In order to better analyse and assess the effects of the Corona crisis on Austrian companies, the Kreditschutzverband von 1870 conducted a comprehensive survey. In a video interview, Managing Director Ricardo-José Vybiral shared with us his findings from the survey as well as his learnings from the past six weeks.
Insights into the survey conducted by the KSV
After six weeks of shutdown, a cautious return to normality is slowly taking place in Austria these days. Under certain precautions, people are allowed to return to their offices and production facilities. The Kreditschutzverband von 1870 recorded the actual economic effects of the crisis on Austrian companies in a comprehensive survey. Managing Director Ricardo-José Vybiral summarises the results of the survey as follows: “We can see from our survey that about two thirds (68 percent) of the companies are very strongly or rather strongly affected. About 27 percent are particularly hard hit. Two to three percent are not affected at all and the remaining companies are rather less affected”.
But if you look at the insolvency figures, Vybiral explains, an exciting phenomenon emerges. “Usually there are around 100 corporate insolvencies per week. This figure has now dropped to half because companies take advantage of the rescue packages by the government. This is additionally enhanced by the fact that the biggest insolvency applicants, the tax office and the health insurance funds are currently not filing for insolvency. So the companies are cautious and are making very active use of the opportunities offered by the rescue packages,” he sums up. However, one should not be deceived by these figures, as the true dimensions of the insolvency wave will only become apparent after the summer months.
On the positive side, however, Ricardo-José Vybiral would like to emphasise the economic strength and capital strength of Austrian companies. “Since 2015, the equity ratio, which was already quite high before that, has risen by another two percent every year. And this capital strength is currently saving and helping us a little bit to get through this crisis. Austrian companies have learned a lot, they have seen that the equity ratio has to be increased in order to weather such storms well,” Vybiral says.
Medium-term procedures to get companies back on track
While it should be relatively clear to most companies what short-term measures need to be taken, there is still a lack of clarity in many Austrian companies about what to do when cost management and resource management are no longer sufficient. Although it is of course easier said than done, Vybiral highlights liquidity as the first point here. “In addition, it can also be crucial to establish and maintain a strong proximity to your partners, suppliers, customers and employees. We are in a time of social distancing, so this proximity is even more important,” says the CEO. Although a certain lethargy quickly sets in during such a challenging time, it should be avoided. “It is imperative that the company leaders remain in control and look into the future.”
Investments by companies
The crisis has also had a dramatic impact on the propensity of companies to invest. Only around 13 percent of companies will actually implement the measures planned for 2020, which will lead to an investment backlog. “On the positive side, however, it should be noted in this context that companies had already built up equity capital before the crisis. We might have criticized this before Covid-19, but now it helps us to at least allocate the remaining investments correctly,” says Vybiral.
Motivation of employees
Although the sense of solidarity that has decisively shaped our society in recent weeks can also be felt in the companies and their respective teams, the success of a company stands and falls with the motivation of its employees, even in times of crisis. “One should definitely try to stay in dialogue and draw as clear a picture of the future as possible. But we should not draw the same picture as before, because the world will not look the same as before. We must identify milestones and new paths, rethink processes and look at how we can approach things differently in the future. I do believe that with a vision, a mission and clear scenarios we can have a positive impact on our employees,” Vybiral explains. The decisive factor is the will to make a difference together. However, the CEO emphasizes that it is the task of the company leaders to ignite and maintain this.
The crystal ball
What the rest of this challenging year could look like can only be guessed at the moment. Nevertheless, Ricardo-José Vybiral dares to take a look into the crystal ball: “When we look at our business location and try to rebuild things with strength, energy and courage, then there will be opportunities,” he summarizes. Nevertheless, he warns against building on the fact that these opportunities will fully compensate for lost sales. “But we see, for example, that before the crisis two thirds of Austrian companies did not have a digital agenda. But in our survey we saw that the most important issue at the moment is digitalisation,” Vybiral says. The managing director of KSV1870 would also like to conclude the interview with a positive remark: “I believe that Austria as a business location is in a pole position internationally due to its strong capital structure and the way the government has taken measures, and that we can therefore get started again more quickly. We have good chances, because before the crisis we were already doing great.”