1706162489
Lags behind competitors
Most European manufacturers have reduced their inventories in 2023 as the impact of supply chain disruptions eases. This resulted in working capital outflows reversing last year from the path they had taken in 2021 and 2022. Fitch’s baseline corporate forecasts assume the average cash flow margin will reach approximately 1.5% in 2023 and 2024. After that, it will grow slowly due to order delivery and the passing on of increased costs due to inflation.
Shipping companies assume that the unrest in the Red Sea will last longer
The current disruptions in the flow of spare parts and components occur during the annual period when companies are operating at full production capacity. This may increase cash outflows typically seen in the first quarter and delay the recovery of cash flows following the coronavirus shock, particularly if this is due to a decline in production volumes.
As a result, free cash flow margins for manufacturers in EMEA may lag behind their counterparts in other regions.
In addition, rerouting ships will further limit stopping points at major ports, increase the need for transshipment services to transport containerized goods to their final destination, and increase the cost and complexity of supply chain management and shipping.
#Red #Sea #crisis #affecting #recovery #European #companies #cash #flows