Debtor delinquency, the need for notarial bonds and the number of judgements have all declined over the past 12 months. This is according to the latest KreditInform barometer, based on a survey of more than 100 major corporations, with the majority from the manufacturing, wholesale and retail, mining and agricultural sectors.
This decline — coupled with the findings of the survey that 79% of the respondents expected the interest rate to remain constant over the next 12 months, compared with 29% in the previous survey — is good news and a reflection of the stable economic conditions for South Africa, says Ivor Jones, managing director of KreditInform.
This is further supported by an increase of 27%, over the previous KreditInform barometer, in the number of respondents reporting that industry sales revenues had remained constant and 57% indicating that their companies had increased overall sales revenue.
“Over a third of our respondents expect profitability to improve over the next 12 months, with over half expecting no change. Only 17% expect a decline in profitability, which can be attributed to those exporters who will continue to be affected by the strengthening rand,” said Jones.
In terms of the finished goods stocks, results show that these had generally increased (33%) or at least remained constant (45%), which is in line with the past barometer.
One significant change in the findings in the latest barometer is the increase in raw material costs, with a growth of 90% of respondents noting this change. Generally, this input cost increase has been small, with producer price inflation showing positive improvements throughout the period.
Product prices have generally held constant (50%); where they did increase it was generally 5% or less. This again reflects a similar pattern to that displayed in the previous barometer. There was a small (4%) increase in the number of respondents indicating that sales revenues had grown or remained constant during the period.
This, according to Jones, is an indication of the general stability and improved business confidence that is currently evident in the domestic economy. This is currently being supported by the favourable local interest and CPI rates.
A look ahead
Looking ahead to the next three months, most companies are expecting the rand-dollar exchange rate to remain constant (45%) or weaken (36%).
This is quite different to a year ago, when some strengthening was expected with 39% of respondents predicting the strengthening of the rand during the second quarter — compared with just 19% in the latest findings.
“In what has been a consistent phenomenon, identified in all barometers so far, sales revenue in general is expected to increase or at least remain constant, with company sales revenue expected to increase in line with, or better than, general industry trends.
“This is a further reflection of the current positive outlook and level of business confidence being experienced in the South African economy,” says Jones.
Finished goods stocks were expected to remain constant (45%) or increase (39%). Raw material costs were expected to remain constant (59%) or increase (38%). Similarly, finished product prices were expected to hold constant (56%) or increase (39%).
Stocks of finished goods were seen to be moving faster than at the time of the previous barometer, with 43% more respondents predicting a reduction in finished goods stock levels. The coming festive season may have some influence here, though. — I-Net Bridge