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no. 1182

Economic OutlookEuler Hermes Economic Research Department

www.eulerhermes.com | no. 1182

Payment periods in Europe: wide gaps

Special ”Dossier”

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Economic Outlook n° 1182 | Special Dossier | Payment periodsEuler Hermes

ContentsSpecial DossierPayment periodsPayment periods in Europe: wide gaps

n°1182page 4

> Overview – The increase in payment periods poses a major risk to European recovery page 4

page 8> First Focus point – A three-speed Europe page 8

page 12> Second Focus point – What determines payment periods in different sectors? page 12

• Automobiles and automotive components>The problem for subcontractors page 14

• Air transport>An instrument of globalisation but marked by regional differences page 18

• Chemicals>Supplying industries and supporting the industrial fabric via client credit page 20

• Pharmaceuticals>No cash flow problems page 22

• IT services> Constrained by their clientele page 24

• Aeronautic components>Stability in payment periods – sign of a healthy sector page 25

• Construction>The sector with the greatest disparities page 26

• Four determinants to note page 28

• Comparison Germany-France page 28

Annexespage 29

•Annex I > Law on the Modernisation of the Economy (LME) and sector round tables in France page 29

• Annex II > Payment defaults in Italy page 30

• Annex III > Detailed data, by country page 31

• Annex IV > Detailed data, by sector page 32

Economic Outlook n° 1182 | Special Dossier | Payment periods

Editorialpage 3

Subsidiariespage 33

Economic Outlook seriespage 35

Le Bulletin Économique du Groupe Euler Hermes is issued ten times a year by the Economic research department of Euler Hermes. It is also available on subscription for

other businesses and organisations. Reproduction is authorised, so long as mention of source is made. o Publication Director and Chief Economist: Ludovic Subran

• Study coordinated by: Virginie Reboul (Economist) • Macroeconomic Research: Maxime Lemerle (Manager), Mahamoud Islam (Economist) • Global Sector Research:

Yann Lacroix (Manager), Bruno Goutard, Marc Livinec, Didier Moizo (Sector Economists) • Country risk Research: David Atkinson (Manager), Andrew Atkinson, Manfred

Stamer (Economists) • Have also contributed to this publication: Romeo Grill (Economist for Germany), Dan North (Economist for the USA), Christian Péchard (Infocenter

Studies Manager), Andrea Pignagnoli (Economist) • Graphic Design: Claire Mabille • Editors: Martine Benhadj • Support: Anne-Marie Bégoc, Valérie Poulain • Translation:

Charles Prager • For further information, contact: the Economic Research Department of Euler Hermes at 1, place des Saisons 92 048 Paris La Défense Cedex – Tel.: +33

(0) 1 84 11 53 77 > Euler Hermes is a limited company with a Directoire and Supervisory Board, with a capital of 14,451,032.64 euros. • Photoengraving: Evreux Compo,

Evreux, France – Permit April 2012—Bull 1176; ISSN 1 162 – 2 881 o 31 May 2012

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Euler HermesEconomic Outlook N° 1182 | Special Dossier | Payment periods

Editorial

The harmonisation of payment periods in Europe: anecessary evil?

Although the notion of economic convergence seems crucial to the future of theEuropean Monetary Union, it is threatened by the upheavals being undergone.

The growing gaps in growth, public deficits and current account balances – both inscale and intensity – demonstrate that the differences between the heart of theEurozone and the periphery are here to stay. Creating a common economic policythat benefits from this heterogeneity and that ultimately transcends it is an essentialtask, especially to allay fears over the Eurozone’s very future. The toolbox – of whichthe European Financial Stability Facility (EFSF), the European Stability Mechanism(ESM) and the European Investment Bank (EIB) are parts – strengthens institutionalconvergence, but it does not solve the problem of the efficient specialisation ofeconomies that one would expect. The economic debate, for its part, remains markedby this indispensable convergence, crystallized by the furious speed required toreturn to balanced budgets for 2012 and 2013. Making this adjustment is particularlyhard for the countries of Southern Europe, hit by severe recessions. This study focuseson a less visible but equally important convergence: that of payment periods betweenbusinesses. By March 2013, under a European Directive, contractual payment periodsin Europe must be set at a maximum of 60 days. Some countries are ready for this,such as France, while others, such as Germany, already show payment periods wellbelow 60 days. By contrast, Italy, Spain and Portugal, as well as certain key economicsectors in some countries, such as construction and IT services, are far from theEuropean target. On top of this is the deterioration in economic activity in Europe. Thisshould further amplify these gaps by 2013. Will European SMEs, which create thegrowth of the Eurozone, suffer from an overly rapid convergence, one that iscountercyclical and potentially damaging to their cash flows? When you focus in onthe sector level, the differences between client and supplier payment periods areconsiderable and at times alarming. In economic policy terms, efforts to support andincrease the competitiveness of the private sector remain little discussed, despite amarked rise in business insolvencies nearly everywhere in Europe. Discussions oversovereign debt occupy a great deal of attention, but they do not address thedifficulties facing businesses. However, it is today that we will determine the health ofEurope’s industrial fabric for the future. _Ludovic Subran

Overview

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As we near the March 2013 implementation ofthe European Directive, B2B payment periodsare now more than ever a core concern. Cash

flow dynamics are always crucial for a business, andthis becomes especially the case at times of economiccrisis and more restricted access to bank or marketfinance, during which even more rigorous manage-ment of accounts receivable and payable is called for.

Definitions▶Contractual payment period > the time period duringwhich payment should be made according to the provisionsagreed between the client and the supplier (stated in days).▶ Effective payment period> the time period at the end ofwhich the payments due as agreed between the client andthe supplier are actually made (stated in days).▶ Lateness of payment> the time difference between thecontractual payment period and effective payment period.The sum of the average lateness of payment and thecontractual time yields the effective payment period (statedin days).▶ Days’revenue (DR) > unit consensually used to expresspayment periods when they are calculated using businessbalance sheet data, dividing the amount of client credits orsupplier debts by average daily revenue.

1

Source: Euler Hermes

▶ Client payment period> the average time until collectionby the business of client payments, taking account of thepayment periods agreed by the business. The longer thedelay, the more the business’s cash flows suffer from a lack offunds.▶ Supplier payment period> the average time taken by abusiness to pay suppliers, taking into account the timeperiods agreed with the business. The shorter the paymentperiod, the more the business’s cash flow suffers from a lackof funds due to rapid payment.▶ Tension indicator >the difference between clientpayment periods and supplier payment periods (stated indays).

Euler Hermes

The increase in payment periodsposes a major risk to European recovery


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Economic Outlook n° 1182 | Special Dossier | Payment periods Euler Hermes

Besides a sharp upturn in the volume of insolvencies,the end-stage of business difficulties, the crisis and itsmany secondary effects have brought a marked dete-rioration in the quality of B2B payments in Europe.There have been overall increases in the rate of lossesarising from bad debts, in late payments, and morebroadly in payment periods, while B2B credit is a majormode of finance across all countries. The current eco-nomic and financial climate, marked by a deterioratingoutlook and by increased uncertainty and greater vola-tility, strengthens the need that much more to moni-tor and manage the risks associated with the lengthe-ning of these payment periods.

Many data sources exist for measuring and comparingpayment periods, as well as several studies to analyzedevelopments in inter-company payment. However,their methodologies vary in terms of the nature of thedata they employ – either using quantitative data(from national administrative databases, institutes orsurveys), and most often on only an annual basis, orinfra-annually, or – most often – using qualitative dataresulting from samples or surveys. The methodologiesalso vary in terms of the scope of their studies, eitherin terms of business size (SMEs or large companies) ortime-scope under study (payment periods or only latepayments). As a result, the comparative, studies exa-mine fields of varying scope, with no effective har-monising methodology. Also, these analyses aremostly descriptive, covering sectoral matters, andgenerally do not offer any quantitative forecast. Lastly,we should note that, by its nature, it remains hard tosummarise the payment period situation for a coun-try or even a sector, given the wide amplitude of pay-ment periods from one business to another.

Period defined by the European Directive

Delivery

Issuing of invoiceOrder Date d’échéance

de la factureInvoice

due date60 days maximum

The importance of payment periods

◾◾◾

To put an end to the problem of latepayments, countries are mobilising.

Sources: Ministries of Economy, Finance and Foreign Trade, Official Journalof the European Union


Legal aspects2

> An aggregate calculated for a country or sector that:– gauges the fluidity of exchanges between a country’s businesses,– is a measure of cash flow management vitality,– has an impact on business climate attractiveness.

European Union >European Directive 2011/7 of 16Februarywill replace European Directive 2000/35 of 29 June. MemberStates must make the changeover by 16 March at the latest. Themain measures of the Directive are:> establishing a standard payment period of 30 days; > setting a maximum payment period of 60 days in the absenceof any contractual stipulation setting another payment period> introduction of penalties in the event of late payment, witha unit indemnity of 40 euros interest charged on late payment(reference rates plus 8%).France > The French Law on the Modernisation of the Eco-nomy (LME), France ▶ The French Law on the Modernisationof the Economy (LME), introduced in 2009, imposes a maximumpayment period of 60 days, 45 days from the end of themonth beginning from date of issue of the invoice. 35 dero-gations (sector agreements) have allowed businesses that other-wise would have run into severe difficulties to benefit from moreflexible, gradual conditions. On 29 February, France's NationalAssembly adopted the proposed bill concerning the simplificationof legislation, which, in particular, provides for the extension ofdispensatory payment periods.Spain > Spain’s law 15/2010 of July 2010 established a time-table of gradual application of these new payment periods:> from its entry into force until 31 December, payment periodswere limited to 85 days> from 1 January 2012 to 31 December, a maximum paymentperiod of 75 days> from 1 January, payment periods limited to 60 days

A microeconomic problem… … and an indicator of the business climate


6

▶ A rise in late payments increasesinsolvencies more than proportionally,but the obverse is generally not shown.In 2011, in countries such as Germany and France,the downtrend in late payment periods was accom-panied at the same time by a fall in insolvencies.However in Belgium and even more in The UnitedKingdom, this same trend failed to prevent a rise ininsolvencies. In practice, a relationship between latepayment periods and insolvencies is seen muchmore during periods of increasing late paymentperiods, which are propitious to a sharp rise in insol-vencies.

▶ A favourable legal framework bringsincreased attractiveness.The European Directive will prove an effort for somecountries, for instance in Southern Europe, whichmust gradually come into line with the new stan-dards. However, the convergence should in the longrun also allow them to generally reduce their pay-ment risk profiles (all other things being equal), and,in so doing, increase their attractiveness as interna-tional trading partners. France regulates paymentperiods through its Law on the Modernisation of theEconomy (LME), introduced in 2009 (see ‘Legalaspects’p. 5). The French government would like tofurther reduce payment periods to 30 days for SMEsand VSEs. Clearly anticipating the coming EuropeanDirective, Spain’s law of July 2010 (see ‘Legalaspects’p. 5) sets out a timetable for the gradualapplication of these payment periods.

◾◾◾

Introduction of the LME

98 00 02 04 06 08 10 12

6%

4%

2%

0

-2%

-4%

-6%

Inverse growth in insolvencies (right axis)

-20%

-15%

-10%

-5%

0

-5%

-10%

-15%

-20%

Client payment periods (left axis)Growth (left axis)

The legal framework and the effect of the LME

▶ The case of FranceIt is notably thanks to the LME and theanticipation of its coming into force thatFrench businesses improved paymentperiods and their volatility, an importantpoint to the extent that they use fourtimes as much inter-business creditthan bank credit (at around 400 billionand 100 billion euros respectively), withaccounts payable accounting forbetween 25% and 30% of the totalbalance sheet of French businesses. In 2009 payment periods fell by 3% andinsolvencies rose by 12% (against +15%in 2008).


From the literature on the subject and from pastexperience, notably during the crisis of winter 2008-2009 and the emergence from crisis that followed,three key facts on payment periods in Europe can benoted:

▶ An economic recovery does notnecessarily imply a shortening in paymentperiods.The crisis has generally necessitated tighter controlover cash flows, with reductions in investment andoptimisation of inventories. However, these have notbeen enough to offset the exceptional scale of thedownturn, which has brought increased paymentperiods in every country in our study, apart from onenotable exception – France, partly because of legalchanges over this period. At the same time, the risein late payments and payment defaults has alsoincreased perceptions of a lower likelihood of beingpaid on time. Conversely, recovery in the economydoes not automatically signify a trend of reducedpayment periods. In the very short term, the recoveryphase of activity can initially be accompanied by anincrease in exposure (accounts receivable and paya-ble) at a faster pace than turnover, which countersthe shortening in payment periods, and it thenrequires the growth in activity to accelerate morethan proportionally: France saw no reduction in pay-ment periods in 2010, on annual average. Growth of0.1%, in our study, implies a change in client paymentperiods of between -1.3% and +0.5%.

Focus on France

7


The aim of this study is to provide a comparativeanalysis between countries (our first focus point)and between sectors (second focus point) for clientand for supplier payment periods in Europe. Themajor findings of our study are summarised below:

1The slowing of efforts seen starting in2009 confirms the existence of three

dynamics in at work in Europe.In this initial analysis, using the BACH database (aEuropean database on non-financial firms issued bythe Bank of France), we studied the course of paymentperiods for several European countries over the period2000-2010 (available balance sheets). We next offera prospective view of payment periods for 2012-2013using Euler Hermes data, which will highlight themagnitude of the efforts that need to be made. Theindicators of change and of cash flow tensions gene-rated put the accent on the changes and the trendsin payment behaviour more than on the length of pay-ment periods, and best reflect the risks of worseningcash flows that are already under pressure.

> There is a clear disparity between the countries ofNorthern and Southern Europe that risks wideningover the very short term (2012), in the current eco-nomic environment, and this will mean greaterefforts to be made, especially for countries inSouthern Europe.The gaps by country. We can distinguish in fact ‘threeEuropes’: Germany and Poland, both of whom showpayment periods shorter than the 60 days set out inthe European Directive and displaying very low cashflow tension indicators; Belgium and France with pay-ment periods close to 60 days; and Spain, Italy andPortugal, all of which saw significant increases in pay-ment periods in 2009 and will have to make conside-rable efforts to meet the 60-day standard.

> The outlook for 2012 is for an accentuation of thegaps between countries and therefore of the effortsto be made.In 2012, payment periods should mirror economicdevelopments. With an outlook for positive growth,payment periods for businesses in Poland andGermany should normally shorten by an average of 2%and 0.5% respectively. For France and Belgium, withgrowth forecast to be below potential, paymentperiods will increase by 0.5%. By contrast, the countriesmost in difficulty, such as Spain, Italy and Portugal,should see an increase in payment periods, takingthem further away from the 60-day target before16 March.

> In 2013, a general, but limited, improvement inpayment periods in Europe.The outlook for positive growth in 2013 will allow anautomatic improvement in payment period practices,but this will not be enough to meet the target.

2 European sectors: 4 groups.In a second analysis, we employ the Euler Hermesdatabase for a closer examination of European busi-ness sectors, over a greater number of countries. Wefocus on eight key sectors.

> Gaps between sectors will persist, driven by thedifficult economic situation and by still unequalnegotiating strengths.There is a clear gap between sectors within a givencountry and between countries in a given sector. Theranking of sectors (by length of payment periods)remain fairly similar from country to country. However,in Southern Europe, the sectoral differences are four tofive times greater than in Northern Europe. Our eightsectors break down into four groups: (1) air transportand automobiles, with concentrated suppliers andclients who pay quickly; (2) pharmaceuticals, chemi-cals and automotive components, with average pay-ment periods since they are widely present in the eco-nomy, and aeronautic component suppliers; (3) ITservices, where unequal bargaining power is the rule;and (4) construction, with domestically-based sup-pliers and clients. ▣

Business sectorsSector Division NACE Code 1

Automobiles 34 34.1 to 34.3Automotive components - 28.4Chemicals - 4.1, 24.2, 24.3, 24.5, 24.6, 24.7Pharmaceuticals - 24.4 Air transport 62 62.1 and 62.2Aeronautic components - 35.3Construction - 45.2 and 45.4IT services 72 72.1 to 72.6

▶ Areas of analysis> For the first analysis:Countries: Germany, Belgium, Spain, France,Poland, Italy and PortugalAll sizes of businessesPeriod: 2000-2010> For the second analysis:Countries: Germany, Belgium, Spain, France,Italy, United Kingdom, United States, Denmark,Norway, and Sweden.All sizes of businessesPeriod: 2006-2010


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Diverging developments in the face of the economic climate and the European Directive

This analysis highlights clear differences inpayment behaviour that comes as no revelation,given the warning sounded in June 2000 with theinitial publication by the European Commission ofits Directive to combat late B2B payments.However, with the targets not being met, on16 February the Commission proposed a newEuropean Directive to allow long-term genuineharmonisation within the EU. By 16 March 2013this Directive has to be enter into law in all MemberStates. Our following account of 2000-2010 andour forecasts thus do not capture the legislativeimpact in Spain (July 2010) and in the EuropeanUnion (March 2013).Looking forward on the basis of macroeconomicforecasts suggests only a weak convergence by2013 (the target date of the European Directivebeing 16 March), after an intervening increase inpayment period gaps in 2012 due primarily to theweakness in the economy.

▶ Sectoral gaps 4 to 5 times bigger inSouthern Europe than in NorthernEurope.

> Italy and Spain show large disparitiesbetween sectors: with a national averageof 79 days for client payment periods,Spain has payment periods rangingbetween 174 days in the constructionsector to only 48 days in the automotivesector, a difference of 126 days.

> German businesses posted averageclient payment periods of 24 days in 2010,with small variation (31 days), dependingon the sector.

A three-speed Europe

FirstFocus point

Euler Hermes

At the end of 2010, on the eve of theEuropean Directive coming into force,payment periods in different countrieswere highly disparate, both in durationand in trend, and particularly worse incountries in Southern Europe.

▶ Germany and Poland already largely within thestandardsWe see Germany and Poland already well below the60-day standard set by the European Directive. Thetwo countries are distinguished by their strictenforcement of late payment penalties. They show anegative change indicator, reflecting a steadyimprovement in payment behaviour. At 24days’revenue on average in 2010, client paymentperiods for German businesses fell by 21% between2000 and 2010. Poland showed average paymentperiods of 45 days’revenue in 2010, the same as in2005.

▶ France and Belgium in the middleBelgium and France neared the 60-day standard overthe decade. After falling by 10% since 2000, the time,client payment periods in France stood at 61 days in2010. This was largely due to anticipation of the 60-day maximum LME standard and its implementation.

The relatively high level of Belgium’s cash flow ten-sion indicator means that businesses there must payspecial attention to cash flow management.We can see that the indicators of change in paymentterms in France were the only improvements in 2009.Initially fairly close to that in Southern Europe, Frenchpayment behaviour has approached that of NorthernEurope, thanks notably to the implementation of theLME and also that to the importance of its trade withGermany, where payment periods are short.The levels of payment periods in France and Belgiumenable them to anticipate the implementation of theEuropean Directive with a certain vigilant calm.

▶ Southern Europe at the backWith longer contractual payment periods, Spainintroduced its 10 July 2010 law to gradually reducepayment periods to conform to the EuropeanDirective by 1 January. However, like Portugal andItaly, countries in Southern Europe are suffering inthe economic climate and display payment periodswell above the norm, rising to between 80 and 100days since 2009. At 116 days’turnover, paymentperiods in Italy are the longest of these.

◾◾◾

9


0

30

60

90

120

150

20 50 80 110

Amplitude*

Length of payment periods* The difference between the sector posting the longest payment periods in the country and the sector with the shortest payment periods in the country.Panel of sectors: automobiles, automotive components, pharmaceuticals, chemicals, air transport, aeronautic components, construction and IT services.

FR

ITES

GB

SEDE

BE

DKNO


The average payment period masks major differences between countries

+ 0.5 %+ 1 %

+ 0.5 %- 1.5 %

+ 2 % 0 %+ 2.5 %

+ 0.5 %

+ 0 %+ 1.5 %

- 0.5 %- 1 %

- 2 %- 2.5 %


10

payment periods will continue to improve, droppingby 0.5% in the former. In Poland, they should shor-ten by 2%, in negative correlation with its 3% growthrate.

▶ Positive momentum in France (due to the LME);but in Belgium, by contrast, economic setbacks willbe more determining.With growth forecast at 0.3% in France and 0.2% inBelgium – in both cases below their growth poten-tial – the two countries will see a slight 0.5% increasein payment periods. In 2013, while B2B paymentperiods are likely to continue rising by a further 1% inFrance, these times should shorten by 1.5% in BelgiumWe may expect slightly less rigorous payment disci-pline and a certain degree of confidence amongFrench businesses, possibly due to their use of creditinsurance.

▶ Southern European countries, hit hard by the cri-sis, will struggle to attain the targets.Payment periods in Spain, Portugal and Italy shouldincrease in 2012. We forecast a natural growth inpayment periods in these countries, with a 2.5%increase in Spain and a 2% increase in Italy, doingnothing to help them meet the European Directive.

Looking forward: widening disparities,major efforts to be made, too rapid andperhaps inopportune?

Using the econometric relationship betweenchanges in payment periods and the economicenvironment, we expect a lengthening of paymentperiods. This is without taking into account thepotential positive effect of anticipations of theDirective coming into force.

In the countries of Northern Europe, relations bet-ween businesses and banks allow banks to commitproviding borrowers with the funds to pay sup-pliers within contractual deadlines. In France andSouthern Europe, by contrast, a system of suppliercredit applies, which makes meeting contractualdeadlines more difficult.

▶ Germany and Poland: small-scale reduction andnearly no contribution to the economic environ-ment.Both countries have been rigorous, with paymentperiods – already shorter than required under theEuropean Directive – and they are continuing theirefforts.In 2012, both countries by our forecasts will enjoygrowth – at 1% in Germany and 3% in Poland – and

◾◾◾

Value 1: Change in payment periods from 2011 to 2012Value 2: Change in payment periods from 2012 to 2013 Source: Euler Hermes

An outlook of lengthening payment periods…

… driven by a worsened economic environment


0

5

10

15

20

25

30

Portugal

PolandItaly

France

Spain

Germany

Belgium

1312111009080706050403020100

Forecasts

Cash flow: Tension Indicator

Sources: Euler Hermes calculations, BACH database

Scale of the efforts to be made

Cash flow pressures should increase.From 2007 to 2008, we have seen an evident inten-sification of cash flow tensions in Portugal and Italy,already at high levels.Increased cash flow tensions force businesses to findother sources of finance. By contrast, in Poland anearly zero cash flow requirement (1 day) underlinestight cash flow management. Spain, for its part, hasescaped the cash flow scissors effect suffered inother Southern European countries only thanks tosupplier payment periods being nearly as long asclient payment periods.Despite showing acceptable cash flow requirements,businesses in France and Belgium should pay closeattention to cash flow management.

In 2013, the prospects for growth are better than in2012 and suggest a positive influence on B2B pay-ment periods. However, this should be of limitedscale in Southern European countries, necessitatingmajor efforts there to meet the targets of theEuropean Directive.

The new European Directive should prove diffi-cult to implement by 2013, especially inSouthern European countries, and could in theshort term impact on the number of insolvenciesand weaken the industrial fabric, although in thelong term it could have a beneficial effect forthese same countries. ▣

0

20

40

60

80

100

120

EU Directive

Portugal

Poland

Italy

France

Spain

Germany

Belgium

1312111009080706050403020100

Forecast

Effort to be made

Days’ revenue

Change in client payment periods

Sources: Euler Hermes calculations, BACH database

0

20

40

60

80

100

120

EU Directive

Portugal

Poland

ItalyFrance

Spain

GermanyBelgium

1312111009080706050403020100

Forecast

Effort to be made

Days’ revenue

Change in supplier payment periods

Sources: Euler Hermes calculations, BACH database11

Country Growth Insolvencies

Germany Q + 1% q - 1%Poland Q + 3% Q + 11%Belgium Q + 0.2% Q + 10%France Q +0.3% Q + 4%Spain q - 1.8% Q + 20%Italy q - 1.8% Q + 24%Portugal q - 3% Q + 29%


Forecast of economic growth and insolvencies in 2013

12

What determines payment periods in the different sectors?

The national data studied in the first part of thisstudy does reflect the overall trends in a country,but not the differences in the particular situationsrelated, for example, to business size or businesssector.

▶ Unequal bargaining power is a well-know factof life for SMEs dealing with very large enterprises,and it is a structural disadvantage for them.Major enterprises use their bargaining power,weakening SMES, in order to win shorter clientpayment periods and longer supplier paymentperiods. This becomes more acute during periodsof crisis, during which room for manoeuvre (access to finance) is more greatly reduced for thesmallest firms.

▶ The sector of activity effect is by contrast lesswell known, but the disparities are great and areintrinsically linked to the very nature of the activityof businesses in the sector, due either to the salescycle (e.g., toys and chocolate), the productioncycle (longer in public works, shorter in foods), or to the sector’s positioning (the absence of clientpayment periods in major retail distributors). This second part of our study will highlight othersectors that also show these disparities.

Air transport

Automobiles

IT services

Construction

Amplitude**

0

30

60

90

120

150

10 40 80 100Length of payment periods

* The difference between the country posting the longest payment periods for the sector and the country with the shortest payment periods for the sector.Panel of countries: Germany, Belgium, Spain, France, Italy, United Kingdom, Sweden, Denmark and Norway** Excluding Spain

Group 1

Pharmaceuticals

Chemicals

Aeronautic components

Automotive components

IT services

e tst

Construction

Group 2Group 3

Group 4

**


SecondFocus point

A fairly marked axis of sector internationalisation

Euler Hermes Economic Outlook n° 1182 | Special Dossier | Payment periods

The longest payment periods are seen in nearlyall countries in the construction and IT servicessectors. The automotive sector in most countries

has the least need of B2B credit. In Spain and France,there is a difference of around 60 days between theautomotive sector and IT services, while the differenceis 65 days in Italy, only 30 days in Germany, and 20 daysin the United Kingdom. Over the period we examine,we see a general convergence between paymentperiods, limiting cash flow requirements.

We can distinguish four groups of sectors that pre-sent payment periods that are similar in level andamplitude.

▶ Among automakers, we see a relative conver-gence between client payment periods and supplierpayment periods, generating some cash flow sur-pluses, with the prize going to Italy, which is conver-ging towards the other countries studied with clientpayment periods at 37 days, but which shows recordsupplier payment periods at 75 days.▶ In air transport, payment periods are overall wellrespected. While these have been cut by 18% in Italy,they have however exploded in Spain, lengthening by52%. For the other countries, payment periods gene-rally are between 20 and 40 days.

▶ In France, sector round tables have helped sub-contractors to even out client and supplier paymentperiods. These have shortened by 21%, to 54 days forclient payment periods and 53 days for supplier pay-ment periods. In the United Kingdom, however, whilesupplier payment periods are down by 30% to 41 days,client payment periods have dropped by only 12% to68 days, generating a heavy cash flow requirement of26 days. Germany continues to show rapid payments,with client payment periods of 36 days and supplierpayment periods of 24 days. Italy for its part has the slo-west payments, with 111 days for client paymentperiods and 96 days for supplier payments. Roughlyspeaking, payment periods in Italy are twice as longas in France and three times as long as in Germany!

▶ With global suppliers, the chemicals and phar-maceuticals sectors show a limited difference in pay-ment periods. The chemicals sector made great

Group 1

Group 2

13


efforts after the abrupt slump in activity of 2008-2009,achieving average client payment periods of 65 daysin 2010. Particularly great efforts were made in Spain,where businesses have cut payment periods by 30%since 2006. Our study of the sector also shows big dif-ferences: Italy and Spain allow long client paymentperiods, at 93 days and 67 days respectively, while theypay their suppliers at 63 days and 46 days respectively,creating significant cash flow requirements.This becomes even worse in the pharmaceutical sector,in both cases with cash flow requirements at 50 days.Large cash flow needs are also generated in Germany,with client payment periods of 46 days, which seemlong given that supplier payment periods are 29 days. Inthe other countries in our study, we see a relativeconvergence of client and supplier payment periodswithin reasonable limits from 30 days to less than 60days.▶ In the aeronautics components sector, paymentperiods are generally steady at between 20 and 60days, with the notable exception of Spain where theyare unusually long.

▶ In IT services, key clients impose longer paymentperiods on suppliers in the sector, which shows fairlylong payment periods generally, particularly in clientpayment periods, which are nearly 50 days in Germanyand the United Kingdom, 95 days in France, 101 days inItaly and 107 days in Spain. The long client paymentperiods and the far shorter supplier payment periods(generally between 20 and 60 days), which are fallingapart from in France (+3% to 51 days) and in Spain(+14% to 61 days) generates significant cash flow needswithin the sector and creates genuine financial fragility.

▶ The highly locally based construction sector seespayment periods lengthen when the economic cli-mate worsens, making it the sector where we see thebiggest differences. A prime example is Spain, wheresupplier payment periods have reacted a record 157days (and where the sector has massively suffered). Bycontrast, in the United Kingdom client payment periodsare 33 days. It must be noted that the convergencetoward similar payments in these countries will take agreat deal of time. ▣

Group 3

Group 4


14

Automobiles and automotive components: the problem for subcontractors

Relations between subcontractors and their clientshave been difficult for a long time. Majorcontractors enjoy unchallenged bargainingstrength, benefiting from their powerful positionsto the detriment of their subcontractors andimposing very long payment periods.We note that the automotive components sector inFrance (number two in Europe, behind Germany)accounts for more than 40% of subcontracting inthe country.

Acceptable payment periods in theautomotive sector.

This is the sector with the shortest client paymentperiods (at 37 days on average), proof of the coope-ration between major contractors and subcontrac-tors, notably in Northern Europe. With the imple-mentation of industry round tables in France, thesector is working to harmonise payment periods inorder to avoid harming subcontractors. A very goodexample is automotive components, with supplierpayment periods of 53 days.With supplier payment periods longer than clientpayment periods, the automotive sector shows cashflow surpluses of varying sizes, depending on thecountry. However the countries where these sur-pluses are the biggest are those where supplier pay-ment periods are much longer than average.We can distinguish two different groups of countriesin the auto sector.

▶ The good students of Northern Europe.At the top of the class are Germany and the UnitedKingdom, with client payment periods of 22 and 31days’revenue respectively, and supplier payment

periods of 34 days in both cases. The cash flow sur-pluses in 2010 were the equivalent of 13 days’reve-nue in Germany and 3 days’revenue in The UnitedKingdom.

In France there was a sharp fall in payment periods in2007, followed by very sharp fall in 2008, when clientpayment periods dropped to 32 days and supplierpayment periods fell to 41 days, in anticipation of theimplementation of LME.However, 2009 saw a clear lengthening in paymentperiods, with client payment periods increasing by50%. This was a response to the crisis by automakersto support their concessionaires, the latter heavilyburdened with stocks of unsold vehicles.In 2010, payment periods shortened again, droppingto 41 days for client payment periods and 49 days forsupplier payment periods, thanks to good cash flowmanagement, showing an 8-day surplus.

▶ The countries in Southern Europe as well asBelgium are drawing on supplier credit.The countries in Southern Europe as well as Belgiumare drawing on supplier credit to ensure a positivecash flow to offset their weak cash flows or low sha-reholders’equity.Italy shows a significant cash flow surplus, generatedby very long supplier payment periods (at 75 days,more than twice as long as in Germany). At the sametime, client payment periods there are 37 days, withinthe European average, generating a very large posi-tive cash flow for Italian automakers.The European Directive, whose aim is to reduce andcontrol payment periods (to a maximum of 60 days)will therefore be hard to implement in Italy in thissector.

◾◾◾

15


-50

-40

-30

-20

-10

0

10

20

Belgium

United Kingdom

Italy

Spain

Germany

France

20102009200820072006

Cash flow Tension Indicator: automobiles


-40

-30

-20

-10

0

10

20

30

40

50

Belgium

United Kingdom

Italy

Spain

Germany

France

2010200920082007

Indicator of change in client payment periods: automobiles


Client payment periods: automobiles

Supplier payment periods: automobiles

US42

NO45 IT

37BEL41

FR41 DK

40

DE21

GB31

ES48

SE19

Clie

nt p

aym

ent p

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ds in

day

s’ re

venu

e, 2

010

0

10

20

30

40

50

60

-110% -60% -10% 10%0% 40% 60%

Change

Supp

lier p

aym

ent p

erio

ds in

day

s’ re

venu

e, 2

010 US

79 IT75

FR50

BE69

ES56

NO47

SE37

GB34

DK45

0

10

20

30

40

50

60

70

80

90

100

-100% -50% 0% 50% 100%

Change

DE34


Italy

Belgium

Spain

France

United Kingdom

Germany

220

164

11

5

-19

-3

3

-5

-19-15

-25 20 -15 -10 -5 0 5 10 15 20 25Client payment period difference from average of 37 daysSupplier payment period difference from average of 53 days

Client and supplier payment period gap: automobiles


in a significant increase in working capital require-ments.

▶ In Italy, the cash flow requirements are 14 days,with the longest client payment periods in Europe(110 days, twice as long as in France and three timeslonger than in Germany), offsetting once again verylong supplier payment periods, at 96 days’revenue.Italy has not implemented a code of good practicethat could, as in France, considerably improve rela-tions between major contractors and subcontractors.We note in the case of Italy an evident financial fra-gility when it comes to implementing the newEuropean Directive on payment periods.With its highly structured business sectors, Germanyhas no need to implement codes of good practice.

▶ Cyclical factors: for major contractors, purchasingoperations should, with recovery, bring value added,as subcontractors should produce equivalent ormore innovative quality at a lower cost; extremeconcentration among suppliers makes negotiationsdifficult or even simply unlikely to bear fruit.

▶ Structural factors: with client payment periodsdown by half in 2010 to 54 days’revenue, the autocomponents industry in France has been one of themajor beneficiaries of the June 2006 signature of thecode of good practice.

In order to adapt to the new European Directivecoming into force in March 2013, Italy will have tomake the greatest efforts to shorten paymentperiods, and this will not only be a real challenge, butalso will pose risks to business cash flows. ▣

Automotive component makersand SMEs in the face of the largeautomakers: what negotiatingpower do subcontractors have?

▶ The scissors effect between client paymentperiods and supplier payment periods, with subcon-tractors coming out the losers, is a direct result of thepower of automakers over their subcontractor sup-pliers.In France, given the many problems encountered bysubcontractors, measures were adopted through acode of good practice of client/supplier relations forsubcontracting in the auto sector (see Annex I).

▶ For the auto components industry in France, therehas been a clear improvement in payment periods.Indeed, client payment periods in the industry hadbeen rising consistently after 2000, to 110 days in2004 (source: Euler Hermes).The application of the code of good practice, combi-ned with the introduction of the LME, obliged auto-makers to move to payment periods compatible withsupplier payment periods. We thus saw a proportio-nal contraction in payment periods in 2010, to 54days for client payment periods and to 53 days forsupplier payment periods, helping subcontractors tomaintain low cash flow requirements.In Germany, while payment periods are the shortest,the cash flow requirements are however higher thanin France.

▶ In Spain and in the United Kingdom, there is a scis-sors effect between client payment periods (83 daysand 68 days respectively) and supplier paymentperiods (52 days and 41 days respectively), resulting


16

◾◾◾

17


NO40

IT111

BE67

DK55

DE36

GB68

ES83

SE51

Change

Clie

nt p

aym

ent p

erio

ds in

day

s’ re

venu

e, 2

010

FR54

0102030405060708090100

-150% -100% -50% 0% 50% 100%

Change

Supp

lier p

aym

ent p

erio

ds in

day

s’ re

venu

e, 2

010

GB41

NO27

IT96

BE49

DK20

ES52

SE39

FR53

DE36

53

0

20

40

60

80

100

120

-100% -50% 0% 50% 100%

-80

-60

-40

-20

0

20

40

60

80

100

120

Belgium

United Kingdom

Italy

Spain

Germany

France

2010200920082007

Indicator of change in client payment periods: automotive components

-20

-10

0

10

20

30

40

50

60

Belgium

United Kingdom

Italy

Spain

Germany

France

20102009200820072006

Cash flow Tension Indicator: automotive components

Source: Euler Hermes Source: Euler Hermes

Client payment periods: automotive components

Supplier payment periods: automotive components

-40 -30 -20 -10 0 10 20 30 40 50Client payment period difference from average of 37 daysClient payment period difference from average of 37 days

Italy

Spain

Belgium

United Kingdom

France

Germany

4441

-4

13-1

-11

-3

-2

0-16

-28-34

Client and supplier payment period gap: automotive components




18

Air transport: an instrument of globalisation but marked by regional differences

The air transport sector in our studies is comprisedof passenger transport and airfreight traffic.

From the data we can observe a number of sectoraland regional characteristics.

Relatively short payment periodsin air transport compared to othersectors.

▶ Two factors explain this feature, for example onaccounts receivable

> The passenger segment (78% of turnover in thesector worldwide in 2011) is a B2C (business-to-consumer) activity, and, due to a high proportion ofpayments being made prior to travel, does not gene-rate significant accounts receivables in airlineaccounts.> Freight transport is subject to legally mandatorypayment periods of no more than 30 days (legalconstraints).Also note that when carriers buy their aircraft, this iscarried out through medium to long-term financingwhich allows them to make staged payments to aero-nautics constructors during the course of the pro-duction of aircraft and then finalise payment oncethe aircraft are delivered.

▶ Client payment periods structurally longer inEurope (44 days’revenue) than in the United States(22 days).This is due to two fundamentally different econo-mic models. The major United States airlines, follo-wing the difficulties encountered in the previousdecade, have clearly refocused on the passenger seg-ment and heavily reduced (or abandoned) relatedactivities, to the benefit of domestic or foreign spe-cialist operators. This nearly ‘pure player’strategy ofthe United States companies, looking to concentratetheir resources to optimise their core business,stands in contrast to the broader operational portfo-

lios of their European counterparts. Of the latter, themajor players can, to varying degrees, shelter ope-rations as diverse as passenger traffic (a minimum75% of turnover) as well as freight, maintenance (toother airlines, in addition to their own fleets), cate-ring and IT services. This (highly relative) diversifi-cation is part of a very different economic model –one designed in order to, among other things, ‘satu-rate’the use of their existing infrastructure (generallyvery costly material assets) via diverse operations,and in order to ensure good maintenance of sensi-tive equipment, as well as to integrate activities thatare less cyclical and/or new avenues of profitability.This partial orientation towards buoying B2B activi-ties automatically translates into lengthened pay-ment periods for the airlines’accounts receivable.

▶ During the 2008-2009 crisis, very substantialfluctuations in accounts payable in the UnitedStates (from 46 days in 2008 to 29 days in 2009);less in Europe (from 35 days’revenue in 2009 to 38days in 2009).In a widespread context of falling activity, inherentlystemming from the world economic downturn, thedifference of magnitude in these two markets can beexplained by the concomitant variations in oil prices.We have to remember the crucial impact of keroseneprices at that time on the fortunes of airlines. Indeed,fuel prices account for 30% to 35% of their operatingcosts and thus a significant share of their accountspayable. In face of the sector’s intrinsic exposure tothis factor, different choices were made on oppositesides of the Atlantic. European carriers, for their part,chose to use financial instruments to cover a generallylarge part of their fuel purchases, which explains therelative stability – or more correctly the more limitedscale – of the changes their accounts payable, despitethe turbulence in oil (and thus jet fuel) prices. In theUnited States, by contrast, financial cover wasundertaken far less – or in cases not at all – beingdeemed too expensive, and supplies were obtainedon spot markets, thus explaining the size of Americanbusinesses’accounts payable following the course ofoil prices.

19


Change

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s’ re

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010

ES62

GB25

IT58

FR44

DE31

US22

0

10

20

30

40

50

60

70

80

-30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%

Since then, the strategies have evolved, withEuropean companies generally havingreconsidered the extent and especially the durationof their cover operations.

▶ A North-South divide in Europe.The air transport sector reflects the characteristicsof a country’s domestic economic environment,and hence is no exception to showing longer pay-ment periods in the south of Europe than in thenorth. Thus, supplier payment periods are 25days’revenue in the United Kingdom, 31 days inGermany, 44 days in France, 58 days in Italy and 63days in Spain. ▣

-30

-25

-20

-15

-10

-5

0

5

10

15

20

United Kingdom

United States

Italy

Spain

Germany

France

20102009200820072006

Cash flow Tension Indicator: air transport


-40

-20

0

20

40

60

80

100

United Kingdom

Spain

United States

Germany

France

2010200920082007

Indicator of change in client payment periods: air transport

Client payment periods: air transport

Supplier payment periods: air transport

ES34

FR44

DE29

GB17

IT29

Change

Clie

nt p

aym

ent p

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ds in

day

s’ re

venu

e, 2

010

US21

0

10

20

30

40

50

60

-50% -40% -30% -20% -10% 0% 10%




20

Chemicals: supplying industries and supporting the industrial fabric via client credit

Between 2003 and 2005, the chemicals sectorwent through the bottom of a cycle. It followed thiswith large-scale restructuring among operatorsthat at times disrupted output flows. In 2009, thesector suffered the impact of the abrupt economicslowdown on its clientele, especially in the autoand construction sectors. This gave way to theappearance of input bottlenecks that in turnbrought an increase in payment periods in thechemicals sectors of nearly every country.

A limited variation in paymentperiods.

▶ Generally, one can say that enormous efforts weremade in the chemicals sector to manage cash flowrequirements. It was rather as if the violent downturnin activity experienced in 2008-2009 convincedoperators to set right the way they were financingtheir operational cycles in order to not (or no longer)undergo the horrid consequences of suddenlyrunning out of cash.The improvement in managing cash flowrequirements in the French chemicals sector hasbeen genuine. The sector’s cash flow requirements of8 days’revenue seems the lowest in Europe after TheUnited Kingdom (3 days). With client paymentperiods falling by 8% in 2008 and supplier paymentperiods by 12%, the French chemical industry hascome out well, notwithstanding a slight increase inpayment periods in 2009. In 2010, payment periodsdropped below 60 days, with client payment periodsof 58.7 days’revenue and supplier payment periods at50.9 days, or a total shrinkage of payment periods of11% between 2006 and 2010.

▶ With shorter client and supplier payment periodsand lower cash flow requirements than in othercountries, the chemicals sector in the United Kingdom

shows once again a stable and effective managementof operating requirements. The income on cash of thegood performers in the sector is surely the result of astrategy aimed at cementing the loyalty of their clientsand suppliers via long payment periods for theircustomers and a determination to pay their suppliersrelatively quickly.

▶ We should note the singular efforts made by Spainin its policy of cutting payment periods within itschemicals sector. Compared to 2006, when clientpayment periods were 95 days, Spanish businesseshave reduced the figure by 30%. Payment behaviourin Belgium is close to that of France: reasonablepayment periods and good cash flow management.Norway operates within the logic of an integratedsector, well managing its payment periods and cashflows. Indeed, despite a slight increase in paymentperiods in 2009, the figures are still good, with clientpayment periods of 40 days and supplier paymentperiods of 31 days, and cash flow requirements of 9days.

▶ Italy’s heavy cash flow deficits directly result fromits very long client payment periods, even despitetheir shortening by 8% since 2006. At 93 days, theseare well beyond the limits of the European Directiveentering into force in March 2013.

▶ In the United States, the chemical industry pays itssuppliers an average of 40 days after invoices areissued and gets paid by its clients with a paymentperiod on average equal to 61 days’revenue, resultingin cash flow requirements of 20 days’revenue. ▣

21


-20

-15

-10

-5

0

5

10

15

20

Norway

United Kingdom

Belgium

United States

Italy

Spain

Germany

France

2010200920082007

Indicateur Indicator of change in client payment periods: chemicals



0

10

20

30

40

50

Norway

United Kingdom

Belgium

United States

Italy

Spain

Germany

France

20102009200820072006

Cash flow Tension Indicator: chemicals


Client payment periods: chemicals

Supplier payment periods: chemicals

Clie

nt p

aym

ent p

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ds in

day

s’ re

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010

Change

ES67

US61BE

58DK57

NO40

GB30

FR59

IT93

SE32

DE46

20

30

40

50

60

70

80

-40% -30% -20% -10% 0% 10% 20% 30% 40%

IT63

FR51

SE24

ES46

DE29

NO31

US41

DK29

GB28

BE47

Change

Supp

lier p

aym

ent p

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ds in

day

s’ re

venu

e, 2

010

0

10

20

30

40

50

60

70

80

-15% -10% -5% 0% 5% 10% 15% 20%

Italy

Spain

Belgium

France

Germany

United Kingdom

-30 -20 -10 0 10 20 30 40 50

-2

-11-18

2544

7

810

-9

1210

18

Client payment period difference from average of 37 daysSupplier payment period difference from average of 53 days

Client and supplier payment period gap: chemicals



22

Pharmaceuticals: no cash flow problems

Supplier payment periods seem generally shorterthan client payment periods in thepharmaceuticals industry. Depending on thecountry, however, we see an uneven picture in howpayment periods are developing. Thelaboratories’advantage of enjoying comfortablecash flow surpluses from their operations resides intheir ability to pay their suppliers more quickly andthus benefit from financial discounts. This is moreprofitable than placing their funds at low rates ofinterest.

In France the rate of non-payment and insolvenciesin the chemicals sector overall is markedly higherthan in the pharmaceuticals segment.

▶ Payment periods are well below 60 days in thesector in the United Kingdom, Germany andDenmark. The very short payments benefiting theirsuppliers, which even occasion cash flow require-ments in Germany and Denmark, is a means ofconsolidating their ties with their partners, allowingthem to benefit from, among other things, financialdiscounts.

▶ By contrast, in Spain (-50), Italy (-50) and in theUnited States (-55), the industry suffers from a harm-ful scissors effect. The length of payment periods thatbusinesses grant their customers is very generous,when it is not the result of (as in Spain) the financialwoes of their hospital clientele. Unlike in the UnitedStates, however, Spain and Italy are not relaxing their

efforts to attempt to shorten payment periods (-11%and -6% since 2006 for client payment periods inSpain and Italy respectively, compared to +49% in theUnited States).

▶ Cash flow management by United States phar-maceutical companies seems notwithstanding dri-ven by a more aggressive commercial policy.Lengthening clients’payment periods is also a way ofreinforcing their loyalty and helping them to avoiddifficult bank lending conditions – in sum, the expres-sion of a policy more financial than industrial innature on the part of the United States pharmaceu-ticals sector. The length of these payment periods,which continue to grow, does put the United Statesat the bottom of the class in this sector in terms of thelength of payment periods and of efforts made toattempt reducing them (client payment periods upby 49% and supplier payment periods up by 43%).

▶ Apart from a rebound in payment periods in 2009,the French pharmaceutical industry, fifth in the ran-kings, is not letting up on its efforts to shorten them.In 2010, these were down by 10 days against 2006,with cash flow needs of 14 days’revenue, well belowthe figure for Germany (30 days), Spain (49 days),Italy (50 days) the United States (55 days) andDenmark (14 days). Committed to cutting averagepayment periods, the pharmaceuticals sector inFrances does not benefit however from the advan-tage it gains by obtaining discounts in return for rapidpayment to its suppliers. ▣

23


NO16

FR52

IT40

BE54

DK20

GB31

ES35

SE11

US38

Change

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ds in

day

s’ re

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010

0

10

20

30

40

50

60

70

-30% -20% -10% 0% 10% 20% 30% 40% 50% 60%

DE16

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

30

Denmark

United Kingdom

United Sates

Italy

Spain

Germany

France

2010200920082007

Indicator of change in client payment periods: pharmaceuticals


0

10

20

30

40

50

60

70

80

Denmark

United Kingdom

United States

Italy

Spain

Germany

France

20102009200820072006

Cash flow Tension Indicator: pharmaceuticals


Client payment periods: pharmaceuticals

Supplier payment periods: pharmaceuticals

Change

Clie

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ds in

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s’ re

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010

FR66

ES85

IT90

GB36

DK38

SE11

NO25

BE63

DE46

US93

0

20

40

60

80

100

120

-20% -10% 0% 10% 20% 30% 40% 50% 60% 70%



24

IT services: constrained by their clientele

Major clients have the strong suit in theirnegotiations with IT services providers, resultingfor the latter in large cash flow requirements thatweaken businesses in the sector. Indeed, this is thesector hit hardest by the weight of its accountsreceivable. As a result, it faces a large or very largescissors effect in every country apart from Sweden.Moreover, we see rigidity to a reduction in clientpayment periods.

▶ Our study reveals very long client payment periods,but supplier payment periods that are reasonablygood, or even low in some countries. The scissorseffect in very big in every country, but with a moremuted impact in Germany, the United Kingdom,Belgium and Sweden.

Major clients have the advantageof the stronger position innegotiations, resulting in largecash flow requirements thatweaken businesses in the sector.

▶ In France, despite the LME and a strong responseby the sector to cut these payment periods by 7% from2006, client payment periods remain long, due tomajor public sector customers. On the supplier side,by contrast, little advance can be expected, inasmuchas their purchases consist of intellectual services paidfor on a monthly basis, and materials that are alreadypaid for quickly in order to improve margins.

▶ Germany for its part is seeing a reversal in its cashflow tension indicator that risks harming businessesin the sector. Supplier payment periods are down onlyslightly, as the initial payment periods were shorterand there is a sharp separation between IT servicesand IT equipment in the country, unlike in France. The9% increase in client payment periods reflectsweakness in demand, but Germany’s paymentperiods remain among the shortest in the sector inEurope.

▶ The pronounced deterioration in the situation forbusinesses in the sector in the United States, and themore moderate one for those in the United Kingdomand Belgium, is due primarily to an only small declinein supplier payment periods and to weak demand. ▣

20

30

40

50

60

70

80

Belgium

United Kingdom

United State

Italy

Spain

Germany

France

20102009200820072006

Cash flow Tension Indicator: IT services


Spain

Italy

France

Belgium

Germany

United Kingdom

-30 -20 -10 0 10 20 30 40

-24

-21-27

1730

16

719

-18

157

24


Client and supplier payment period gap: IT services


25


Aeronautic components: stability in payment periods –sign of a healthy sectorThe sample on which we base our conclusions inthis study is drawn for civil and military aeronauticsactivities in the different countries examined.

▶ What sets this sector apart is the extremely highlevel of concentration among aeronautics construc-tors both in Europe and the United States, whoselevels of activity set the tone for subcontracting. Atthe end of the chain, civil aviation constructors (busi-ness or commercial aircraft, essentially in the zonesexamined) benefit from advances paid by the airlinesordering aircraft, staged from the signing of contractsuntil delivery, in order to finance the production cycle(with very high inventories and exposure). Moreover,at times there are payments on account, higher ups-tream in the chain, helping to ease cash flows.

With the notable exception ofSpain, the last three years haveseen relative stability in paymentperiods.

▶ France, however, seems to show the impact of theentry into force of the LME, with supplier paymentperiods falling from 77 days in 2008 to 49 days in2010, while in the United States, 2008 reflected thedestabilisation in the sector brought about by thelong strike at Boeing. This overall resistance, in theface of the difficult economic situation that affectedall industrial sectors, is the sign of the excellent healthof the commercial aviation sector, buoyed by nearlyconstantly increasing production, by contrast withbusiness aviation, which was seriously affected by fal-ling production and order books over the sameperiod.

▶ Not contradicting the distinction betweenNorthern and Southern Europe, already well demons-trated in many sectors, and despite the convergencein the sector towards a restricted number of custo-mers, the longest payment periods are in Italy (with

supplier payment periods of 60 days’revenue in2010) and especially Spain (131 days in 2010). Thissituation is grounded in local practices but is alsoclearly due to the domestic economic environment– particularly in the case of the big lengthening inSpain, where supplier payment periods doubled bet-ween 2008 and 2010. Operators in both these coun-tries are thus exposed to penalising consequencesfrom the approaching application of the EuropeanDirective. ▣

ES131

FR49

DE51

US42

GB44

IT60

Change

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0

20

40

60

80

100

120

140

160

-40% -30% -20% -10% 0% 10% 20% 30% 40%

ES153

FR65

DE20

US67

GB40

IT67

0

50

100

150

200

-30% -10% 10% 30% 50%

Change

Clie

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Client payment periods: aeronautic components

Supplier payment periods: aeronautic components




26

Construction: the sector with the greatest disparities

Payment periods in large part reflect the particulareconomic environment of the country in question.

This is a domestic sector in withexceptional payment periods insome countries.

> In France, the sector benefits from derogation inpayment periods.Nonetheless, efforts are needed to shorten paymentperiods. In fact, on 14 February, the then Minister incharge of consumption, Frédéric Lefebvre, announ-ced an intensification of monitoring measures inorder to reduce payment periods deemed to be toolong. In 2012, the sector is supposed to begin postingpayment periods within the LME norms (45 daysfrom the end of the month or 60 days from theinvoice date). However, according to the Minister, thereality is quite different, with payment periods run-ning between 76 and 92 days. The then governmentwanted to introduce an amendment to the legisla-tion that would allow entrepreneurs to suspend workin the event of late payments on intermediate ins-talment invoices, the aim being to end the growingnumber of cases of the law being circumvented. Eventhough the effects of the LME and derogation agree-ments are impacting on payment periods, it is hardin this sector to reduce client payment periods due tothe nature of the clientele (individuals, the State andstate-owned enterprises in the sector). By our esti-mates, this impacts negatively on businesses in thesector.

> In Germany, the strict application of late paymentpenalties allows a better result than does the LME as itis applied in France. As a result, payment periods arehalf as long as they are for French businesses in thesector. We see a coordinated reduction in paymentperiods and in cash flow requirements in the Germanconstruction market, now lacklustre primarily fordemographic reasons.

> Late payments are frequent in Spain, despitealready long contractual payment periods, and only asmall scaling back of extremely long client paymentperiods has been achieved, by around only half asmuch (-10%) as was achieved in Germany (-16%).

> In Italy, the construction sector is made up of manybusinesses with low shareholders’capital, and theweakness in demand has translated into longpayment periods and a sharp increase in cash flowrequirements.

> In the United Kingdom, public intervention helpedsustain activity in the construction sector but acted toslow the reduction in client payment periods. TheUnited Kingdom shows a relatively coordinatedreduction in payment periods, at close to the average.

> In Belgium, businesses in the building and civilengineering sector are unable to meet the clientpayment periods imposed by the authorities, holdingback reductions in supplier payment periods inresponse. Government authorities and especiallylocal authorities pay very late, a trend that isaccentuating.

> In the United States, we see an increase in supplierpayment periods (+18%), due to a fall in demand andthe large number of residences for sale. Clientpayment periods have also risen considerably (+46%)in this extremely poor market environment, on top ofwhich it is also difficult for prices of new-build housingto rise. ▣

27


Change

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s’ re

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BE70

ES157

IT114

SE27

FR57

DE28

GB38

DK38 NO

33

US43

0

50

100

150

200

-80% -60% -40% -20% 0% 20%

-20

-15

-10

-5

0

5

10

15

20

25

Belgium

United Kingdom

United States

Italy

Spain

Germany

France

2010200920082007

Indicator of change in client payment periods: construction


-10

-5

0

5

10

15

20

25

30

35

40

Belgium

United Kingdom

United States

Italy

Spain

Germany

France

20102009200820072006

Cash flow Tension Indicator: construction



Client payment periods: construction

Supplier payment periods: construction

Change

Clie

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e, 2

010

ES174

US53

DK57

GB33

IT127

FR87

NO63

BE82

SE47

DE41

0

50

100

150

200

-20% -10% 0% 10% 20% 30% 40% 50%

Spain

Italy

Belgium

France

Germany

United Kingdom

-40 -20 0 20 40 60 80 100 120 140

-20

-10-28

109113

66

2221

-20

926

66


Client and supplier payment period gap: construction



28

Air t

rans

port

Auto

mob

iles

Phar

mac

eutic

als

IT se

rvic

es

Cons

truc

tion

Aero

naut

ic

com

pone

nts

Chem

ical

s

Auto

mot

ive

com

pone

nts

40 days 60 80 100

France National average

National average

15 days 35 55

Aero

naut

ic

com

pone

nts

Auto

mob

iles

Germany

Air t

rans

port

Auto

mot

ive

com

pone

nts

Cons

truc

tion

Chem

ical

sPh

arm

aceu

tical

s

IT se

rvic

es

▶ Payment periods by sector


▶ There are four determining factorsexplaining these disparities between sectors:> 1. The organisation of the sectors themselves, an example being theround table in the automotive components sector in France, whichenabled subcontractors to even out client and supplier paymentperiods.

> 2. When the suppliers are global, sectors such as chemicals benefitfrom a limited variation in payment periods.

> 3. The health of the sector, an example being the construction sec-tor in Spain, which shows the difficulties undergone because of thecrisis.

> 4. The negotiating strength of big clients and big suppliers whoimpose longer payment periods, such as in the IT services sector.

Four determinants to note

Comparison betweenGermany-France

Euler Hermes

29

Annexes

Round tables in the automotive components sectorIn France: the code of good practice of28 June 2006 allows for balanced and more lasting and har-monious client/supplier relations through the sector, where the client must:> send a late payment penalty without the supplier having to request it> not alter the payment term for reasons not set out in the contract (notably arising from internal fai-lings in its administrative departments)> furnish a means of payment that can be mobilised or financed to the supplier who requests it and doso within 20 days of receiving the invoice, in the absence of any litigation

Agreement on payment periods of 27 January: additional to the code of good practice for paymentperiods:> the payment period between clients and subcontractors is cut to a maximum of 90 days effective 1 Sep-tember

Client businesses in the sector with turnover in excess of 300 million euros will give an additional re-duction in payment periods of 30 days to suppliers with turnover of less than 50 million euros, accordingto the following modalities: maximum payment periods of 75 days effective 1 September and of 60 dayseffective 1 September.

LME constructionIn France: under derogation in the construction andcivil engineering sector, the parties agree the follo-wing maximum payment periods:> 70 days from end of month effective 1 January> 60 days from end of month effective 1 January> 50 days from end of month effective 1 January> 45 days from end of month effective 1 January

Annex I

▶ Law on the Modernisation of the Economy(LME) and sector round tables in France

LME in pharmaceuticalsFollowing the implementation of the LME of 2008in France, subject to the decree of 22 September,trade associations representing French pharma-cies signed an accord with the trade association ofFrench pharmaceutical manufacturers (LEEM) tobe applied gradually to payments for non-pres-cription drugs, which account for 10% of the phar-maceuticals market.

According to the AFIPA, the trade body that re-presents the self-medication medicines industry,payment periods for non-prescription medicineswere much longer than for other medicines, run-ning from 180 days to 360 days for seasonal pro-ducts (e.g., winter remedies and anti-allergydrugs).

In France: under a derogation for non-prescrip-tion drugs, the payment periods agreed by theparties to settle invoices due may not exceed:> 90 days from invoice date for 2009> 70 days from invoice date for 2010> 60 days from invoice date from 1 January.These payment periods run from the date of issueof the invoice.

The 35 derogations of the LME> toys; DIY; watches and jewellery; construction and civil engineering; plumbing, hea-ting and electrical equipment; book publishing; stationery and office supplies; tyres; me-tal packaging closures and metal tins for food; optional non-reimbursable prescriptiondrugs; sales of pets, products and accessories for pets; two or three-wheeled motorisedand quad bikes; boating; amateur gardening; industrial equipment and hardware; agri-cultural supplies; agricultural equipment; paints, inks, colours, glues and adhesives; op-tical spectacles; cooperage; sporting goods; print industry; music CDs and DVDs; ama-teur fishing; arts and crafts; leather; steel products for construction; recreational vehi-cles; marine and inland aquaculture; food supplements; roundwood logs and standingtimber; wholesaling of automotive tools; hunting arms and ammunition; textiles andclothing.


▶ Payment defaults in Italy

Annex II

30

A close examination of payment defaults of Italianbusinesses reveals great disparities betweenregions and sectors via two key indicators: the rateof non-payment and the severity (averageamount) of missed payments.

On the domestic market, the victims of the crisis inconsumption, of international competition (e.g.,footwear) or of the rise in energy prices (e.g., papermanufacturing) saw default amounts increase.Chemicals also saw a rise in these amounts.Exports, a key element in the Italian economy in 2011,now are a matter of great concern over the rate ofpayment defaults in industry, agriculture, foods,chemicals and mechanical engineering.Italy’s strong exports to troubled economies such asSpain, Greece and Portugal have a considerableimpact on the severity of non-payments. We also seean increase in the average payment default amount inthe steel, footwear and construction sectors.

Regional disparities are increasing in the crisis: thesouth and centre of Italy are more exposed to liquidityproblems during economic slowdowns. In the northof the country, in Piedmont and Liguria, show asustained trend of increasing rate (depending on theproduction specialisation in these regions, i.e.,automobiles and naval industries). In central andsouthern regions, the trend deteriorates more quickly,with some diverging trends for certain regions likeMolise and Calabria, which are just improving after adeep crisis. ▣

0

50

100

150

200

Amount

Rate

2012*2011201020092008 Q1

Italy - Domestic market – 2007 to March2012 trend

30

60

90

120

150

AmountRate

2012*2011201020092008 Q1

Italy -Export market – 2007 to March2012 trend

(basis, 2007 = 100) (basis, 2007 = 100)

Source: Euler HermesSource: Euler Hermes


31


Germany Client Supplier Client Supplier Cash flow payment payment payment period payment period tension period period growth indicator growth indicator indicator

2000 30 21.6 8.32001 27.3 19.7 -9% -8.9% 7.62002 26.6 19.2 -2.4% -2.6% 7.42003 26.1 19.0 -1.8% -0.8% 7.12004 25.5 18.9 -2.2% -0.8% 6.72005 25.3 18.7 -1% -0.9% 6.62006 25.4 18 0.5% -3.8% 7.42007 25.2 18.5 -0.8% 2.6% 6.72008 22.6 16.7 -10.2% -9.5% 5.92009 23.4 17.1 3.6% 2.5% 6.32010 23.7 18.5 1% 7.9% 5.22011 23.5 18.5 -1% 0% 52012 23.3 18.5 -0.5% 0% 4.92013 23.1 18.5 -1% 0% 4.6

Spain Client Supplier Client Supplier Cash flow payment payment payment period payment period tension period period growth indicator growth indicator indicator

2000 69.6 64.2 5.32001 69.5 64.2 -0.1% 0% 5.32002 70.6 64.6 1.5% 0.7% 5.92003 69.2 64.7 -1.9% 0.1% 4.52004 69.8 64.8 0.8% 0.2% 4.92005 71.2 67.0 2% 3.3% 4.22006 71.5 67.4 0.4% 0.6% 4.12007 73.5 69.5 2.9% 3.1% 42008 70.6 66.9 -3.9% -3.8% 3.82009 80.9 75.3 14.6% 12.6% 5.62010 79.0 75.3 -2.4% 0% 3.62011 78.3 74.8 -0.9% -0.8% 3.52012 80.2 76.3 2.5% 2% 42013 80.6 76.6 0.5% 0.5% 4

France Client Supplier Client Supplier Cash flow payment payment payment period payment period tension period period growth indicator growth indicator indicator

2000 68.0 58.3 9.62001 64.5 56.2 -5.1% -3.6% 8.32002 63.2 55.1 -2.0% -2.0% 8.12003 62.4 54.3 -1.2% -1.5% 8.22004 61.2 54.0 -2.0% -0.6% 7.22005 63.3 55.3 3.4% 2.5% 82006 63.4 55.5 0.3% 0.3% 82007 63.2 55.8 -0.3% 0.7% 7.42008 63.1 53.2 -0.2% -4.7% 9.92009 60.7 51.1 -3.7% -4.1% 9.72010 61.4 52.4 1.1% 2.6% 92011 62 53.2 0.9% 1.6% 8.72012 62.3 53.2 0.5% 0% 92013 62.9 53.8 1% 1% 9.1

Italy Client Supplier Client Supplier Cash flow payment payment payment period payment period tension period period growth indicator growth indicator indicator

2000 105.9 85.7 20.22001 102.7 81.9 -3% -4.5% 20.82002 106.1 83.3 3.3% 1.8% 22.82003 105.2 82.6 -0.9% -0.9% 22.62004 102.4 82.2 -2.7% -0.5% 20.22005 104.5 83.8 2.1% 2% 20.72006 102.8 81.2 -1.7% -3.2% 21.62007 100.8 80.8 -1.9% -0.5% 202008 99.6 77.2 -1.2% -4.4% 22.42009 106.8 82.5 7.2% 6.9% 24.22010 105.9 82.3 -0.8% -0.3% 23.72011 105.3 81.8 -0.6% -0.5% 23.52012 107.4 83.5 2% 2% 242013 107.4 83.5 0% 0% 24

Poland Client Supplier Client Supplier Cash flow payment payment payment period payment period tension period period growth indicator growth indicator indicator

2005 45.4 45.3 0.12006 45.6 44.6 0.4% -1.4% 0.92007 44.5 43.7 -2.3% -2.2% 0.92008 43.7 43.3 -1.8% -0.9% 0.42009 44.3 44.1 1.3% 2.0% 0.12010 45.3 44.9 2.3% 1.8% 0.42011 44.1 43.3 -2.7% -3.7% 0.82012 43.2 42.3 -2.0% -2.3% 0.92013 42.1 41.1 -2.5% -2.7% 1

Portugal Client Supplier Client Supplier Cash flow payment payment payment period payment period tension period period growth indicator growth indicator indicator

2000 68.3 51.6 16.72001 71.4 53.8 4.6% 4.4% 17.62002 69.6 53.7 -2.6% -0.2% 15.92003 70.9 55.3 1.8% 3% 15.52004 70.1 55.4 -1% 0.1% 14.72005 69.0 54.8 -1.6% -1.2% 14.22006 76.4 64.4 10.8% 17.6% 12.02007 76.8 64.8 0.4% 0.6% 12.02008 72.7 61 -5.3% -5.8% 11.72009 79.8 65.3 9.8% 6.9% 14.62010 81.7 66.3 2.3% 1.6% 15.42011 82.3 66 0.8% -0.4% 16.32012 83.6 65.4 1.5% -1.0% 18.22013 83.6 65.4 0% 0% 18.2

Belgium Client Supplier Client Supplier Cash flow payment payment payment period payment period tension period period growth indicator growth indicator indicator

2000 69.8 56.9 12.92001 67.3 54.4 -3.6% -4.3% 12.82002 64 43.7 -4.8% -19.6% 20.32003 67,8 53.8 5.9% 23.1% 13.92004 72.1 58.2 6.5% 8.1% 13.92005 65.9 53.5 -8.6% -8.1% 12.42006 64.3 51.8 -2.5% -3.2% 12.52007 65.5 51.8 2% 0% 13.72008 60.7 47.3 -7.3% -8.7% 13.42009 64.8 51.8 6.7% 9.4% 132010 63.2 52.2 -2.5% 0.9% 112011 61.6 50.7 -2.5% -2.9% 10.92012 61.6 50.7 0% 0% 10.92013 60.7 49.8 -1.5% -1.8% 10.9

Annexe III

▶ Detailed data, by country


Automobiles Client Supplier Client Supplier Cash flow payment payment payment period payment period tension period period growth indicator growth indicator indicator

France 41 50 1% -12% -8Germany 21 34 14% 45% -13Spain 48 56 -27% 10% -8Italy 37 75 -12% -4% -38United States 42 79 -97% -86% -37United Kingdom 31 34 56% 26% -3Belgium 41 69 -6% 27% -28Denmark 40 45 10% 33% -5Norway 45 47 -23% 10% -2Sweden 19 37 -47% 15% -18

32

Note: client payment period, supplier payment period and cash flow tension indicator are for 2010; client and supplier period growth indicators are for 2006-2010.Source: Euler Hermes

Annexe IV

▶ Detailed data, by sector


Chemicals Client Supplier Client Supplier Cash flow payment payment payment period payment period tension period period growth indicator growth indicator indicator

France 59 51 -11% -8% 8Germany 46 29 -3% 1% 17Spain 67 46 -30% -1% 21Italy 93 63 -8% -9% 30United States 61 41 22% 16% 20United Kingdom 30 28 -15% 10% 3Belgium 58 47 14% 7% 12Denmark 57 29 11% 12% 28Norway 40 31 1% 4% 9Sweden 32 24 -7% -9% 8

Construction Client Supplier Client Supplier Cash flow payment payment payment period payment period tension period period growth indicator growth indicator indicator

France 87 57 -6% -18% 30Germany 41 28 -16% -19% 13Spain 174 157 -10% -3% 17Italy 127 114 -1% -6% 13United States 53 43 46% 18% 11United Kingdom 33 38 -2% -10% -5Belgium 82 70 -10% -13% 12Denmark 57 38 -11% -9% 19Norway 63 33 -10% -21% 30Sweden 47 27 -5% 6% 21

Air Client Supplier Client Supplier Cash flowtransport payment payment payment period payment period tension

period period growth indicator growth indicator indicatorFrance 44 44 -2% 8% 1Germany 29 31 2% 14% -2Spain 34 62 -45% 51% -29Italy 29 58 -35% -16% -30United States 21 22 5% 5% -1United Kingdom 17 25 -29% 43% -8Belgium 51 49 47% 12% 3Denmark 15 23 -13% -17% -8Norway 21 19 -19% -30% 2Sweden 12 17 -31% -6% -5

Aeronautic Client Supplier Client Supplier Cash flowcomponents payment payment payment period payment period tension

period period growth indicator growth indicator indicatorFrance 65 49 -5% -14% 16Germany 20 51 -21% 37% -32Spain 153 131 8% -17% 22Italy 62 60 -22% -31% 2United States 67 42 42% -15% 25United Kingdom 40 44 -12% 5% -4

IT services Client Supplier Client Supplier Cash flowpayment payment payment period payment period tensionperiod period growth indicator growth indicator indicatorr

France 95 51 -7% 3% 44Germany 52 25 9% -8% 27Spain 107 61 -14% 14% 46Italy 101 60 -2% -5% 41United States 72 21 16% -10% 51United Kingdom 50 23 0% -12% 27Belgium 84 58 -4% -10% 25Denmark 54 26 -17% 5% 28Norway 64 25 -8% -3% 39Sweden 33 23 -5% -7% 9

Pharmaceuticals Client Supplier Client Supplier Cash flow payment payment payment period payment period tension period period growth indicator growth indicator indicator

France 66 52 -13% -16% 14Germany 46 16 41% -10% 30Spain 85 35 -11% 18% 50Italy 90 40 -6% -15% 50United States 93 38 49% 43% 55United Kingdom 36 31 -1% 7% 5Belgium 63 54 12% 7% 9Denmark 38 20 2% 4% 18Norway 25 16 16% -11% 9Sweden 11 11 31% 25% 0

Automotive Client Supplier Client Supplier Cash flow components payment payment payment period payment period tension

period period growth indicator growth indicator indicatorFrance 54 53 -21% -21% 2Germany 36 24 0% -4% 12Spain 83 52 -18% 2% 31Italy 111 96 3% -2% 14United Kingdom 68 41 -12% -30% 26Belgium 67 49 -17% -14% 18Denmark 55 20 -2% -5% 35Norway 40 27 -33% -14% 13Sweden 51 39 -26% -9% 12

33


Euler Hermes

>ArgentinaEuler Hermes Argentina S.A.Av. Corrientes 299 - 2° PisoC1043AAC CABA, Buenos AiresTel.: + 54 11 4320 7157/77

>AustraliaEuler Hermes Australia Pty LtdLevel 9, Forecourt Building2 Market StreetSydney, NSW 2000Tel.: + 61 2 8258 5108

>AustriaPrisma Kreditversicherungs-AGHimmelpfortgasse 291010 VienneTel.: + 43 5 01 02-0

Euler Hermes Collections GmvHZweigniederlassung ÖsterreichHandelskai 3881020 ViennaTel.: + 43 1 90 81 771

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> BelgiumEuler Hermes Europe S.A. (N.V.)Avenue des Arts—Kunstlaan, 561000 BruxellesTel.: + 32 2 289 31 11

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Euler Hermes

34


> LatviaPlease contact Poland

> LithuaniaPlease contact Poland

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Euler Hermes UMA Inc. (trade debt collection)600 South 7th StreetLouisville, KY 40201-1672Tel.: +1 800 237 9386

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Subsidiaries

Registered office: Euler Hermes Group1, Place des Saisons92 048 Paris La Défense CEDEXFranceTel.: + 33 (0) 1 84 11 53 77Fax: + 33 (0) 1 84 11 54 87www.eulerhermes.com

35


Economic Outlookseries…

N° 1170 > Special DossierRebound in worldtrade in 2010 confirms the shift already underway before the crisis.

N° 1171 > Business Insolvency WorldwideThe fall ininsolvencies is confirmed, but on a modest scale and in uneven fashion.

N° 1172 > Global Macroeconomic ReviewIn the face of slowdowns and turbulence, world economic recovery is going through tumultuous times.

N° 1173 > Global Sectors ReviewGlobal economic recovery continues, but new threats are arising.

N° 1174 > Business insolvency in France (only available in French)The decline ininsolvencies remains modest overall and stillvery uneven, with a high number of cases.The French economic environment - the slowdown continues.

N° 1175 > Global Macroeconomic PerspectivesThe slowdown is confirmed, the weaknesses remain, the risks endure.

N° 1176 > Special DossierGreen Economy.

N° 1177-1178 > Macroeconomic, Risk and Insolvency OutlookOn the edge.

N° 1179 > Global Sectors ReviewLooking for growth where it can be found.

N° 1180 > Business insolvency in France (only available in French)The overall decrease in French insolvencies hides several weaknesses.

N° 1181 > Macroeconomic, Risk and Insolvency OutlookA fog cannot be dispelled by a fan.

N° 1182 > Special DossierPayment periods in Europe: wide gaps

To come:

N° 1183-84 > Macroeconomic, Risk and Insolvency Outlook

njoncture internationale et risques pays

e ralentissement se confirme,es faiblesses demeurent,es risques persistent

www.eulerhermes.com Euler Hermes Economic Outlook is published quaterly by the Economic Research Department of Euler Hermes 1, place des Saison, 92048 Paris La Défense Cedex - Tel. : +33 (0) 1 84 11 53 77

This document reflects the opinion of the Economic Research Department of Euler Hermes. The information, analyses and forecasts contained herein are based on the Department's current hypotheses and viewpointsand are of a prospective nature. In this regard, the Economic Research Department of Euler Hermes has no responsibility forthe consequences hereof and no liability. Moreover, these analyses are subject to modification at any time.

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Mise en page 1 - Euler Hermes · 2019-11-14 · Editorial page 3 Subsidiaries page 33 Economic Outlook series page 35 Le Bulletin Économique du Groupe Euler Hermes is issued ten