Construction sector in Lithuania twice as risky as other businesses
Despite rising incomes and headcount, seizures amount to almost EUR 110 million
19% of construction companies are in the high and top bankruptcy classes and 31% are at risk of late payment, according to a recent study by Creditinfo Lithuania. Despite the number of employees and the rapid growth in revenues, the sector has already recorded 169 company bankruptcies this year. Nearly 11,000 debts have been registered, totaling more than €91 million. 1049 companies are subject to asset seizures amounting to almost €110 million.
There are currently 19850 construction companies registered in Lithuania, employing a total of almost 110 000 workers. At the beginning of this year, the number of companies in the sector was 20367, creating 108.2 thousand workplaces, while in 2023 the figures were 19167 and 107.7 thousand respectively.
According to data provided to the Centre of Registers, in 2023, construction companies in Lithuania together generated revenues of more than EUR 10.6 billion, representing 14.7% of the country’s GDP. In comparison, in 2022, construction companies’ gross revenues were 22.6% lower at EUR 8.7 billion.
Following the data provided by the companies, the top ten construction companies in terms of revenue in 2023 are Kauno Tiltai (EUR 192.9 million), YIT Lietuva (EUR 191.1 million), Fegda (EUR 184.2 million), Conres LT (EUR 117.3 million), Infes (EUR 107.3 million), Green Genius (EUR 102.7 million), “Merko statyba (EUR 97.8 million), Žilinskis & Co (EUR 94.4 million), Autokausta (EUR 94.3 million), Stiemo (EUR 87.4 million).
Despite the year-on-year increase in revenues, the construction sector is twice as risky as any other business in Lithuania. Currently, 19% of construction companies are in the high and highest bankruptcy classes, while almost one third (31%) are at risk of default. The sector has a similar risk profile from the beginning of 2023. Over the last 5 years, the highest risk levels were reached in 2020 and 2021, when a quarter of construction companies were close to bankruptcy and almost half of the companies (47%) were at risk of default.
In comparison, the average riskiness of all Lithuanian businesses is twice as low: 9% of companies are in the high and highest risk classes, while 16% are at risk of default.
Since 2007, 4,497 construction companies have gone bankrupt in Lithuania, with an average of 254 each year. The highest number of bankruptcies was recorded in 2009, when 445 companies became insolvent. This year, 169 construction companies went bankrupt between January and September.
The average amount of seized assets increased by 34.7% to EUR 105 thousand
Currently, 10892 debts of construction companies are registered in the credit bureau system, with a total amount of EUR 91 million and an average debt of EUR 8 360. Compared to the beginning of January 2024, the number of debts exceeded 13,000, the total amount was €164 million, and the average debt size was 1,5 times higher (€12,602).
According to the data of the Credit Bureau, there are currently 2209 seizures on construction companies, including 1043 seizures with monetary value, for a total amount of EUR 109.8 million. The number of construction companies with at least one attachment is 1049 and the average attachment per company exceeds EUR 105 000. At the beginning of this year, the number of seizures was 2,702, with 1,293 seized companies, and the average amount of a single seizure was EUR 68.7 thousand, 1/3 (34.7%) lower than at present.
“If you notice in the credit bureau’s systems that a business partner or client has seizures, please be careful. It is a serious sign that the company is at risk of defaulting on its payments,” advises Rasa Rasickaitė, Risk Assessment and Management Expert at Creditinfo Lithuania. Asset seizure is a compulsory restriction of the ownership right to property, which can be applied by state authorities to secure evidence, civil action, possible confiscation of property, as well as the collection of fines and unpaid payments, satisfaction of creditors’ claims, and fulfilment of other claims and liabilities. Therefore, when you see a registered seizure, you should also pay attention to other available information, such as court information, debts to creditors, the tax authorities and the social security system.”
According to Rasickaitė, in the event of a seizure of assets, it is advisable to find out the reason for which the seizure has been registered, what assets have been seized, and whether the seized assets are allowed to be disposed of in the course of the company’s business. If there are doubts about the ability of the business partner to pay, it is advisable to ask for prepayment or guarantees.
