Chemicals production growth is expected to increase about 2.5% in 2017 and 2018 while payment delays and insolvencies will remain at very low level.
- Spanish chemicals production increased 3% in 2016, while turnover grew just 1.7% (up to EUR 59 billion), mainly due to lower international sales prices. Production growth is expected to increase about 2.5% in 2017 and 2018. Profit margins remained stable over the past 12 months, mainly due to less volatility in oil prices, and this should continue in H2 of 2017 and into 2018.
- In general, access to bank financing for chemicals businesses has improved in recent years, for both short-term financing (working capital management) and long-term facilities (i.e. capital expenditure financing). Gearing of businesses in this sector is generally low.
- Payments in the Spanish chemicals sector take 60 days on average. The number of payment delays and insolvencies has been very low over the last couple of years, and this is expected to remain unchanged in H2 of 2017 and into 2018, due to fairly stable commodity prices and the positive growth outlook of the Spanish economy, which is forecast to grow 2.8% in 2017 and 2.2% in 2018.
- Our underwriting stance for all major chemicals subsectors remains relaxed for the time being. We continuously monitor how the development of commodity prices affects the cash flow generation of businesses and their ability to pass on price changes to the final costumer. Special attention is given to highly geared companies, assessing the evolution of their debt burden and the reasons of any significant debt increase.