by Alfredo Ballarini16   Maggio   2014

Silk screen printing industry: an analysis

The industry of screen printing for ceramic tiles has been observed through a representative sample of 10 companies. The survey has showed a decrease for the year 2012 of almost 9%, with a turnover going from around €59 million to €53.8 million.

EBITDA has been dramatically reduced from 4.25% to 1.81% of the produced value due to a reduction of the surplus value and to a higher impact of the cost of labour though slightly decreased in absolute value.

Amortization itself, decreased in absolute value, is acting as margin pressures due to decreased sales which increase management costs. As a consequence EBIT is still negative and, unless exceptional items are envisaged, net profit is bound to be too.

Financial exposure, though worsened by a decreased turnover, remains within the limits of un acceptable risk, but what is lacking is free cash flow  due to zero profitability on one hand and delayed payments on the other; the treasury management showed in the chart indeed points out the need for a time frame restruction of the various positions; collection and payment schedule is unbalanced, with collection delayed compared to payments made.

Forecasts on profitability show a more likeable impact of EBITDA, especially so when loss is more easily manageable and less structured. EBITDA has a 53% chance of going back to – and even overcome – 3.8% of impact on produced value, and only a 2% chance of getting below zero %. But chances of it ranging between -0.1% and 3.8% are still high so the situation is open to any outcome and strong management restructuring is needed.

Summarizing the field’s economic and financial scenario through a unified rating process (although judged with personal subjective parameters) we would have (by simplified calculation) a Standard & Poor’s rating wich is lower than last year BB- rating.