Moving Forward, But Not Too Fast
Have Italian small firms recovered from the crisis? The answer comes from the study conducted by SDA Bocconi's SME Observatory on a sample of 45,000 firms with turnover comprised between 5 and 50 million euros.
The study focused on the economic and financial performance of Italian small and medium firms in the 2008-2013 period. It found that in 2013 they had increased their sales by 4% since the crisis, and performed well in terms of profitability (average ROI of 7.2% for the period considered). This is not mainly due to revenues made on sales, however, but to high capital turnover (which increased in the 2011-2013 period). In terms of financial solidity, entrepreneurs are engaged in a constant struggle to improve the capital structure of their companies, by reducing debt exposure (-5.5 billion euros in 2012) and increasing available liquidity (+4.8 billion euros in two years). These two pieces of data send a clear message when combined with a third trend: companies with negative net financial exposure (thus with liquid assets higher than financial debt) have increased from 33.2% to 35.9%, thus highlighting prudence or outright reluctance in taking on new investment projects.
The study has also selected 1,639 SMEs that show themselves to particularly resilient, growth-oriented, and have strong ROIs and capital parameters. Such firms are larger than the sample mean size and tend to have a longer history. The growth of their sales (8.2% p.a, on average), and their profitability (average ROI of 15.7%) puts them in a league of their own, as they outperform the rest of the sample by a factor of at least 2.
And what about the food & agriculture industry? In 2013, the industry counted 2,836 firms. It is a small group with good performance indicators: growth in revenues is higher than 6%. Although profitability is lower than in manufacturing, it shows an upward trend. Also industry-level financial solidity is among the best in cross-industry analysis, thus making food & agriculture a sector with high potential for growth. Agribusiness remains an industry where life is easier with respect to the rest of SMEs: the percentage of active firms is higher than elsewhere, especially in food & beverage.
Summing up, the sun does not yet shine over Italian SMEs, in spite of several signs pointing toward economic recovery. However improving financial solidity is a clear signal of actual business potential. The Italian food & agriculture industry is small but promising: it will have to prove it knows how to capitalize on the media attention gained this year thanks to the World Fair. Expo Milano 2015 has been a showcase of what can be done to attain sustainable economic value in the near future.