Post-summer blues at Spanish companies have been aggravated this year by the country’s economic downturn, which most economists admit will be worse than originally feared.
Tight credit conditions, rising unemployment, consumer uncertainty and inflationary pressures have dented sales and profits across most business sectors, while gross domestic product growth has slowed from 3.8% last year to about 1.7% this year, according to government figures.
The pain has been most acute at Spain’s construction and property groups, where heavy debt loads and sharply reduced cash flow are forcing decision-makers to either refinance or deleverage through asset sales.
Those with heavy exposure to the residential sector, which crashed a year ago, are under the most pressure. In some areas, sales of new homes have fallen about 90% in the last year. Suppliers to the industry – such as brick, tile and furniture makers – are going bust or having to merge.