Agriculture Is The Riskiest Sector For A Fourth Consecutive Year

A total of 240 Bulgarian companies registered for  bankruptcy last year, which is a 31 per cent mark-up on the previous year, according to the regular report of Coface, a world leading company in credit management.

The agriculture and forestry sector heads the ranking, accounting for 22.5 per cent of declared insolvencies. Next comes the retail trade – accounting for 15.83 per cent – and then comes the construction industry with 6.25 per cent.

The building sector is among the top three most hazardous industries in Bulgaria. Hence, it's expected  that the number of bankruptcies will rise by 50 per cent in 2008, primarily due to ongoing massive unsound investment in holiday properties along the Black Sea coast and in the mountains, said Kamelia Popova, managing director in Coface. She noted that construction is also the riskiest sector in Central and East Europe (CEE) and that the number of Bulgarian bankruptcies is likely to reach regional levels soon.

The transport and warehouse sector, finance, insurance and consultancy also registered a considerable number of insolvencies. The service sector as well as wholesale trade and food and beverage production are also cited as vulnerable activities.

Chemicals, non-ferrous production and the pharmaceutical industry are deemed the lowest risk industries because they are export-oriented.  They have also received a large investment in a bid to modernise them. Companies in these segments have also forged long-term trustworthy relationships with their partners.

Given that the level of inter-company debt currently exceeds 50 billion leva, Bulgaria actually has a relatively low percentage of registered bankruptcies. Popova believes that this could be attributed to the significant difference between the total number of operating companies and the total number of  registered ones (240 000 against 1.2 million) as well as the long and cumbersome legal procedure for declaring insolvency.

In terms of regional risk, Sofia was the city with the largest share of bankruptcies (19 per cent), followed by Plovdiv (nine per cent) and then Pleven (eight per cent).

The top three largest companies (according to turnover) to declare insolvency in 2007

1. Zlatni Pyassutsi-Travel Ltd – tourism sector
2. Mlechen rai-99 Ltd – ice-cream producer
3. Thermosystems Complect Jsc – machine manufacture

Coface has been preparing reports on bankruptcies of Bulgarian companies since 2004.

In terms of regional risk, Sofia was the city with the largest share of bankruptcies (19 per cent), followed by Plovdiv (nine per cent) and then Pleven (eight per cent).