Saturday, 17 November 2012

Three out of five trading companies cease payments


One in five sole proprietorships will probably cease its activity in 2012. This is less likely for larger companies. In parallel, suspension of payments affects 3 out of 5 trading companies which cannot meet their obligations. This data comes from the Annual Report for trade in Greece in 2012, which will be presented on 19 November by the National Confederation of Hellenic Commerce.

This is the 12th annual report and it represents the changes in the retail sector, specifically examining the development of small and medium-sized commercial enterprises. In parallel, the report analyses basic parameters such as employment, earnings, liquidity, sales of companies, etc. The main comments are negative in terms of all areas the report is based on. The overall decline in the sector is significant, regardless of the company size.
The deep economic downturn has affected business in all its dimensions. The main features are a new reduction in the scope of activities, deterioration of profitability and shrinking of trade capital base. Obviously, the domestic and international environment has a serious negative impact on business investment. For the first time, solid capital investment has fallen in limited liability companies and joint stock companies, while in 2010-2011 there was a decrease in investment in 9 out of 10 companies. Last year, 93,500 jobs in the trade sector were lost, and the total number of employees is now 673,400. For the first time since 1999, employment in the sector is under 700,000. Small firms show greater resistance to job cuts, as 80% of them have not resorted to such a simple solution, but have chosen to retain all their staff.
For the second consecutive year, small businesses prefer to offer goods produced domestically - a trend opposite to that of LTDs and ADs which reduce confidence in local goods. This preference for home-produced goods can be attributed to some of the difficulties related to import of products by foreign suppliers due to the economic crisis. However, this trend, though unintentional, may strengthen the internal market and lay the foundations for a new model of development.
As expected, liquidity - one of the main tools of business - suffered a big drop compared to last year.
Last year's forecasts for firms in 2012 differ from this year's actual assessments. Approximately 8 out of 10 companies admit that sales and other activities have declined compared to what they planned last year. Current prognoses for 2013 reflect entirely the negative climate, as 7 out of 10 companies foresee shrinkage of sales and profits.

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