About 9000 business at risk of financial failure: Report
THE number of businesses at high risk of failure has fallen by more than a quarter during the past year, new research suggests, but some major Australian companies are at increased risk.
According to a study by insolvency specialist SV Partners, almost 9000 business nationally have a high or severe risk of financial failure in the next year. That compares to more than 12,000 a year ago.
The insolvency outlook re- port also found that seven of the high-risk companies had annual turnovers of more than $1 billion, indicating there is a potential for hundreds of suppliers, creditors and staff to be affected if they were to collapse. This compared to six companies with turnovers of $1 billion or more a year ago.
SV Partners does not disclose the names of the companies it believes are at high risk.
Overall, the percentage of businesses at high or severe risk of failure the next 12 months has fallen from 2.4 per cent a year ago to 1.8 per cent, SV Partners believes.
Among other companies, 21.5 per cent were classified as being at medium risk and 76.7 per cent at low risk.
Victorian businesses fare slightly better, with only 1.6 per cent of companies at high risk of failure.
That compares to 2 per cent a year ago.
Within Victoria, however, there were now two, high-risk companies with turnovers of $1 billion or more, SV Partners director Michael Carrafa said.
One was a “non-store retailer” and the other a manufacturing company.
“Larger retailers and manufacturers are not immune to the industry pressures that impact small and medium-size businesses,” he said.
According to the group’s March report, the industries most at risk broadly are construction, accommodation and food services and retail.
The construction sector has the biggest number of companies at risk nationally, SV Partners says, accounting for 1192 nationally, followed by accommodation and food at 1084 and retail at 916.
In Queensland, the percentage of companies at high risk fell from 2.8 per cent to 2.2 per cent in the year to March.
This included one company — in the mining sector — with a turnover of $1 billion or more.
Those classified as being at high to severe risk are companies in distress, where the chances of bringing the business out of distress are judged to be low.