The balance sheet and Stock Exchange performances of the 50 major Italian groups listed between 2006 - 2011 (March) leave a bad taste in the mouth for how disappointing they were. Naturally, there is no shortage of pearls and those who go against the tide, but the numbers speak for themselves. Between 50 and 39, the aggregate of the 6 largest listed groups, 5 industries, 2006 banks and 2010 insurance companies recorded a drop in the net result of 32%, from 38,5 to 26,2 billion euro. The decline spared no activity, hitting finance the hardest, with insurance companies down by 44,3% and banks down by 48,5%. Industry contained earnings erosion to 22,2%. Within large industry the trends are disparate: the public one did less worse than the private one (-15,1% against -35,2%). The effect is largely attributable to the growth of Enel (“Endesa effect”) which increased profits by 44,6% and without which the fall in public profits would have been 30%. In fact, all the other public giants show considerable declines (ENI: -31,5%; Finmeccanica: -50,2%, despite the acquisition of DRS Technologies). Within the public sector, there is a difference between state-controlled companies, which sell (-12,4%, -28% without Enel), and mostly municipal-controlled local utilities, which show good dynamism (+8% changes in earnings), also supported by buoyant merger activity. A case in point is the "public" Edison (half state-owned with EdF, half local with A2a) whose profits plummet by 97%, practically to zero (also due to the write-downs of Egyptian assets). Private industry reduces profits by 35,2%, offsetting contrasting trends: manufacturing increases them by 12,9% and services and non-manufacturing activities see them decrease by 55,4%. The result of the manufacturing activities is conditioned by the events of Pirelli which in 2006 lost over one billion (Olimpia devaluation); excluding it, manufacturing would also have recorded a decline in profits of around 25%.
The companies that have achieved the greatest growth in profits compared to 2006 are Danieli (more than
quadrupled), Astaldi and Exor/Fiat (doubled), Iren (+81%), Terna (+68%), Prysmian (+66%), Tod's (+65%) and Parmalat (+46%).
The most important debacles hit Edison, Caltagirone and RCS which essentially eliminated profits (downs of more than 97%), but above all the groups which, in 2006, closed 2010 with a loss (Buzzi, Saras, De Agostini, Gemina, Premafin and Seat PG). Among the banks, the decline of Unicredit (-76%) was significant, while the increases of Intesa (+6%) and MontePaschi (+8%) were slight but significant. Five companies accumulated net losses from 2006 to 2010: Gemina (-15 mil.), Premafin HP (-127 mil.), STMicro (-585 mil.), Seat PG (-707 mil.) and Pirelli & C. ( -1.305 million). Unicredit has accumulated profits just above Intesa (18,5 billion vs 17,9). The new Parmalat has accumulated net profits of 2,3 billion, the same as those of Terna. the Fininvest group for 1,1 billion, five times more than the De Benedetti group (0,2 billion). Four groups (ENI. Enel, Unicredit and Intesa Sanpaolo) alone have achieved 60% of the profits of the whole in the last five years.
The Stock Exchange reduced the value of large groups with a fall in quotations comparable to that of profits in the period: capitalization fell by 2006% between the end of 2010 and the end of 41, hitting banks and insurance (both -52%) and industry (-34%). The large public groups suffered on the Stock Exchange as did the private ones (-34% and -35%). State-owned companies declined as much as those in the hands of local authorities (-33% and -35%), whose growth was therefore not rewarded by Piazza Affari. Edison has halved its value and represents the “public” operator with the most disappointing performance. Private manufacturing, which, as we have seen, recovered profits on 2006, instead left much less on the ground than services (-7,5% against 54%), a sign of some confidence of the Stock Exchange towards these activities. A confirmation? Stock market multiples: are in general decline on 2006 (from 14,3x to 11,6x), with the only exceptions of the private manufacturing sector (from 17,6x to 19,7x).
The "queen" of the Stock Exchange in the period is Exor (+43%) and in the five-year period there are few companies that have achieved growth in value: Danieli & C. (+40,5%), Davide Campari (+30,2 .24,2%), Terna (+21,6%), Tod's (+20,5%) and Recordati (+96%), all companies which also achieved significant increases in profits in the period. Seat PG has lost XNUMX% of its value.
The industry between 2009 and 2010: strong recovery, but more on volumes than on margins
These are the aggregate results of the large industrial groups:
• Revenue: up 2010% in 11,5 (private groups: +9%, public: +15%). The comparison with the 2006 values (net of the Enel effect) indicates that the large industrial groups have recovered in terms of commercial volumes (sales); the public groups did it more markedly, largely protected, priced and linked to oil (+17,1%), to an intermediate extent private non-manufacturing activities and services (+6,5%), so private manufacturing is more marginal (+1,7%). The State (the central one) recorded a +17,6% (but only Enel, excluded from these calculations, doubled
turnover, from 37,5 to 71,9 billion), better than local governments which with their own local utilities grew by about 9%.
• MON: up 2009% on 21,4 (private groups: +12,3%, public: +29,5%). The comparison with 2006 indicates that the margins are still below pre-crisis levels (as already seen for profits): -12,3% for all the major groups, -7,6 for the public ones, even -17,7 % private groups, with manufacturing marking the greatest distance (-18,7%) since 2006. The only positive note comes from local utilities which, also as a result of acquisitions and integrations, have been able to increase their margins by 34% on 2006.
• The incidence of Mon on turnover: confirmation that there is still a long way to go before returning: the ratio settled at 2010% in 12,3, certainly up from 11,3% in 2009, but still 3 percentage points below the 15,4% of 2006 (net of the Enel effect). Large public groups, favored by the nature of the sectors in which they operate, report better margins than private ones but what all sectors have in common is the distance since 2006: public groups have fallen from 19,1% to 15%, private ones 12,5 .10% to 10,7%. In evidence, also from this point of view, the local utilities that manage to increase their profitability, going from 13,2% to XNUMX%.
There are individual exceptions to these trends. The growth in turnover since 2006 has not affected Seat PG which took 24% of revenues, Impregilo (-23%), Italmobiliare and Buzzi Unicem (-17%), Telecom Italia (-12,7%), Indesit ( -11,4%) and A2a (-10%).
Some companies also underwent reductions in mon between 2009 and 2010: these are Buzzi (-56%), Italmobiliare (-30,5%), Impregilo (-17,3%), Tenaris (-15,4%), Seat PG (-15%), Caltagirone (-7,2%) and Saras which went from +111 million to -31 million euros, the only group to report a negative mon in 2010. Campari is the manufacturing company with the better relationship between money and turnover (23%), followed by Recordati (21,3%), but far from the utilities Terna (53%) and Acea (34,5%) and Seat (35%).
The financial structure: some positive notes
Over the five-year period, the financial structure of the industry shows an increase in equity of 19% (net of Enel) against a 23% increase in financial debt. It is a dynamic that has left the debt/equity substantially stable, marginally growing by about 3 percentage points, from 88% to 91% at the end of 2010. The large public groups have pushed more on debt which has increased by 70,1% against +27% of shareholders' equity, with state-owned groups (again net of Enel) which doubled their debt volume (+110%): this led to a decline in their debt/equity ratio from 47% to 63%, but it remains at levels of tranquility and well below the average of the whole. The exception here is Enel which, after the Endesa deal, saw its ratio go from 72% to 119%. Only the local utilities, which also managed to increase equity and financial debt equally over the five-year period (about 25%), have a relatively more fragile profile with a debt/equity ratio of around 120%. This is a level not unlike that of private groups around 114% which however managed to keep it essentially stable in the period due to a more generous increase in equity than that of financial debts (+13% against +9%) . Within private industry, the different capital solidity of manufacturing (debt/equity at 96%) compared to services and non-manufacturing activities (128%) should be noted.
In 2010, the large groups undertook an overall strengthening of their capital, achieving good growth in equity (+10%) against a modest rise in financial debt (+2,6%), with an improvement in the debt ratio /equity from 97% to 91%. This is a trend that affects both large public groups (+9,3% equity, +5,3% financial debt) and private groups (+13% equity, +9% financial debt).
The breakdown of financial debt by maturity indicates an incidence of short-term financial debt around 23% of the total debt, while the medium-long term part (the remaining 77%) is represented by approximately 60% by bond debt (Tab. 6)
There are seventeen large Italian groups with a ratio between debt and equity (debt / equity) greater than one. Seat PG marks by far the most unbalanced situation, with a ratio of 780%, more than doubled from 330% in 2006.
Report values above 200% Edizione, Exor and Astaldi. The groups least dependent on financial debt are Parmalat (debts are 1% of equity), Tenaris and Tod's (12%) and Recordati (12,1%). Tod's, given the ridiculous level of debt, has been able to afford to triple it since 2006 (+257%). Excluding Enel (+368%), the largest debt increases since 2006 concerned Bulgari (+172%), which maintains a very low debt/equity ratio at 27%, Eni (+138%), with a debt/equity ratio also low at 50%, and Terna (+113%) whose ratio is instead high, at 192%. The reduction of debt by Parmalat is striking (-95%, from 700 to 36 million), while that of Pirelli is very important (-61%, from three to 1,1 billion). Among the companies that increased their financial debt the most in the last year are Terna (+22,6%), Prysmian (+26,6%) and Fininvest (+25,7%).
In the makeup room: the net financial position
Some recommendations of the CESR of 2005 and of Consob allow the indication in the financial statements of "alternative performance indicators" including the net financial position. It is calculated by deducting cash, negotiable securities and current financial receivables from financial debt. These are offsets which substantially modify the amount of the overall financial debt and which lend themselves to distortions in the meaning to be attributed to the figures (which cannot replace that deriving from elementary budget balances, as moreover recommended by the authorities themselves ). The only meaning that can be assigned to the NFP is a possible presence of tensions in the management of financial flows, discounting the fact that in the consolidated financial statements the allocation of financial liabilities is not symmetrical to that of assets and that the latter have values that can fluctuate according to the dynamics of the financial markets. For six of the major groups, the net financial position at the end of 2010 was negative, with assets exceeding liabilities.
These are Parmalat, Danieli, Tod's, STM, Recordati and Tenaris, which have liquidity in excess of their financial debt (the most striking case is that of Parmalat with cash and securities of 1,4 billion and financial debt of 36 million ). In sixteen cases, the financial debt is reduced by at least a quarter. The most drastic "correction" is that on Exor/Fiat which, starting from a financial debt of 32,4 billion. reaches a NFP of 1,1 billion. (96% reduction). Followed by Caltagirone (the NFP is equal to 15% of the budget debt), Impregilo (26%), Prysmian (35%) and Pirelli & C. (40%).
Productivity and cost of labor per capita: competitiveness
Between 2006 and 2010, the net added value per employee, a proxy for productivity, decreased by 0,9% (around 110 euros per employee) which involved both public groups (-3,6%) and private ones (-6,4%). In the public sector, only the local utilities are holding steady (figure unchanged on 2006 at 127 thousand euros), the state-owned ones are slightly down (-3%), but with a contrasting trend between Enel (+33,6%) and Eni (-12,2% ). Private industry shows significantly lower per capita values (73 Euros) which are also down on 2006 (-6,4%) and very differentiated between manufacturing (57 Euros the wealth produced by each employee) and services (101 Euros EUR). The per capita cost of labor increased by 11,1% in the same period (to 50 euros), more in public groups (+10,9%) than in private ones (+7,3%), more in companies state (+12,7%) than in local utilities (+3,9%) and much more in services (+13,6%) than in manufacturing (+5,1%). The cost of labor in public groups (61 thousand euros) is almost 40% higher than that of private groups (44 thousand euros), the added value of public groups (187 thousand euros) is 1,5 times the private one (73 thousand euros). The share of added value absorbed by labor costs is much higher in private groups (60,3%) than in public ones (32,6%), due to the different sectoral mix. Manufacturing discounts the most challenging operating conditions which translate into stronger pressure on margins (labor costs / net value added at 72%).
Terna is the company with the highest added value per employee in 2010 (294 thousand euros), higher than that of Eni (287 thousand) and Enel (203 thousand). The manufacturing group with the highest net added value is Davide Campari (184 euros), followed by Recordati (125). Fininvest has the highest per capita labor cost (104 thousand euros), followed by RCS MediaGroup (63 thousand euros). At the opposite extreme are Indesit (26 euros) and Immsi/Piaggio (32).
How much foreign in Italian groups
The large Italian groups that generate sales abroad achieved an overall growth in sales of approximately 20% compared to 2006. This is a progression that mediates two disparate trends: growth on the domestic market, equal to just 3%, and that on the foreign market where it reached 37%. The incidence of foreign turnover on the total turnover has thus grown since 2006, passing from 49% to 56%. The expansion of Enel and the acquisition of Endesa played a significant role in this process, accounting for more than 70% of the increased foreign turnover of the jumble (36 billion out of 49 billion of higher revenues). Consequently, it is the public (state) groups that mark the greatest increase in foreign turnover (+67%), which is combined with a more modest growth at home (+14%), while the private groups manage to increase their foreign turnover by 15% but they pay a 9% drop at home. Private manufacturing, against a growth of 11% abroad, marks a sharp domestic decline (-21%) and therefore increases the percentage of foreign turnover on the total, bringing it to 78%, well above the 53% of the groups public and twice as high as non-manufacturing sectors. Foreign employment is also growing, its weight on the total passing from 44% to 56% between 2006 and 2010, due to the reduction of the national component (-11,5%) and the growth of the foreign one (+36%). . The phenomenon has macroscopic dimensions for public industry (+82% the variation abroad, -11,5% domestic), but it also occurs unchanged in the private sector (-14,8% domestic employment, +22,4 .1% abroad), a little more toned down in manufacturing (-16,6% and +30,8%), very marked in other activities (-54% at home, +XNUMX% abroad).
Among the major progresses in terms of incidence of export turnover on the total, Enel (+43,6 pp), Impregilo (+29,2 pp), Eni (+6,1 pp) and Pirelli (+17,5 pp) pp). Among the major sellers abroad in 2010: Pirelli (90% of turnover), Bulgari (89%) and Indesit (84%). Impregilo (87%), Pirelli (86%) and Parmalat (85%) are the groups with the highest number of employees abroad.
Investments and employment
In 2010, the tangible investments of the major groups settled at 34,4 billion, 20% above the level of 2007. Seventeen of the 39 major industrial groups increased their investments in 2010 compared to 2007. At the aggregate level, public groups increased the volume of investments by 35%, while private groups reduced them by 2,4%. 2010 also marks a slight recovery in investments compared to 2009 (+3,6%), with 21 out of 39 groups increasing them or at least keeping them unchanged.
Employment showed a slight recovery in 2010 (+0,4%) on 2009, while it remains 6% higher than the levels at the end of 2007. Compared to 2009, employment stability is attributable to large public groups (+1,7, 0,3%), while private individuals recorded a slight decrease (-2007%). Even compared to 17,6, however, the boost to employment came essentially from public groups (+1,4%), while private individuals generated a marginal contribution (+5,2%), positive in manufacturing (+5,8%) , negative in the other sectors (-XNUMX%).
Dividends and payouts
The dividend payout, after falling in 2009 from 12,9 bln. at 10,7 billion euros (-17,1%), it marks a recovery in 2010 reaching 11,6 billion. (+7%). This is about 25% less than the 15,8 billion. achieved in 2007. Only the large public groups benefited from higher dividends (+9,5%, from 7,6 to 8,3 billion), the private ones substantially confirmed the overall level existing since 2008 (around 3,3, 17,4 billion): manufacturing activities have undergone a reduction (-15,8%), while services show good progress (+2006%). Since 6,5, the State has received 4,4 billion euros as a dividend. from Eni, 325 billion. from Enel and 11,2 million from Finmeccanica (1,3 billion the total). The local authorities at the head of the local utilities instead accumulated 55 billion in the period. The overall payout remains stable at around 60%. Considering the aggregate for the period, public groups have a payout (47%) higher than that of private individuals (36%), manufacturing is quite sparing (only 92% the aggregate) while local authorities remain voracious and local utilities score average payout of 2010%. In 39, seven out of XNUMX companies did not pay a dividend (Fininvest, Edison, Saras, De Agostini, RCS Mediagroup, Seat PG and Gemina).
First quarter 2011
The first glimpse of 2011 confirms the recovery of 2010: the turnover grows by 11,7% compared to the first quarter of 2010, the mon by 13%, the net result shows an improvement of 19%. The performance of the private cluster is higher than that of the public groups in terms of turnover (+13,9% vs +10,2%), industrial margins (mon up by 24% vs +10,2%) and net result (34,4 .13,8% vs XNUMX%).
The beginning of the year was particularly positive for private manufacturing activities, with turnover growing by 15,6%, Mon increasing by 33% and net profit showing a strong increase with +76,4%. The recovery of margins was combined with further symptoms of capital strengthening: financial debts fell overall by 4% and the debt/equity ratio dropped from 102% to 97% (-5 pp).
banks
In 2010, the revenues of the major banks recorded a decline in revenues (-4,5%), due to the contraction in the interest margin (-7%), not offset by the higher revenues for commissions (+7,3%), and the non-contribution of the trading result (marginally negative). Losses on receivables are down by 17,3%, interrupting an uninterrupted upward trend since 2007, with a consequent reduction in their incidence on revenues which goes from 25,3% in 2009 to 21% in 2010. The sharp decline in write-downs allowed the group of major banks to achieve a profit up by 4,4% on 2009. Operating costs (labour and administrative expenses), although down on 2007 (-6%), maintain their incidence on revenues down and the cost/income ratio started to rise again in 2010 (+3pp) reaching 67%.
In the first quarter of 2011, total revenues show substantial stability (+1,3%) compared to the first quarter of 2010, with a slight increase in the interest margin (+2,1%) and a strong improvement in the trading result ( +45,3%) which, moreover, was largely positive also in the first quarter of 2010 and then closed in negative over the 12 months. If these initial trends were to be confirmed during the year, the aggregate of banks would close 2011 with revenues still approximately 10% lower than the 2007 level. , if confirmed for the entire year, would bring the aggregate devaluations to around 13 billion, down from 11 billion. of 15, but still more than double compared to 2009 amounts (2006 billion) for an incidence on revenues of around 4,9% (it was 19% in 8). A further element to carefully evaluate is the drop in operating costs (-2006% on the first quarter of 1,2). If the increase in revenues and cost containment are confirmed, there could be room for some recovery of profitability for the whole of 2010.
Losses on credits have different incidences, particularly high for Unicredit: 25,9% of revenues in 2010 and compared to 17% of Intesa Sanpaolo and 20% of the remaining institutions. The high incidence is also confirmed with respect to shareholders' equity: 10% Unicredit against 5,2% of Intesa and 6/7% of the other institutions.
Net non-performing loans (Tab. 13) grew from 44,8 billion euro at the end of 2008 (equal to 3,3% of loans and approximately 30% of equity) to 76,7 billion (+71%) end of 2009 (equal to 5,8% of loans and 46,6% of net capital) to 85,5 billion. at the end of 2010 (6,4% of loans and 50,1% of equity) to reach 2011 billion at the end of March 87,2, on levels that have finally stabilized both with respect to loans to customers and equity. In March 2011, the least favorable situation was that of Banco Popolare, whose non-performing loans amounted to 9,7% of loans to customers and 75% of shareholders' equity; Banca MPS was also above the panel average for both indicators (respectively: 8% of loans and 67,5% of equity).
As for the coverage rate, however, it too seems to have finally stabilized in 2010 at around 42%, after the progressive reduction from 51,3% in 2007. The lowest percentages are for Banco Popolare (27,5%) and UBI Banca (29,5%), while the most prudent policies are of Mediobanca (44,5%) and Unicredit (44,4%).
At the end of 2010 the stock of 85,5 billion. of non-performing loans was made up of 39,2% of substandard loans, 40% of non-performing loans and the rest of restructured (8%) and past due (13%) loans (Tab. 14). In 2009, the composition of doubtful loans had been changed by the substantial doubling of substandard loans, the weight of which had become preponderant on non-performing loans (43,5% of the total for the former, 35% for the latter); in 2010 the situation recomposed and, against a substantial stability of problem loans (33,5 billion), the mass of non-performing loans increased (+7,4 billion to 34,2 billion) which returned to being proportionally predominant. They are also down by about 2,5 billion. overdue and progressing credits are around four billion. the refurbished ones. Taking into account that "non-performing" loans represent the most serious form of impairment, the largest incidences with respect to loans (Tables 15 and 15-bis) are marked by Banca Mps (3,5%) and Banco Popolare (3,0 %), also first in terms of incidence on tangible equity (55,6% and 42,5% respectively). The greatest concentration of substandard loans is held by Banco Popolare (4,6% of loans to customers and 64,1% of shareholders' equity). It should be noted that impaired loans represent, at the end of 2010, 138,2% of Banco Popolare's tangible net capital and 115,4% of that of Banca Mps.
Part of the non-performing loans is covered by guarantees which offset the write-downs in the event of non-collectability (Tab. 16). At the end of 2010, the share of fully guaranteed loans for the five largest institutions was around 53%, with values of the guarantees that were ample for more than full credit coverage (>100%). A further 16% of non-performing loans have partial coverage, on average for 76% of their value. In summary, approximately 68% of non-performing loans are covered by guarantees, which leaves for the major banks around 27 billion of net non-performing loans without assistance; the total value of the guarantees is close to or greater than 90% of the credit. If these guarantees are taken into account, all the incidence measures of doubtful credits (on credits, equity, etc.) should be reduced by about 2/3. The highest share of fully guaranteed loans belongs to Banca MPS (63,4%), the lowest to Unicredit (44,9%). Intesa Sanpaolo is at 57,5%. Unicredit has the lowest share of total guarantees (64,3%), UBI Banca the highest (76,9%).
The composition of the financial assets held by the major institutions has undergone significant changes in the last three years, with a significant increase in debt securities (bonds), the incidence of which has gone from 42% in 2008 to 60% in 2010. The UBI Banca portfolio it is the richest in debt securities (88% of the total), while MPS has the lowest incidence (51%). Derivatives, after the reduction in 2009, stabilized and account for an average of 7% of the banking assets of the major institutions, as well as "level 3" assets, the illiquid ones, while there is a significant reduction in 2010 of the liabilities of level 3 (those issued by Italian banks), above all for the cut by Unicredit. Still on the liability side, it should be noted that the debt securities issued by banks and maturing within one year in December 2010 amounted to approximately 172 billion. euros, 33% of the debt securities issued by the major banks, equal to approximately 528 billion euros.
The highest per capita funding was recorded in 2010 by UBI Banca (5.444.000 euro per employee), the lowest by Unicredit (3.841.000 euro). UBI Banca has the highest per capita volume of credit to customers (5.191.000 euro), against the minimum of Unicredit (3.651.000 euro). The cost of labor per employee in 2010 is broken down as follows: Intesa Sanpaolo 57 thousand, Unicredi 60 thousand euros, Banca MPS 70 thousand euros, UBI Banca 72 thousand, Banco Popolare 84 thousand euros.
Unicredit had the highest number of branches at the end of 2010 (Tab. 22): 8.690 (down by 7% from 9.321 in 2008), of which 4.180 abroad; followed by Intesa Sanpaolo (7.570, of which 1.761 abroad), with a drop of 20% from the 8.496 at the end of 2008. The lowest number of branches is for UBI Banca (1.901) not unlike Banco Popolare (2.120). The highest funding per branch is the prerogative of Unicredit (67 million), followed by Intesa and UBI Banca (56 million), Banca MPS (54 million) and Banco Popolare (49 million). Overall, branches fell by 3,4% between 2009 and 2010, by 3,6% abroad and by 2,7% in Italy. Funding per branch increased by 3,5%.
The relationship with the Stock Exchange is now stormy. At the end of July the value of the main banks was less than a third of what it was at the end of 2006 and the amount of dividends also collapsed to a fifth of its value in 2006.
