European business-to-business (B2B) service companies’ operating performance will likely remain sluggish for a third consecutive year in 2016, as the improving economic backdrop in the region has yet to translate into a meaningful pick-up in activity for most companies in the sector, says Moody’s Investors Service in a report published today.”Growth prospects for European B2B services companies are likely to remain muted in 2016 on the back of the modest anticipated fall in regional unemployment and limited euro area GDP growth,” says Knut Slatten, a Moody’s Analyst and author of the report. “That said, opportunities for growth remain in certain countries like Spain. Despite the current slowdown, some emerging markets will continue to exhibit strong growth-rates that will help mitigate ongoing euro area headwinds. Commodity-prices represent only a small portion of input-costs and the recent fall in commodity-prices will only have a modest impact on credit-quality in the sector.”
The uneven recovery across the euro area means that services companies’ Spanish operations will continue to outperform over the next 12-18 months, as the country’s GDP grows faster than the euro area as a whole. Human resources company Adecco S.A. (Baa1 stable), specialist cleaning company Elis S.A. (Ba2 stable) and contract caterer Elior S.A. (Ba2 positive) all reported strong growth in their Spanish/Iberian operations.
Emerging markets will remain a growth engine for European services companies, despite the recent volatility in some of these markets. Danish company ISS Global A/S (Baa2 stable) recorded organic growth of 8% from emerging markets in the second quarter, against 4.6% for the group as a whole, and these markets now make up a quarter of the company’s revenues compared with 18% in 2010.
The material has been provided by InstaForex Company – www.instaforex.com