The French chemicals sector has proved to be resilient in recent years, despite subdued growth rates of the French economy.
Production growth is expected this year, supported by increased investments, low prices of oil, natural gas, and electricity, a benign EUR/USD exchange rate, and low interest rates. Specialty chemicals, in particular, are expected to perform well due to increased demand for paints, essential oils, and lubricants.
Moreover, French chemicals production is concentrated around a few large international players who have wide access to financing and diversified markets. The danger of losing competitiveness has clearly led to some strategic restructuring measures by French chemicals businesses, such as focusing on core business activities and diversification of activities into specific segments with higher margins.
The volume of protracted payments and non-payment is expected to remain low.
The industry is characterised by a low level of insolvencies. It is expected that the number of insolvencies will decrease further this year. However, given the value chain structure of the sector, insolvency of a major player would have a severe impact on suppliers.
The labour costs are high and the regulation for the chemicals industry is stricter in France than in most other countries. As France’s GDP growth stagnates at 1.5%, the corporate outlook is increasingly strained by supply constraints in terms of labour supply and production capacity.
Meanwhile, the French construction sector, one of the major chemicals buyer industries, still shows no comprehensive rebound.
The weaker external environment and trade policy risks, especially for the automobile sector, next to domestic protests, also contribute to deteriorating business sentiment.
Trade receivables risk mitigation
Should your debtors fail to meet their payment obligations, Atradius Collections can help by initiating a professional collection process. We focus on the relationships between you and your debtors at all times.
Our team of collection specialists carry out the collection process in-house, contacting the debtors both verbally and in writing whilst adhering to state laws. When there is a case of dispute, we aim to reach an amicable solution between you and the debtor. We do this by analysing all contractual documents (e.g. signed contracts, orders, confirmations, invoices and delivery notes, as well as all standard terms that have been agreed upon).
All investigations are completed with the assistance and agreement of our legal team.
If third-party collections do not yield results, we would consider taking legal action after consulting with you.
The first step is sending a letter informing the debtor of our decision to start legal proceedings. Our legal team will decide the best procedure to be undertaken, depending on the documents that are available in the case and the position of the debtor (e.g. acknowledgement of debt, dispute, litigation).