According to a study conducted by the Banque de France, based on the balance sheets of 205,392 French companies, 6% of them could find themselves in difficulty when the government support measures come to an end. The majority of companies, however, can count on stable or improving cash flow.
A reassuring balance sheet
The Banque de France has carried out a study of the financial situation of companies to better understand the impact of the crisis. It analyzed the balance sheets of 205,392 French companies between the end of December 2019 and the end of March 2021, a period during which corporate cash flow rose by 215 billion euros, while gross debt increased by 224 billion euros.
To obtain more relevant and representative results, the institution isolated 7% of the companies studied.
- On the one hand, these are companies that were already experiencing financial difficulties before the onset of the pandemic,
- On the other hand, there were companies with very solid earnings, protecting them from the impact of the crisis or enabling them to mitigate it considerably.
The study's findings are rather reassuring: while corporate gross debt rose by 224 billion euros between the end of December 2019 and the end of March 2021, the increase in net debt of non-financial companies was only 9 billion euros.
Furthermore, three quarters of the companies surveyed by Banque de France can count on stable or even increasing cash flow, even when sales have fallen. More than a quarter of them owe this balance to state-guaranteed loans.
A more worrying situation for some companies
However, 14% of companies in the panel are in a more complex situation, with both a reduction in cash flow and an increase in debt. According to the Banque de France, 191,000 companies, or 6% of the companies whose balance sheets were analyzed, are likely to find themselves in difficulty when the state aid runs out.
This rate rises to 10% if we focus on the hotel and catering sector, which has been one of the hardest hit by the crisis due to activity-restricting measures. The rate of companies in a difficult situation is also high in the arts and entertainment sector.
The departmental crisis recovery committees will be concentrating their efforts on these companies, to enable them to benefit from appropriate support.