Medium-sized industrial companies in North-East Italy 2011 Emanuela Salerno, Mediobanca Research Department Udine, 17 May 2011
The region Section 1 2
In 2008 The region Section 1 1,515 medium-sized companies (1,461 considering groups) 48 medium-sized companies in Udine 50-499 staff Sales 15-330m Limited companies Source: Unioncamere research department 3
Medium-sized companies in North-East Italy: multilingual with local accents The region Section 1 "Genuine" mediumsized companies 1,461 Non-Italian parent companies owning 14% of potential medium-sized companies are based in Control 722 non-italian companies (33% of the total), 135 of which manufacturing (19% of the non-italian firms) and are based in Non-Italianowned 300 Large Italian groups 434 Americas 18% Eurozone 51% Other EU 14% Switzerland 11% Africa and Asia 4% Rest of world 2% Americas 14% Other EU 3% Eastern Europe EU 20% Eurozone 33% China 11% Africa and Asia (excl. China) 8% Eastern Europe non- EU 7% Switzerland 3% Oceania 1% 4
Medium-sized companies in North-East Italy Base value added 2008 The region Section 1 MB-UC classification Nature of areas 13.9 22.3 76.2 63.8 9.4 14.4 Other areas Other LPSs Districts Other areas Large industry District and medium-sized business 5
Trends Section 2 6
What medium-sized businesses do in North-East Italy Value added 1996-2008 universe (data in m) Trends Section 2 Mechanical engineering 3,108 3,168 Personal and household goods 2,750 607 Food and drink 1,233 803 Udine Mechanical engineering 62.4% Food and drink 15.9% Chemicals and pharmaceuticals 636 601 Personal and household goods 6.5% Chemicals and pharmaceuticals 6.3% Paper and printing 4.4% Paper and printing 345 302 Iron and steel 4.5% Made in Italy 68.3% Iron and steel 354 183 In 1996 Change, 1996-2008 Made in Italy 69% Non-domestic sales = 40% of Italian medium-sized businesses total sales 7
Growth in North-East Italy Net changes, 1999-2008: 137 new companies Trends Section 2 153 19 87 64 75 101 114 20-28 -35-35 -20-7 -13-21 -26 Udine 1999 43 2008 48 Change +5-149 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 From small companies To large companies Turnover index -25 In which sectors are large companies growing? Machinery and equipment, electrical/mechanical engineering, metal treatment and chemicals and pharmaceuticals 8
Growth in value added from 1999 to 2008 Percentage changes: manufacturing, closed sets, current prices Trends Section 2 Change % Medium-sized enterprises in North-East Italy +43.3 Total Italian medium-sized enterprises +40.0 Friuli Venezia Giulia Emilia-Romagna Veneto Trentino-Alto Adige +60.7 +44.5 +39.5 +43.6 Udine +65.6 Italian manufacturing industry +13.8 9
Medium-sized companies in North-East Italy: turnover and value added Index 1999=100 closed set - MB-UC estimates for 2009-2010 Trends Section 2 163.9 165.9 151.8 147.2 143.2 140.3 144.9 132.3 137.2 136.4 130.9 135.2 124.4 122.1 126.1 116.5 100.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 MSEs in North-East Italy: sales MSEs in North-East Italy: value added Italian MSEs: sales Italian MSEs: value added 10
Medium-sized companies in North-East Italy: staff levels/operating margins Index 1999=100 closed set - MB estimates for 2009 Trends Section 2 138.5 125.4 120.3 111.4 112.2 113.1 109.1 110.8 112.4 114.0 117.1 118.0 115.2 100.0 104.2 106.4 107.9 106.3 110.0 111.8 102.5 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 NE MSEs - EBITDA index Italian MSEs - EBITDA index NE MSEs - employees index 11
Exports 1999-2010 - Index 1999=100 Universe (chained values) MB and MB-UC estimates for 2009-2010 Trends Section 2 209.7 161.7 154.6 145.5 140.6 114.5 117.1 116.5 116.6 122.8 129.9 123.2 127.8 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 NE MSEs NE MSEs - mechanical engineering Total Italian MSEs NE MSEs - personal and household goods 12
Value added: two speeds (Value added, index no. 1999=100; MSE data for 2009 estimated) 150 140 3.9 1999-2009 MSEs: + 28.6% (2.5% avg. p.a.) NE MSEs: +30.9% (2.7 avg. p.a.) Large enterprises: - 7.8% (-0.8% avg. p.a.) 50 40 30 130 120 1.4 1.7 0.5 0.1 1.4 0.8 2.1 1.5 20 10 0 110 100 90 80 2007-2009 MSEs: - 11.0% NE MSEs: -11.1% Large enterprises: - 28.4% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009-1.0-5.1-10 -20-30 -40-50 -60 MSEs NE MSEs Large enterprises Italian GDP 13
Net per capita value added at 1999 prices Closed sets 1999-2003 and 2003-2008 Trends Section 2 Base index 1999 = 100 115,0 112,5 110,0 107,5 105,0 102,5 100,0 97,5 95,0 92,5 100.0 98.5 97.4 97.0 97.7 96.1 96.4 95.1 94.3 98.1 99.2 97.4 97.8 102.7 100.9 Italian GDP 300,0 250,0 200,0 107.5 106.2 150,0 100,0 100.1 50,0 99.8 - -50,0 90,0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008-100,0 All MSEs NE MSEs Italian GDP 14
Finances Section 3 15
Financial structure: lean production ergo lean finance % of tangible capital invested - data universe 2008 Finances Section 3 44.1 44.0 37.8 57.5 54.7 63.4 55.9 56.0 62.2 42.5 45.3 36.6-32.5-33.0-34.0-23.1-26.0-26.4-20.7-20.2-20.5-26.2-45.1-48.0-46.8-46.8-45.5-50.7-28.9-25.6 Italian MSEs NE MSEs Udine MSEs NE medium/large companies Largest Italian groups European multinationals Short-term borrowings Medium-/long-term borrowings Net equity Current assets Fixed assets 16
Tax rates different, including versus European peers Finances Section 3 55,0 50,0 45,0 45.5 44.4 40,0 35,0 32.9 30,0 25,0 27.9 20,0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 MSEs NE MSEs Large Italian companies European multinationals 17
but unusually progressive (Data refer to MSEs in North-East Italy for which details are available tax; 2008) Finances Section 3 120,0 180 100,0 Average tax rate = 38.4% of which: Ires = 28.2% Irap = 11.8% 143 129 145 153 160 140 80,0 120 120 60,0 40,0 20,0 63 5.5 8.2 12.2 17.7 31.0 28.6 27.2 26.4 28.4 30.5 63.1 39.6 100 80 60 40 20 0,0 1 2 3 4 5 6 0 Ires (%) Irap (%) No. of companies 18
Medium-sized companies in North-East Italy: are they performing? Difference between ROE and risk-free rate - universe Finances Section 3 Average difference = 8.3 points (7.7 points for Italian mediumsized companies) 16.0 13.4 9.5 9.9 5.6 7.1 7.4 6.4 5.7 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2.0 ROE % Medium-/long-term Italian gov't bonds Difference 19
MSEs which have become large: where are they now? Finances Section 3 North-East Italy: 252 companies Italy: 586 companies Default 8.7% Default 7.5% Independent 36.5% Independent 36.7% Acquired by non-italian groups 20.6% Acquired by Italian groups 34.1% Acquired by non-italian groups 19.3% Acquired by Italian groups 36.5% Annual average default rate in North-East Italy 1% (0.2% MSEs, North-East Italy) Annual average default rate in Italy 0.8% (0.3% MSEs, Italy) 20
Solidity to face the crisis % of companies in 2008 - R&S-Unioncamere scoring model Finances Section 3 All Italian SMEs 34.3 49.1 16.6 Total manufacturing SMEs 39.3 45.3 15.4 Italian MSEs 53.7 38.3 8.0 MSEs in North-East Italy 57.9 34.8 7.3 New entries 2008, NE 42.8 46.2 11.0 Emilia-Romagna 58.9 35.0 6.1 Friuli Venezia Giulia 50.0 40.5 9.5 Trentino-Alto Adige 73.2 25.4 1.4 Veneto 56.9 34.7 8.4 Udine 57.8 33.3 8.9 Solid Intermediate Problematic 21
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