For today, we decided to bring you an overview of the indebtedness and capital structure of Romanian companies using H1 2020 results.
For today, we decided to present you with a comparison of Romanian companies. To be specific, we observed how indebted Romanian companies are by comparing net debt to EBITDA (trailing 12 months) and % of debt financing. We also added how much additional debt these companies could take in order to reach 3xEBITDA.
Note that financials were excluded from the overview.
Net Debt/ EBITDA (trailing 12m)
Among the 11 observed companies 5 operate at a negative net debt, meaning their cash position (short term financial assets + cash and cash equivalents) exceed their financial debt. To be specific, these are: Conpet, Nuclearelectrica, Romgaz, OMV Petrom and Transelectrica.
MedLife has the highest indebtedness (of the observed companies) of 4.39x EBITDA, followed by Digi with 2.54x EBITDA. Next come Purcari with 1.4x EBITDA and Sphera Franchise Group with 1.12x EBITDA. Despite the fact that Sphera’s H1 2020 EBITDA was severely hit by the pandemic, the company’s net debt relative to its trailing 12m EBITDA is still very low.
We also observed how much additional debt companies could take to reach 3xEBITDA which is in the region considered as a breaking point and red flag in terms of indebtedness.
This analysis provides information on the companies’ potentials for takeovers, but also the potential for an internal growth through additional borrowing. It’s important to point out that companies with net debt above 3xEBITDA are not necessarily too indebted as not all them are equal and their industries differ (and the other way around – certain industries are not prone to hold any leverage).
Potential Additional Debt (HRK m) to Reach 3x EBITDA
Turning our attention to the capital structure, of the observed companies, 9 of 11 are mostly equity funded. Of those, Conpet leads the list with 100% equity, followed with Romgaz (99.9%). On the flip side, Digi Communications is almost entirely debt funded with a debt representing 94.8% of the capital structure.
Capital Structure of Romanian Companies