A still difficult context for companies in this first quarter of 2024. After a very difficult 2023 financial year, with an explosion in the number of bankruptcies, the dynamic seems to be continuing at the start of the year. 17,088 failure procedures were opened between January 1 and March 31, 2024, the highest level over this period since 2015, according to a study by the Altares group published this Wednesday, April 10.
Failures increased by 19.4% in the first quarter of 2024 compared to the first quarter of 2023. “With more than 17,000 defaults, over the first three months of 2024, the average of the pre-Covid decade for a first quarter is exceeded ( 16,700)”, observes Thierry Millon, director of studies at Altares, who adds that “the symbolic bar of 60,000 defects over twelve months was crossed in February for the first time since the summer of 2016”.
The latter is nevertheless intended to be positive. “A slow improvement is taking shape, thanks to a better month of March” he explains, referring to “first signs of calm”.
Disparities by sector…
At the sector level, although the trend remains upward in failures almost everywhere, we nevertheless notice different dynamics depending on the activities. Thus, construction is particularly affected, with a 30.8% increase in failures compared to last year. The same goes for insurance and financial activities (+40.2%) – in reality largely driven by the failures of the latter (+61.5%), while insurance is doing better (-21.4 %) -, or even transport and logistics companies (+29.6%). On the contrary, certain sectors are doing a little less badly, such as information and communication (+ 6.8%) or even industry (+ 9.5%).
When we go into even more detail, certain activities are particularly in difficulty. This is particularly the case for real estate: the number of failures of real estate agencies has almost doubled (+ 95%) this quarter, compared to the quarter of 2023. But we also find other activities, such as the manufacture of clothing. (+58% failures), road transport of goods (+33.9), pharmacies (+78%) and the furniture retail trade (+96%).
On the contrary, certain activities are seeing the number of failures drop, explains Altares. This is particularly the case for bakeries, with a 12% drop in failures in the first quarter of 2024 compared to the first quarter of 2023. But also butchers (-25%), sports centers or clubs (-27%) or even computer programming companies (-13%).
…and by size
Unsurprisingly, in terms of volume, it is the smallest companies that represent the vast majority of failures, accounting for 92% of defects alone. However, the pace is slowing, with an increase of 19% compared to more than 42% in the first quarter of 2023.
The dynamic is especially “particularly tense” for large SMEs (between 50 and 200 employees), whose number of defects has increased by almost 60%, details Altares, who points out that 154 of them have been “subject to of a collective procedure, a number at the highest for more than ten years (156 in the first quarter of 2013)”.
Elements of hope?
However, positive points remain to be noted. The youngest companies – created since 2022 – are holding up better at the start of 2024, with an increase in insolvencies limited to 5.9%. “These structures do not carry the burden of a debt linked to Covid”, puts forward Altares as a possible explanation, specifying nevertheless that they are still suffering “the effects of an unfavorable situation”.
But it is precisely on this last subject that Altares wants to be more optimistic for the future. “Like inflation, the rate of insolvencies also seems to want to slow down at the start of spring,” explains the group. If the economic situation continues with a more accommodating dynamic, the year 2024 “would end with a number of failures, including backups, increasing by 10%, therefore close to 64,000 procedures. That is to say “a high number but not a wall of bankruptcies”, concludes the group.