More and More Bankruptcies

Coface reports the largest number of bankruptcies in Poland in 8 years. The construction sector is the most threatened.

In 2012, as many as 877 companies declared themselves insolvent, which is 21.3% more than in 2011. The construction sector reported the largest number of bankruptcies. Last year, courts declared 218 construction companies bankrupt, which translates into an increase by 53% in comparison to the previous year. Bankruptcies in this sector constitute 25% of all that have been reported, whilst two years ago the percentage amounted to 10%.

We have been informing about problems in the constructions sector for a while. Insolvency statistics confirm that financial liquidity in the sector poses a huge problem and, what is more, it does not seem to decrease. As the sentiments toward the sector are getting worse, companies find it more and more difficult to obtain financing, which hinders development, finding new contracts and consequently influences the well-being of other companies. The closing of investments related to Euro 2012 was followed by a period of stagnation on the market. Recently, there has been a slight increase in public orders. However, there are fewer tenders and the competition is still large. We expect the year 2013 to be difficult for construction companies. They are trying to adjust to the new economic conditions, but the recession and restricted access to financing make the process very hard, so many companies may not survive another year – comments Marcin Siwa, Head of Underwriting Department at Coface Poland.

According to Coface experts, the main reason for bankruptcies lies in the financial hold-ups. The company’s prognoses say that the year 2013 will be characterised by a rapid increase in the number of insolvencies too.

Paweł Tobis, Deputy Managing Director at Coface Poland, comments: While analysing the data concerning bankruptcies, one should bear in mind that the declaration of insolvency is usually the final, albeit delayed effect of a long-lasting process. It tends to be preceded by problems with liquidity or structure. Considering that further worsening of the situation on a macroeconomic scale becomes a fact and that more and more companies will have to face such problems, one may suppose that 2013 may, unfortunately, be the year in which Polish companies will be affected by the global crisis more than ever. This will be also reflected in the continuing growth of insolvencies.

The report shows that the structure of bankrupt companies has changed. The problem affects larger and larger companies, as 12% of insolvencies concerns companies with the annual turnover of 5-50 mln PLN. Among the largest construction companies which declared bankruptcy this year are Hydrobudowa, PBG, Poldim and Dolnośląskie Surowce Skalne. A vast majority (95%) of insolvent companies were established after the political transformations of 1989.

Below you will find the full version of the report in a PDF file.

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