European Industrial Companies See Strong Demand But Supply Chain Pressuring Revenue says Fitch

Supply chain disruptions continue to hamper Europe, diversified industrial companies with revenue crimped by semiconductor shortages and longer shipping times. Fitch Ratings sees this as a short term event with demand strong, and likely to continue

Supply chain disruptions continue to hamper Europe, diversified industrial companies with revenue crimped by semiconductor shortages and longer shipping times. Fitch Ratings sees this as a short term event with demand strong, and likely to continue

Germany Porsche Production

Porsche Assemby Line – Germany

Fitch-rated sees these companies to catching up on production volumes and revenue later in 2022.

Fitch Note Below

Large order books in the European diversified industrials sector are driven by pent-up demand following relaxation of many Covid-related restrictions, investments in the energy transition, and structural trends such as automation and digitalisation.

New orders intake for the next year could even be subdued by producers’ selective approach, aiming to ensure timely deliveries. Many companies’ production and delivery capacities have been affected by their capex cuts and inventory burn-down during the pandemic, which further constrain their ability to catch up with increased demand.

 

 

Europe Industry Revenue Fitch 10 26 21

The supply chain disruptions are resulting in longer lead times to convert order books into revenue.

The disruptions in the sector deteriorated towards end-3Q21 and we expect this to continue in 4Q21. The fourth quarter is usually the strongest for diversified industrials and continued disruptions could materially affect full-year growth.

Europe Industry Inventory Fitch 10 26 21

We still expect revenue increases to be in the high single-digit or low double-digit percentage range for the industry in 2021 compared to 2020, which is lower than we originally anticipated as the sector is still recovering from the pandemic-driven downturn. The full recovery could therefore be delayed until the first half of 2022.

However, we believe the affected revenue will be postponed rather than lost as underlying demand is likely to remain healthy.

Source: Fitch

From The TradersCommunity News Desk

Leave a Reply

Your email address will not be published.