The Mediobanca Research Area has completed the publications on companies, updating them to 2015. As usual, it has made available a mass of very useful data. It is therefore possible to evaluate the financial state of our large industry in a particularly critical moment, distinguished from the economic side by strong differences in the development rates of the various countries and, from the structural side, by the advance of the so-called fourth industrial revolution. The latter will require often radical investments and innovations in the organization of production. Companies with financial autonomy and solid capital structures will benefit, as well as "animal spirits" made up of marked innovative capabilities.
For the purposes of our audit, I reviewed data from our 14 largest industry groups by capital employed. They include 4 publicly controlled and 10 privately controlled groups. These 14 groups absorb capital for 443 billion euros, 63% public (including Enel and Eni account for more than 9 tenths), 37% private (Exor/Agnelli accounts here for more than ¾). I would like to remind you that I consider some important groups sold to foreign investors to be among the private individuals: Italcementi (now owned by the German Heidelberg), Pirelli & C. (controlled by Chem China) and Parmalat (owned by the French Lactalis), while Exor, despite having its headquarters in Turin controls automotive companies that have taken on Dutch nationality (Fca, Ferrari and CNH). I will use as a benchmark the European industrial multinationals whose most recent data refer to 2013.
First observation: capital intensive sectors are always the responsibility of public groups where tangible assets per employee are equal to 1,50 million euros against 0,30 for private individuals and 0,39 for the European average. Our public groups also show a low productivity of capital; the % of added value on invested capital (tangible assets) is equal to 14% against 25% of private individuals and 29% of the European average. The data on added value per employee obviously show a different story, with the public at 238 euros against 79 for private individuals and 114 for European multinationals. First conclusion: our large companies still have a public identification and are unbalanced on sectors that absorb a lot of capital. They suffer from a productivity deficit, essentially due to the level of added value which is affected by the low commitment to innovation. To reach the European average, according to data from the R&D survey of multinationals, we would need to increase R&D expenditure by 70%. The distance from France and Germany is higher, respectively 80% and 150%.
Turning to the equity structure, we note our 14 "champions" in a second important suffering: the low endowment of equity. Added to this is the fact that an important share of assets is made up of "intangibles", or, thinking in financial terms, of "nothing concrete": the share of intangibles is 21% for private individuals and 12% for publicly controlled groups. The European average is equal to 21% and therefore our private individuals would appear in line were it not that their net worth is insufficient. Tangible shareholders' equity (i.e. the value of assets declared in the financial statements excluding these intangibles) added to other resources on a m/l maturity basis is equal to just 37,6% of invested capital against 58,1% of the public and the European average by 52,9%.
For individuals, the ratio between intangibles and equity "declared" in the financial statements is 89,8% and this means that out of the 10 euros contributed by the shareholders, 9 are employed in null, unproductive activities. With all due respect to the auditors who obviously must have found sufficient reasons to allow management to keep these values recorded as assets in the company's financial statements. If we wanted to make a ranking based on the share of assets represented by intangibles, we would find values above 50%, in order, for the groups Exor (119,8%), Luxottica (93%), Cofide (63,4%) and Prysmian (50,7%). The inadequacy of the means risked by the parent companies is notoriously the ancient evil of Italian capitalism which prefers to use the capital of minorities and financial debts. The public groups as a whole appear much better off, but only as a result of Eni (intangibles equal to just 4,5% of the nominal net equity); the percentages of Leonardo (162,9%) and Enel (53,2%) are much higher. Finally, the indices of smaller groups (Barilla 47,6%, Finmar 36,2%, Prada 30,2%) are completely reasonable, however their weight on the total is limited. I would add that in the companies of the Fourth Capitalism (not considered here) this phenomenon is practically unknown and this makes them much more solid than these great "champions".
Summary: our large companies suffer from a low commitment to innovation and a lack of own resources, and therefore do not appear entirely prepared to support the critical issues mentioned at the beginning. In the event that the 10 privately controlled groups wanted to adapt to the degree of capitalization of European multinationals, with the same invested capital, there would be a requirement of 17 billion euro. This is an aggregate figure calculated for purely indicative purposes, given that some of the Italian private groups are already adequate to the European average (Prada, Cofide, Barilla). A truly remarkable commitment that in some cases would modify the ownership structures. In my opinion it should be tackled by implementing policies for the revision of production structures and by innovating the goods offered to the market: a new major industrial restructuring! The Government has recently launched a strong incentive program for innovative investments: it is now up to the industrialists to decide whether they have the will and the skills to accept this new challenge or whether it is preferable to sell abroad what remains of "great".
