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Brighter future for French companies in 2017

Brighter future for French companies in 2017 article image

The upcoming presidential elections in April and May this year are causing uncertainty among French entrepreneurs.

They could well delay investment decisions until later in 2017, economists say.

This safeguarding of investment capital will be beneficial for French companies – at least in the short term.

Coface, a global leader in credit insurance and risk management says 2016 has shown some good signs for French companies.

Coface forecasts a fall in insolvencies of -3.8% for 2016, followed by a further reduction of 1% this year.

In Q3 2016, 58,970 company insolvencies were recorded – a fall of 1% over one year.

Conversely, the costs concerned (up 2%, to A$5.5 billion) and number of jobs lost as a result (up by 1.4%, or around 186,000 people) have increased over one year.

Healthy profit margins

This trend reflects the increasing average size of insolvent companies, which have risen by +1.2% (with an average turnover of A$790,000). This trend is palpable in the metals sector, where the average size (turnover) of insolvent companies has increased by 25%.

At the same time, companies are more solid. The average age of an insolvent company has risen to 79.75 months, the highest since 2011. This is due to favourable financing conditions and healthy profit margins (with 31.6% forecast for 2017).

Finally, the three sectors that stand out most this quarter in terms of insolvencies are:

  • Textiles-clothing, food processing and transportation. Textiles-clothing has seen the greatest hike in insolvencies, at +15.5% over one year. This sector has been particularly badly affected by increased competition from the giants such as Inditex and by internet sales;
  • Challenges in the food-processing sector have notably been experienced by butchers and bakers, who have suffered from the stagnation in private consumption over the last two quarters;
  • The transportation sector has been weakened by the rise of taxi insolvencies

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