Italy in figures

Italian SMEs at the testing bench of Covid

The report Cerved PMI 2020 analyzed the financials, demographics, payments, credit scores of 159,ooo Italian SMEs. The results are based on data collected up to October 12, 2020.

February 24 2021
Reading time: 10 min

Cerved provides information about Italian companies, such as the assessment of the solvency and creditworthiness; moreover, it monitors and manages credit risk during all phases and defines marketing strategies. It also operates as a rating agency. Every year Cerved elaborates a report about Italian SMEs.

The full report (Italian) is available here.

A short presentation (English) is available here.

The infographic below highlights the main results contained in the 2020 report. Points 1-3 refer to the pre-Covid situation. Points 4-6 refer to the post-Covid situation.

A profile of Italian small and medium enterprises in 2020

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1. PRE-COVID: Italian SME, a definition
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1. PRE-COVID: Italian SME, a definition

Cerved groups small and medium enterprises based on the definition elaborated by the European Commission (here).

To be defined as a SME, a company headcount can range between 10 and 250 people; revenues between 2 and 50 million euro. Based on this classification, Cerved analyzed the financials of 159K companies: 132k are small companies and 27k medium companies.

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Cerved groups small and medium enterprises based on the definition elaborated by the European Commission (here).

To be defined as a SME, a company headcount can range between 10 and 250 people; revenues between 2 and 50 million euro. Based on this classification, Cerved analyzed the financials of 159K companies: 132k are small companies and 27k medium companies.

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2. PRE-COVID: A recovery not fully achieved
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2. PRE-COVID: A recovery not fully achieved

Though in 2019 revenues of Italian SMEs, in real terms, were slightly above 2007 levels (+2.8%), profitability still lags behind. This is partly due to the fact that revenues do not grow quickly enough to compensate the increases in the cost of labor. In 2019, gross profitability (EBITDA) decreased by 19.4% with respect to 2007. ROE (Return on Equity as a measure of net profitability) reduced from 13.9% (2007) to 10.8% (2019).

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Though in 2019 revenues of Italian SMEs, in real terms, were slightly above 2007 levels (+2.8%), profitability still lags behind. This is partly due to the fact that revenues do not grow quickly enough to compensate the increases in the cost of labor. In 2019, gross profitability (EBITDA) decreased by 19.4% with respect to 2007. ROE (Return on Equity as a measure of net profitability) reduced from 13.9% (2007) to 10.8% (2019).

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3. PRE-COVID: SMEs financial position improved
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3. PRE-COVID: SMEs financial position improved

Two recessions (2008-09  and 2011-12) triggered a process of selection and corporate restructuring: the financial position of Italian SMEs improved. When analyzing financial scores, the number of SMEs with risky balance sheets  changed from 37K in 2007 (25% of the total) to 17K in 2019 (11%). Those with a more solid fundamentals increased from 60K (40%) to 93K (59%). 

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Two recessions (2008-09  and 2011-12) triggered a process of selection and corporate restructuring: the financial position of Italian SMEs improved. When analyzing financial scores, the number of SMEs with risky balance sheets  changed from 37K in 2007 (25% of the total) to 17K in 2019 (11%). Those with a more solid fundamentals increased from 60K (40%) to 93K (59%). 

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4. POST COVID: Birth rate of new companies strongly reduced
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4. POST COVID: Birth rate of new companies strongly reduced

In April 2020 companies birth rate almost zeroed. Birth rate decreased more significantly in the sectors particularly affected by the crisis; on the other hand, it increased in some supply chains linked to healthcare. After the end of the lockdown, the number of new companies began growing again, but this was not enough to compensate the losses of the previous months.
Overall, in the first 8 months of 2020, 1/5 of newly born companies was lost with respect to the same period of 2019. The impact on future employment might be particularly strong if we consider that, in the last decade, new companies with less than 5 years lifespan represented more than half of new employment.

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In April 2020 companies birth rate almost zeroed. Birth rate decreased more significantly in the sectors particularly affected by the crisis; on the other hand, it increased in some supply chains linked to healthcare. After the end of the lockdown, the number of new companies began growing again, but this was not enough to compensate the losses of the previous months.
Overall, in the first 8 months of 2020, 1/5 of newly born companies was lost with respect to the same period of 2019. The impact on future employment might be particularly strong if we consider that, in the last decade, new companies with less than 5 years lifespan represented more than half of new employment.

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5. POST COVID: Peak of missed payments in May
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5. POST COVID: Peak of missed payments in May

Payline is a database that collects information about payment history of more than 3 million Italian companies. The amount of invoices left unpaid grew from 28% in January 2020 to 45% in May. In July it decreased to 37%, a percentage much higher than the one registered in the pre-Covid period.

Based on the data collected up to October 2020 and the consequent projections:

SMEs revenues in 2020 will decrease by 11% with respect to 2019

Gross profitability will descend by 19% 

Leverage will increase from 12.8% to 15.5%

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Payline is a database that collects information about payment history of more than 3 million Italian companies. The amount of invoices left unpaid grew from 28% in January 2020 to 45% in May. In July it decreased to 37%, a percentage much higher than the one registered in the pre-Covid period.

Based on the data collected up to October 2020 and the consequent projections:

SMEs revenues in 2020 will decrease by 11% with respect to 2019

Gross profitability will descend by 19% 

Leverage will increase from 12.8% to 15.5%

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6. POST COVID: Hotel and travel agencies among the most affected
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6. POST COVID: Hotel and travel agencies among the most affected

The impact of the crisis is much stronger on tourism, restaurants, logistics and transportation, fashion. Based on Cerved assessment, around 20K SMEs (12% of the total) will lose revenues for more than 25% (1/4 of previous revenues). Based on Payline data, the % of unpaid invoices for this group of SMEs was more than 70% in May. It remained beyond 50% after the end of the lockdown.

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The impact of the crisis is much stronger on tourism, restaurants, logistics and transportation, fashion. Based on Cerved assessment, around 20K SMEs (12% of the total) will lose revenues for more than 25% (1/4 of previous revenues). Based on Payline data, the % of unpaid invoices for this group of SMEs was more than 70% in May. It remained beyond 50% after the end of the lockdown.

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