To give an overview of the state in which the European services sector was before the crisis and help assess its possible effects, this report analyzes the annual reports of over 1,300 listed domestic service companies in the European Union and the United Kingdom.
The following service sectors are covered:
- Commercial services
- Consumer services
- Distribution services
- Health services
- Industrial services
- Technology services
- Retail trade
- Transportation
The analysis focuses on the various sectors and highlights individual companies as well to help understand sector differences and key learnings.
First, an overview of the European economy before the pandemic is provided, including ease of doing business scores as well as unemployment rates.
Afterward, based on the data provided in the financial statements of the companies, operating KPIs are examined, such as revenue, expenses, number of employees, and revenue per employee. For instance, the biggest service sector in the European market is the retail trade sector. Its median revenue is over 140 million U.S. dollars in 2019.
Then company balance sheets are analyzed. Solvency and activity indicators, such as debt, cash reserves, long-term debt-to-equity ratios, quick ratio, or asset turnover, help access a companies’ ability to pay their short-term and long-term obligations and give a valuable insight into how well companies in each sector were equipped to overcome a period in which revenue drops. In 2019, the European transportation sector has the highest debt among the other industries with a median of 61.4 million U.S. dollars.
The profitability and valuation of European service companies are also examined by looking at five-year annual revenue growth rates, five-year average net profit margins, EBIT and EBITDA margins, as well as return on assets, and price-to-earnings ratio. High profitability and absolute profits also provide companies greater security in difficult times.
Finally, the study provides an overview of each analyzed sector by listing the most important key performance indicators and comparing them to the overall services sector average.
The complex findings of this report are explained in detail which help answer questions such as how service sectors within Europe differ in a financial aspect and what implications these differences have on the sectors’ preparedness for a crisis.
For an overview of the financial state of the European manufacturing sector, take a look at our
European manufacturing sector: financial insight report.
