Transcript: Major findings from the SME Compass 2009
Deloitte Belgium Insights podcast
Welcome to the Deloitte Fiduciaire SME podcast. My name is Nikolaas Tahon and I am the partner responsible for services to SMEs at Deloitte in Belgium. This edition of our podcast is about the findings from our annual KMO Kompas survey of small and medium-sized companies in 2009.
Set against the background of the KMO Kompas survey in 2008, we can see that the financial situation of Belgian SMEs has worsened significantly.
For the first time in many years, real growth was negative, a good deal less than even the growth in inflation. To begin with, we can see that only 40% of Belgian SMEs were able to achieve any positive real growth, whereas as it was still at 60% in 2007. Only the construction industry recorded any real rise in income in 2008, managing to perform in excess of 9%. Every other sector saw a significant decline in turnover.
All of this has also resulted in a dramatic deterioration in operating cashflow, which is the oil that lubricates the SME engine. Whereas in the previous year, in 2007, there was a growth in cashflow of almost 2%, we can see that this year Belgian SMEs lost almost 9% in cashflow, ending up with only 93% cashflow in comparison with the year before.
All of this can also be seen from the yield figures. For example, returns on capital employed fell from 8.8% in 2007 to 7.4% in 2008, creating a loss in excess of 16% over the year.
The repayment ability of Belgian SMEs also weakened significantly. The past year saw a drop of more than 8% in the ability of small companies to repay their debts. This means that over the year, operating cashflow fell by over 8% in relation to financial obligations.
All this doom and gloom leads us to a very downbeat conclusion. Whereas in previous years Belgian SMEs had created value year after year – and in 2007 even managed to generate over 13% greater value than the year before – in 2008, the value of our small to medium-sized enterprises fell by almost 20%. However, compared with the BEL 20 index, SMEs did perform better, because over the year, the BEL 20 fell by more than 29%, whereas Belgium’s SMEs were able to restrict their decline in value to 20%.
Taken altogether, we can see that the 4 months of crisis at the end of 2008 have already had a significant impact of the financial situation of Belgian SMEs – and we can expect 2009 to present an even worse picture.
We will, of course, keep you notified of any developments.