WALTHAM, MA, 14 March 2007 — Global Insight, the world's leading company for economic and financial analysis and forecasting, announced today that corporate bankruptcies in the European Monetary and Economic Union (EMU) are expected to increase 8% in 2007, after falling 12% in 2006.The stronger euro and expected higher interest rates, along with slower growth in key export markets, will raise operating and credit pressures on a variety of European sectors.
The industries that face the greatest increase in risk ratings in 2007 are in the raw materials, metals, and energy sectors, as well as several that are dependent on exports. Deceleration in the United States and China sets the scene for a tougher 2007, impacting producers of energy, raw materials, and intermediate goods. Growth risk and profitability risk will increase as lower volumes in process industries reduce margins.
The energy sector in Europe and producers of minerals and basic materials are not expected to see the pricing gains of previous years. Companies exposed to markets for industrial chemicals, particularly basic chemicals subject to tough price competition, as well as plastics, glass, and metal goods, are expected to face high input costs and possible weakness in output prices.
The European capital goods sector has greatly benefited in the past few years from higher demand from Asia and emerging economies in other regions, with falling risk achieved through 2006 for several of the capital machinery sectors. However, in 2007, some of the producers of capital equipment, such as machine tools, engines, industrial electronics, turbines for power generation, as well as basic metals, will face higher risks. The medium-term outlook for aircraft assembly profitability has also worsened as a result of higher restructuring costs and the weaker dollar.
Among the sectors whose risks profiles will hold steady or even improve in 2007 are information technology services such as computer services and programming, as well as sub-industries within computer and electronic equipment. Overall risks in the business service industries remain relatively low, and improvement in the industry risk profile for insurance, retail, and recreational sectors are expected in Europe in 2007.
Global Insight's Sector Risk Ratings are produced as part of our World Industry Service and are updated quarterly. These risk ratings are designed to assist credit analysts and asset managers in identifying the best prospects for movements in sector credit quality on a comparable basis across industries and countries. For more information, please visit http://www.globalinsight.com/corpbankruptcies.
Mark Killion, CFA, MD World Industry Sve, Global Insight
+ 610 490.2547 (firstname.lastname@example.org)
Geoffrey Skipper, Prod. Mgr, Global Insight (Internl)
+ 44 (0) 20-7452-5626 (email@example.com)
Catarina Walsh, Media Relations, Global Insight (Internl)
+ 44 (0) 20-7452-5183 (firstname.lastname@example.org)
About Global Insight:
Global Insight, Inc. (http://www.globalinsight.com/) is a privately held company that brought together the two most respected economic information companies in the world, DRI and WEFA. Global Insight provides the most comprehensive economic and financial information available on countries, regions and industries, using a unique combination of expertise, models, data and software within a common analytical framework to support planning and decision-making. Through the world's first same-day analysis and risk assessment service, Global Insight provides immediate insightful analysis of market conditions and key events around the world, covering economic, political, and operational factors. The company has over 3,800 clients in industry, finance, and government with revenues in excess of $95 million, over 600 employees and 23 offices in 13 countries covering North and South America, Europe, Africa, the Middle East, and Asia.
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