corporate insolvencies, which will in
future increasingly affect medium and large-sized businesses. Compared to December 2008, Italy’s
Expected Default Frequency indicator rose again in January 2009, from 1.29% to 1.39%. Since January
2008 (0.17%) it has increased sharply (see chart page 2).
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Spotlight on industries in Italy Metals How has the global economic downturn impacted the metals industry? Italy is the third largest steel producer in Europe after Russia and Germany and has experienced years of
very high growth, capacity investments and financial strengthening, until mid-2008. But now that has all
changed. The production of metals and metal products decreased by 22% in 2008 and in January 2009
Italy’s crude steel production plunged by 40% year-on-year. The global downturn in automotive, construction
and home appliances is dramatically impacting the Italian metallurgic industry, which is now struggling with
massive overcapacity.
What is the current trend in payment delays, payment defaults and insolvencies and why? In this industry, payment behaviour has deteriorated steeply. Metal industries today represent the largest
percentage of payment defaults observed in north and central Italy. Late payments to suppliers are
effectively used as a way to improve working capital. Even well financed organisations are now using
delaying tactics in paying their suppliers.
What should companies selling products into the metals industry pay particular attention to? Most importantly, to the payment terms offered and to the concentration of a buyer’s own customers
portfolios in sectors like automotive, construction or white goods. Selling to a large-sized company can also
leave the seller at a disadvantage unless the contractual arrangements are well framed.
What is Atradius short term outlook for the metals sector? We believe that the situation will continue to deteriorate. Orders for the forthcoming months are desperately
down and indeed flat. It will take a long time for the market to absorb the production capacities created by
the ambitious investment programmes of the past. There will be severe difficulties in meeting the repayment
schedules of medium/long term debts, resulting in increasing pressure on the suppliers to accommodate
payments. As Italian metal companies have significantly bolstered their capitalisation over the past years
they can stand this situation for another 2 to 4 months, but, after that, large scale defaults and insolvencies
can be expected.
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Spotlight on industries in Italy Textiles How has the global economic downturn impacted the textile industry? Since 2008 all segments of the Italian textile sector and fashion chains have suffered due to the decreasing
demand for textile products, both domestically and abroad. Last year the industry recorded a 3% drop of
sales. Most affected are low range products and labels that were previously boosted by “fast fashion” habits.
Retail shops registered sales down by 20% to 40% in 2008 with very high unsold inventories - also a
consequence of e-commerce success. Luxury niches are also suffering and face problems financing their
large marketing budgets as even wealthy clients rein in their spending habits. It is estimated that the
production of shoes went down by 10.2% in 2008, and this has severely hit plastics producers and chemical
components distributors in the shoe soles segment. Synthetic fibre industries are now landed with high
inventories, acquired at the time of low raw material prices, poor margins for products and flat demand.
Export sales to the US, Germany, Spain, Asia, and the Middle-East are impacted by the drop in demand
from those countries.
What is the current trend in payment delays, payment defaults and insolvencies and why? The industry is calling for massive public support, as we see a sharp increase in defaults and insolvencies in
the local specialised districts like Marche (shoes), Prato (low-medium range clothing) or even Biella (wool
and medium-high range production). Some large groups operating luxury licences are currently close to
default. The leather subsector is demonstrating a sharp increase in payment defaults connected to the
automotive and furniture industries.
What should companies selling products into the textile industry pay particular attention to? The size of the company is an important factor. The industry consists of a myriad of very small family-owned
businesses that may now face more funding difficulties. A company’s customer portfolio is also a key
element to look at, as risks will be higher when delivering to the automotive sector or to low range brands
clothing retail. What is Atradius short term outlook for the textile sector? The textile industry is the second largest manufacturing industry in Italy. Because of its importance, it is most
likely to benefit from public support. But this may not solve the problem of low consumption. Therefore we
remain cautious on this sector, mainly because the average company is very small and therefore exposed
more than others to the effect of the crisis.
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Switzerland The current business environment
While the Swiss economy was robust until October 2008, since November it has been increasingly affected
by the global downturn due to its high dependence on exports. Two exceptions are private consumption,
which is expected to increase by 1.2% in 2009, and the luxury goods segment. However, with rising
unemployment figures, it is increasingly questionable how long those factors will still sustain the economy. In
general a GDP-contraction of 0.6% is expected in 2009.
Switzerland is one of the few European countries which registered a decreasing number of corporate
insolvencies in 2008 (-2.2% to 4,221). That said, it is worth remembering that the Swiss economy was
unaffected by the economic crisis until the fourth quarter of 2008. Since September 2008 the number of
corporate insolvencies has increased every month by nearly 20% year-on-year. This development is also
reflected in the Expected Default Frequency indicator for Switzerland, which has risen from 0.1% in
September 2008 to 0.22% in January 2009.
The outlook for Switzerland
In line with the EDF indicator, we expect a further rise in corporate insolvencies in 2009, as an increasing
number of companies face tighter credit conditions and rising refinancing costs. Most at risk are enterprises
that cannot absorb shrinking revenues and profits due to their lower equity base and are therefore in need of
external funds to sustain their liquidity. To close their liquidity gaps, firms are increasingly using delaying
tactics in paying their suppliers, and we are already seeing a worrying deterioration of payment morale.
Those mainly affected by these tactics are small- and medium-sized companies active in export-driven or
very competitive sectors.
We do not foresee the tide turning in the coming months. Payment defaults will sharply increase as the
financial condition of many companies remains tense – especially those in the transport, timber and furniture
sectors. In timber and furniture, payment morale is particularly bad
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Spotlight on industries in Switzerland Banking How has the global economic downturn impacted the banking sector? The Swiss banking sector is characterised by a dualistic structure, consisting of mainly national oriented
banks on the one hand and internationally active giants on the other hand. The credit crisis has deeply
shaken the confidence in those high street banks which, due to their sheer size, constitute a main pillar of
the Swiss economy.
Hard hit by the credit crisis, Switzerland’s largest bank, UBS, was bailed out by the government and the
Swiss National Bank at the end of last year after clients withdrew deposits worth Swiss francs 85.8 billion.
Overall losses in 2008 amounted to Swiss francs 19.7 billion, including 8.1 billion in the last quarter alone.
Credit Suisse, as the second-largest Swiss bank, also suffered sizeable losses of Swiss francs 8.2 billion in
2008 – its loss of Swiss francs 6.204 billion in the fourth quarter markedly higher than expected by financial
analysts.
What is Atradius short term outlook for the banking sector? Switzerland is a financial hub of global importance, and Swiss high street banks are considered to be ’too big
to fail’. Therefore, we expect that the government will continue to support Swiss banks to ease liquidity
bottlenecks.
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Spotlight on industries in Switzerland Automotive How has the global economic downturn impacted the automotive industry? Automotive suppliers were already affected by the economic crisis by autumn 2008. Despite the fact that
there is no domestic car production, as suppliers many Swiss companies are dependent on the automotive
industry. Since the end of 2008 the supplier sector has been affected by order cancellations, leading to
layoffs and extension of Christmas holidays for workers.
Now the downturn is affecting car sellers. Since the fourth quarter of 2008, there has been a tremendous
deterioration in demand, with new car sales decreasing sharply in November 2008 compared to November
2007.
What is the current trend in payment delays, payment defaults and insolvencies and why? Currently payment defaults and the number of insolvencies are still low in the automotive sector, but we
expect that in the coming months Swiss companies will not escape the worldwide insolvency trend in this
industry.
What should companies selling products into the automotive industry pay particular attention to? Suppliers should be aware that a client’s deteriorating payment behaviour may be an early warning indicator
of something worse.
What is Atradius short term outlook for the automotive sector? We do not foresee a change for the better in the short term. The international orientation of the automotive
supplier sub-sector makes it highly dependent on exports and exchange rate fluctuations. A company’s skills
in innovation of products and processes, know-how and an equity ratio as high as possible will all be
decisive factors for its survival. We expect insolvencies in this sector to increase in the coming months.
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Sweden The current business environment Sweden, with its small and open economy, extensive foreign trade and internationally well integrated
financial market, is severely affected by the global economic downturn. According to the Swedish Statistic
Bureau (SCB), GDP decreased by 4.9% year-on-year in the fourth quarter of 2008. Seasonally adjusted,
GDP decreased by 2.4% compared with the third quarter. In the same period, household consumption
expenditure plunged by 3.3%, exports decreased by 7.2% and imports by 5.4%. Industrial production shrank
by 6.1%. Total manufacturing decreased by 8.3% and service sector industries by 4.8%. According to the
National Institute of Economic Research, GDP will drop by about 1% in 2009.
Indicators published since December by the Swedish central bank clearly show that the global economic
slowdown continues to have a marked effect on Sweden. For example, exports and the inflow of export
orders are falling dramatically, and the number of redundancy notices has remained high since last autumn.
Capacity utilisation is still falling rapidly.
The outlook for Sweden
Contracting GDP-growth and diminishing access to credit have led to lower investment and consumption and
pressure on export books. The main indicators are negative and we do not expect any recovery in the short-
term. Corporate insolvencies increased by 20% in January 2009 compared to January 2008 and are
expected to rise further. The indicator for expected default frequency (EDF) has risen from 0.2% in January
2008 to 1.31% in January 2009. Even though EDF is based only on developments in listed companies, it has
proved to be a good indicator of future default levels across the whole Swedish corporate sector.
Automotive: Swedish automotive suppliers have been severely hit by the crisis. Low demand and the
cancellation of orders have led to a strain on finances. A further increase in insolvencies is likely.
Construction: Since end of 2008 the demand for homebuilding has dropped and we expect a further
increase in insolvencies: mainly of smaller and medium-sized companies.
Paper: This is a diversified sector but we expect that sawmills in particular will face problems during 2009,
due to low demand, low prices to end customers, continuing high raw material prices and, for some
companies, high level of inventory and debt.
We also expect that trade sectors dependent on consumer spending will have a difficult 2009, e.g. clothing,
furniture, consumer durables and various retail sectors.
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Hungary The current business environment After years of private/public sector overspending, resulting in strong GDP-growth, but also in high twin
deficits, the economy has fallen into deep recession. A massive multilateral bail-out package was introduced
to shore up the forint and strongly eroded international reserves. Domestic demand-oriented sectors are hit
by budgetary tightening and industrial exports are negatively affected by the economic meltdown in the
eurozone: Hungary exports about 80% to other EU-countries, themselves hit by the recession. Consequently
industrial production fell by 23% year-on-year in December 2008. GDP-growth deteriorated steeply in the
fourth quarter of 2008.
The Hungarian economy is characterized by high commercial credit risks, as nearly 60% of total corporate
and household bank loans are denominated in foreign currency (mainly in euros or Swiss francs). The sharp
drop in the forint has increased those risks, as the debt service burden for heavily euro-indebted
private/public debtors has become much higher.
The Construction sector is under considerable strain, as a fourth consecutive year of shrinkage is expected
due to falling demand, coupled with tightened project financing conditions (the first direct effects of the
financial crisis were a more restrictive credit policy and rising interest rates). The steel and automotive
sectors suffer from the worldwide decline in demand. Consumer electronics will no doubt be severely hit by
deteriorating consumer spending. All these industries are considered to be high risk sectors in Hungary.
The outlook for Hungary
Last year the number of insolvencies reached 11,500, an increase of 17.2%, compared to 2007. In January
2009 this trend continued with 1,400 insolvencies, the highest number ever registered in a single month. We
expect a further increase this year, with construction, food, consumer durables, IT, and retail sales mainly
affected.
As the economic crisis deepens, forecasts of Hungary’s economic performance in 2009 are constantly
changing. A recent report from the National Bank of Hungary forecasts a 3.5% GDP contraction in 2009. The
economy may bottom out in the third quarter, and the international standby-package should stabilize the
economy. The strict criteria for the economic policies - permanently monitored by the IMF - will help improve
the Hungary’s macro-indicators in the mid-term.
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Russia
The current business environment
The Russian business environment is currently very difficult and unpredictable for a number of reasons, but
there are two outstanding issues: the low oil price and the credit crunch. The oil price has a very direct effect
on the general health of the economy and it has also been one of the key drivers in the drastic fall in the
share price of major Russian corporations. At the current oil price level, the fiscal budget is headed for a
deficit this year (above 4% of GDP), and it can be expected that companies dealing with the public sector
may incur payment delays due to liquidity shortage among the public buyers. The global credit crunch has hit
the fragmented and underdeveloped Russian banking sector extremely hard. Apart from the state-owned
giants, Sberbank and Vneshtorgbank, all the Russian banks have serious problems in funding their activities
and are very reluctant to provide financing for their corporate clients. Even with full collateral it is not unusual
for a company to pay interest rates in excess of 30% on its overdraft facility. Many companies find it
impossible to renew their credit facilities at affordable rates and on the level necessary to pay their suppliers
on time.
Russian consumers are also starting to feel the pinch. Demand for more expensive consumer goods is
falling sharply along with the availability of consumer credit. The rouble has been on downward slide against
the dollar in recent months and imported goods have therefore become more expensive. Despite a weaker
rouble, Russian exporters suffer from severely reduced global demand and world market prices: not just for
oil and gas, but also for steel, metals and minerals. Few Russian companies have escaped the negative
effects of the current crisis and the market should therefore be treated with the utmost caution at the present
time.
The outlook for Russia
In the coming months, retail sales are expected to continue falling, particularly for the more expensive
consumer goods. Construction and property development and metals are particularly problematic sectors.
An increase in payment defaults and insolvencies must be expected due to falling external and internal
demand and difficulties in securing bank financing. Compared to December 2008, Russia’s Expected Default
Frequency indicator rose steeply in January 2009, from 2.83% to 4.29%. Since January 2008 (0.06%) it has
increased tremendously. Suppliers should make sure that they have the latest available financial insight into
the credit risks. Russian companies must present quarterly financial statements to the tax authorities within
the following quarter. Look out for companies with high financial gearing, particularly short-term, but also
long-term bank loans, as these can quickly change to short-term. Make sure that the contract is watertight:
contracts should refer to Russian courts or international courts of arbitration to be enforceable in Russia, and
written documentation is vital to allow legal pursuit of debts.
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Canada The current business environment
Canada slipped into a deep recession in the final months of 2008, as the economic decline expanded to
most sectors across the country. The economy has been further negatively impacted by the collapse of
commodity prices, as Canada is still heavily dependent on natural resources.
Canada’s current economic situation parallels that of most major economies. The current weakness is being
compounded by declining global demand, a deteriorating credit environment and weakening consumer
confidence.
GDP-growth dropped sharply in the fourth quarter of 2008, falling by 3.4% year-on-year. In December 2008
exports fell by 9.7% year-on-year, the largest monthly decline since 1982. Imports decreased by 5.7% in the
same month, tempering the weakening trade balance. Retail sales dropped 5.4% in December - the largest
contraction in 15 years. Overall, housing starts decreased by 10.9% in 2008, while employment has fallen by
record numbers in the latter half of 2008, with the unemployment rate jumping to a decade high 7.2%.
The outlook for Canada
Canadian bankruptcies have shown a dramatic increase; in December bankruptcies rose by 47% compared
to the previous month, while, on an annualised rate, the increase was 12%. As companies are still in the
cost-cutting, employee-downsizing stage, increased insolvencies are expected in the near term. The
Expected Default Frequency indicator for Canada has increased tremendously since January 2008 (0.4) - to
4.27 in January 2009.
For the current fiscal year, Canada is set to fall into a budget deficit for the first time in more than a decade,
as the government pours money into infrastructure projects and tax breaks to stimulate growth. Canada has
aggressively managed interest rates and, with inflation remaining below 2%, further rate cuts are expected in
the near future. However, despite these all-time low borrowing rates, businesses have complained that
Canadian lending institutions are not providing adequate domestic finance.
The Canadian economy is expected to contract further through 2009 and is not expected to recover until at
least 2010, mirroring the rebound of commodity prices.
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China The global economic slowdown impacted heavily on the Chinese economy. Chinese economic growth has
fallen significantly from an average 12% in 2007 to 9% in 2008. Growth has been at its weakest level for
seven years and has cost the jobs of 20 million migrant workers, adding to the risk of social instability.
This sharp contraction is primarily due to decreasing export demand - a significant driver for the Chinese
economy. Additional factors such as the strength of the yuan and an increase in the minimum wage have
compounded and accelerated the decline.
Economic expansion slowed to 6.8% in the fourth quarter of 2008 as trade collapsed and the property
market sagged. Overseas shipments fell by 24% in February compared to a year earlier and imports
declined by 24% for the same period.
The Chinese government has adopted stimulus measures to regenerate the economy. Increasing export tax
reimbursement is intended to stimulate foreign trade, while land reforms and lower interest rates should help
to stimulate the domestic economy. A four trillion yuan (about 460 billion Euros) investment package was
announced by the Chinese government in December 2008 to sustain economic growth over the coming 3
years.
The outlook for China
A further reduction in growth to just 7% in 2009 is forecast. The stimulus packages will take time to feed
through to the economy. As China is very much an export driven economy, growth is to a large extent
dependent on the economic recovery of other major trading nations.
We see the following sectors as exhibiting higher risk and/or are demonstrating a faster than normal decline.
These are also sectors where a rebound is not expected in the short-term.
Foodstuffs: One of the biggest challenges faced by China is to restore consumer confidence in this industry.
This follows the highly publicised tainted milk scandal. Poor quality control issues that were highlighted have
led to the export business of major domestic dairy producers drying up completely. Costs of product recall
and compensation have further squeezed profits and liquidity across the industry. Concerns about product
safety have also been voiced on sugar, edible oil, meats etc.
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China (continued) IT/Electronics: We have seen cooling demand worldwide in this sector. LCD panel over-supply is likely to
continue together with falling demand. The IT component sector is also sitting on high levels of overvalued
stock because of weak demand. These high levels of stock and market over-supply will take time to feed
through to the system. This is an important sector for the Chinese economy but businesses are far from
immune from the effects of the global decline in demand.
Paper/Printing: The global slowdown has severely curtailed demand for all grades of paper. The
plummeting price of scrap paper is threatening the ability of most recycling firms in China to continue. This is
mostly used for packaging materials and, with less products to pack, scrap paper is virtually worthless. We
have seen contracts frustrated because many businesses are failing to honour payment at the contracted
value.
Shipbuilding: The shipbuilding sector has been very badly hit by the slowdown in global trade. Orders for
ships are being cancelled and new ship orders globally are forecast to fall 60% in 2009. China specialises in
producing bulk carriers, but the level of manpower required and increased wage costs is compounding the
problem.
Steel/Metal: Steel makers are facing dwindling orders, production cuts, declining prices, heavy stocks, and
staff layoffs. As we have seen in the paper industry, contracts with steelmakers have been dishonoured after
commodity prices collapsed.
Textiles and Clothing: The Chinese textile sector has been affected by weaker global demand, higher
labour costs, energy shortages, yuan appreciation of 10% per year and reduction of the export VAT rebate.
Business failures in the sector are reaching unprecedented levels and there is no sign of a recovery on the
horizon.
Toy manufacture: The toy sector has been hit by a lack of consumer confidence, increasing supply costs
and workers’ wages. Improving quality standards is expensive and has naturally led to a sharp rise in the
cost base. All of these factors have conspired to make China an unattractive manufacturing base for the toy
sector - which contracted by 70% in 2008.
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Australia
The current business environment
Despite fiscal and monetary measures, the Australian economy recorded a 0.5% contraction of GDP for the
fourth quarter of 2008 and is now in recession. Consumer sentiment, along with business and investor
confidence, deteriorated further in the last quarter of 2008. The current business environment is one of
caution. Firms are concentrating on ensuring they get through the next 12-18 months in good shape and are
focusing on bolstering balance sheets, reducing costs, debt, investments and stock levels. Corporate
insolvencies for December 2008 and January 2009 are 40% up year-on-year. Agriculture, health, energy
and consumer staples, such as food, are ports in an increasingly severe storm. The same cannot be said for
the following key sectors:
Construction and Construction Materials: Despite an increase in new purchases in January, as a result
of reduced interest rates and government stimuli for first time buyers, the sector continues to struggle on the
back of high interest rates and low affordability through a lack of supply. The residential construction and
materials sector continues to decline and represented 20% of all insolvencies registered in 2008. Poor
payment is a key indicator of stress and we recommend that close attention be paid to any deterioration in
payments.
Consumer Durables and Retail: As consumers save more, retailers are reacting by discounting at the
expense of margins and running stock down to minimal levels; fearful that they may not move stock at all.
New car sales are down by 22% and Australia’s largest non-food retailer, Harvey Norman, is closing loss
making stores. Historically poor performers are first to perish in this environment.
Clothing, Footwear & Textiles: This is another sector impacted by discretionary spending as consumers
tighten their belts. We expect to see further failures in this sector on top of the recent failures of Herringbone
and Melbatex.
Mining: The collapse of hard commodity prices such nickel, copper, zinc, lead, iron ore and coal, coupled
with virtually paralysed equity markets for these assets, has brought havoc to this sector. Miners who cannot
make money at current prices, or need to raise capital to fund their projects, are in real danger of failure.
Close attention to the commodity spot price against cash costs is strongly recommended.
The outlook for Australia Looking forward, we expect deteriorating profitability and cash flows in most key industries mentioned above
as well as in discretionary sectors (travel, leisure and automotive) and for those companies dependent on
company/government expenditure or expansion, e.g. IT and service industries.
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Atradius Copyright. While we have made every attempt to ensure that the information contained in this report has been obtained from reliable sources, Atradius is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in this document is provided ’as is’, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied. In no event will Atradius, its related partnerships or corporations, or the partners, agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this report or for any consequential, special or similar damages, even if advised of the possibility of such damages.