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CITR survey: 80% of the business in Romania is made by 4% of the companies

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In early 2018, the number of companies in distress reached 51% of the overall number of companies with impact, reversing for the first time the balance between healthy companies and companies in distress, a survey released on Thursday by Casa de Insolventa Transilvania (CITR – Transylvania Insolvency House) reads.

Although the number of impact companies increased against the previous year, the share of 4% remains unchanged, whereas their value as weigh in economy increases exponentially. More than half of the 4 million employees in Romania work for the impact companies, the survey reads, according to hotnews.ro.

20% of the impact companies have reached assets of EUR 1 million in the past two years. Their profitability stands below 4%. In early 2018, some 29,000 companies with assets exceeding EUR 1 million were active.

Of the overall number of companies, the small ones represent 96% but have lower impact.

The CITR Group survey reads that, in early 2018, 4% of the Romanian companies conducted 79% of the business and had a turnover of EUR 237 billion, up by 14% against the previous year.

“The Romanian business environment, after 30 years of market economy, seems to be an engine getting overheated. We are a country where the business is supported by 4% of the overall number of companies, while 51% are in distress,” CITR CEO Vasile Godînc?-Herlea said.

In terms of median profitability, the most profitable sectors in 2018 were in the health system (net profit 10%), agriculture (9%) and hotels activity (8%). The IT industry had a median profitability of about 5%, whereas the processing industry had a median profitability of 3%.

By counties, the number companies in distress exceeds 50% of the turnover, were in Bihor, Dolj, Cara? Severin, Buz?u, Tulcea.

The CITR Group specialists expect in 2019 a growth in the number of companies in distress, given the slowdown of economic growth against the previous years.

“Given the growing current account deficit and the state budget deficit, with pressure on inflation, we have signals that the structure of companies will change, with growth of the number of companies that need restructuring and of the ones under insolvency. We expect the healthy companies to perform even better, while the ones in distress to get worse; corroborated with macro-economic changes, this would lead to significant risk elements for the coming period,” the CITR Group experts say.

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