Normalization of demand at low levels – Further drop in production performance

The domestic sector of manufacture and trade of woods & products is the subject of investigation in a recent study conducted by Infobank Hellastat S.A. According to Alexis Nikolaidis, Economic Research & Sectorial Studies Senior Analyst, the economic crisis that our country has been experiencing since 2009 has led to a fall, over time, in building real estate properties, which resulted in a decline in the volume of orders for wood products.

In detail, the overall building activity, as it is expressed by the number of permits, has shown a continuous decline after 2005, reaching the number of 13,257 permits in 2015, and showing a cumulative decline of 86%. However, a substantial slowdown in the rate of decline was noted during the last year, which resulted in the normalization of demand for wood products.

The residential property market is governed by a significant decline in activity, which refers both to the erection of new buildings and the purchase and sale of existing ones. The recession translates into an excessive supply of properties for sale, and extremely low demand, due to the restrictions on mortgage loans, ongoing tax increases, and limited purchasing power of households.

The climate is also negative in the sector of furniture manufacturing; the imports of cheap readymade products by multinational companies, and the reduced consumers’ income have hit the domestic furniture manufacturing industry, leading several craft companies to exit from the sector.

The diminishing demand has been followed by a substantial decline in production activity in the sector (a further drop of 6% in 2015), the key characteristic of which is the idleness of several plants, and the permanent cessation of operation of many companies.

As a result of the diminishing demand, and competitive pressure from importers of cheap woods, manufacturing companies have sold their products at low prices; this has generated losses for most of them.

According to Mr. Nicolas Gouzelos, CEO of Infobank Hellastat, “Economic and political stabilization is an essential condition, in order for sectors that relate to the building and construction industry to return to growth, and the building activity as well as public investment in infrastructure projects to recover, as these sectors have suffered major losses over the last decade.”

 

Financial analysis

In the study conducted by IBHS, an analysis takes place of the financial statements of 127 companies. The key conclusions are summarized as follows:

•    In 2015, Turnover fell by 1.5%, at €276.69m.
•    EBITDA decreased by 8.2%, at €9.7m, while pre-tax losses increased to €27.17m.
•    The EBITDA margin remained constant at 3.2%, while the EBT margin remained negative, having deteriorated to -2.1%.
•    Capital leverage improved marginally at 0.95 over 1.
•    The collection period for Receivables was set at approximately 5 months. Furthermore, Inventories were held for a period of 7.5 months.

 

For the full version of the sectoral studies please contact 210 8939017 or email to This email address is being protected from spambots. You need JavaScript enabled to view it. & This email address is being protected from spambots. You need JavaScript enabled to view it..

 

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