Press Area, Featured
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Press Area, Featured
Paris, November 27, 2024 – Cartan Trade, the insurtech specializing in credit insurance, announces solid results for 2024 and unveils its strategy for the period 2025-2027, while adapting its Executive Committee.
2024 Performance
In line with its objectives, Cartan Trade’s results meet expectations in all its markets (France, UK, Benelux, Italy) both in terms of gross written premiums (GWP) and the claims/premiums ratio (Loss Ratio).
The company’s portfolio now includes nearly 300 clients, divided into 38% global policies, 34% Top up and 28% Single Risk, with a total commitment of €10 billion, reflecting the growing interest in its innovative solutions in a rapidly changing market.
2025-2027 Strategic Plan: The 3Ds
To accelerate its growth, Cartan Trade is focusing on three strategic axes:
Drive: Continue the sustainable growth of premiums and EBITDA while maintaining control of the Loss Ratio and developing the quality of services.
Disrupt: Accelerate investments in new technologies and data to enrich underwriting and risk monitoring, while focusing on innovative partnerships, in particular to address the SMEs needs.
Develop: Attract and integrate diverse talents to support its growth model and promote credit insurance as an attractive and innovative sector.
Changes within the Executive Committee
To support this strategy, Cartan Trade announces a new organization on of its Executive Committee:
◆ Christophe Pennellier (Director of Risks, Claim and Collection) strengthens his role in managing coverage and relations with capacity providers (insurers and reinsurers).
◆ Islam Madani (CTO) and Julien Madec (CFO), who recently joined the team, will lead innovation and operational excellence projects.
◆ Anne Smadja (Director France), Matthew Wells (Director UK, Ireland and Benelux), and Paolo Cioni (Director Italy) also join the Executive Committee. After successfully developing their markets, they, will play a key role in the growth and consolidation of Cartan Trade in Europe.
◆ Finally, Alice de Brem, Sales, Distribution and Marketing Director, will leave the company to take on new challenges after having contributed significantly to its success.
These changes, which are effective immediately, aim to support the growth of Cartan Trade while strengthening its position as a key player in the market.
A renewed commitment to our partners
After nearly 3 years, Cartan Trade reaffirms its commitment to its partners and customers, with a solid and optimized organization to meet the needs of the market and offer ever more adapted and innovative solutions.
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About Cartan Trade:
Created at the end of 2021, Cartan Trade, the new insurtech specializing in trade credit insurance, was born from a strong conviction: to democratize credit insurance among companies, most often uninsured, by offering solutions combining traditional and more modern solutions.
With the support of recognized financial partners, SV One SAS (SCOR Group’s venture fund), Bpifrance, through its Large Venture fund, Quattro Holding (an investment holding company bringing together several qualified credit insurance personalities in Europe) and Intact Financial Corporation, one of the leading providers of specialized insurance in the world, Cartan Trade is an entrepreneurial, collective and sustainable project.
After its launch in France in January 2022, Cartan Trade has grown very quickly with the opening of new locations in Benelux (November 2022), Italy (December 2022), and the United Kingdom in February 2023.
Partner of more than 70 brokers, Cartan Trade supports nearly 300 companies of all sizes in Europe, generating their turnover in France or internationally, with a complete range of fully digitalized solutions.
Find out more about Cartan Trade here
Press Area, Featured
Note from Christophe Pennellier, Senior VP & Chief Risk Officer at Cartan Trade, the insurtech democratising credit insurance, particularly for SMEs in Europe.
Cartan Trade stands out with its innovative and digitalized approach, offering modern and tailored solutions for businesses of all sizes. The company provides daily insights to European decision-makers, supporting and securing their business.
With over 30 years of experience, Christophe Pennellier plays a key role in risk management, contributing to Cartan Trade’s mission of making credit insurance more accessible and effective.
Today, Christophe shares his enlightened view on the current economic situation in France.
MAIN ECONOMIC TRENDS IN FRANCE
◆ French business leaders’ confidence took a hit in 2024. Ongoing uncertainties around public policies, budget issues, and the urgent need to reduce public deficits are placing considerable pressure on an already fragile growth outlook.
◆ Recent announcements on reducing public deficits (from 6.1% to 5% by 2025), coupled with cuts in public spending and increases in taxes, are expected to negatively affect both investment and consumption.
◆ In this context, France is under increased scrutiny from financial markets and rating agencies, driven by experts’ skepticism regarding the new deficit trajectory.
◆ French debt has become pricier with rising interest rates for government bonds (OAT), now surpassing those of Spain and Portugal. Notably, as of the second quarter of 2024, around 54% of French public and private debt securities were held by non-residents, making France particularly vulnerable to the perceptions and decisions of these foreign investors.
◆ The global context is filled with several geopolitical uncertainties: the upcoming elections in the United States, tensions in the Middle East, and the Russia-Ukraine war. This complex mix has significant repercussions on the French economy.
In this unstable economic environment, business leaders are in a wait-and-see approach and delay their investments.
FOCUS ON DIFFERENT SECTORS
The sectors where we do not anticipate any deterioration in 2025:
◆ The agri-food sector remains a cornerstone of the French economy. France is still recognized as an agricultural powerhouse, contributing significantly to national exports. Geopolitical tensions are adding pressure on agricultural prices. Meanwhile, climatic phenomena, such as El Niño and heavy rainfall disrupting the 2024 harvests, introduce risks that could affect an otherwise positive growth cycle.
◆ The energy sector needs significant investments to shift France’s energy mix, which remains too reliant on carbon (60% of consumption). Renewable energies are steadily increasing their share due to climate policies. The role of nuclear energy, accounting for 36% of the energy mix, provides France with internationally recognized expertise. Investments to modernize and expand the nuclear fleet offer promising opportunities.
◆ The pharmaceutical industry is experiencing a dynamic year in 2024, driven by innovation. International demand remains strong in this sector, dominated by “Big Pharma” companies like Sanofi. The development of social insurance mechanisms in countries that lacked them before the Covid crisis, offers promising opportunities. However, competition in the generics medication market is fierce.
For other sectors, we are facing high to very high risks.
◆ The construction sector has been the hardest hit by the rise in failures over the past two years. Several factors explain the decline in new constructions and activities: high interest rates, a sharp decrease in land investments, difficulty for builders and craftsmen to pass on material and energy costs, and a drop in real estate transactions among individuals.
Initially, new housing was the most impacted by this slowdown, but now renovations are suffering as well, despite the significant need for thermal renovations and building upgrades. The instability of aid in this sector, with frequent changes in tax conditions and access to subsidies, along with their reduced attractiveness, deprives stakeholders to plan and initiate projects confidently.
Finally, the « Zero Net Artificialisation » (ZAN) policy limits and makes it difficult to initiate new projects. The demand for housing remains high in France. A decrease in interest rates along with a loosening of bank policies on home loans could provide some relief in 2025.
◆ The automotive industry is currently under pressure due to a significantly slowed market in 2024, with a drop in electric vehicle sales. This slowdown comes at a time when all manufacturers are dedicating a substantial portion of their investments to electric engines.
The 2035 deadline for banning the production of new combustion engine models is pushing automotive manufacturers to invest heavily in electric engines and adapt their industrial tools. The high cost of electric vehicles remains a significant barrier to their purchase. Additionally, implementing incentives and subsidies is complex, with frequently changing conditions that make buyers hesitant.
Additionally, Chinese competition in the vehicle market remains very aggressive. The customs barriers set up by Europe are effective for now, but China’s pressure and its desire to produce within the EU could weaken Brussels’ position.
The rising energy costs are straining the automotive sector, impacting bottom lines for 2024 and putting additional pressure on subcontractors. Many of them are already grappling with increased failures due to these cost hikes.
The reduction in interest rates, manufacturers’ latest efforts on electric vehicles, the need to decarbonize the automobile fleet, the renewal of product offerings, and the enthusiasm for vintage vehicles are all positive elements for the sector. However, the transition remains long and costly, especially under the increasing pressure from non-EU competition.
◆ The metallurgy sector is impacted by the difficulties of the Chinese economy, the world’s largest steel producer (55% of the steel produced in 2023). The real estate and construction crisis, the primary market for this steel production, has led China to massively export this steel, causing a sharp drop in prices since the summer of 2024. Steelmakers worldwide are being hit hard by these price drops during a period of industrial slowdown and significant investment needs (notably for decarbonization). Some players have already reduced their production capacity, and some have even ceased operations, such as Huachipato, Chile’s leading steelmaker.
Traders and resellers, who bought inventory at high prices, are now facing significant devaluations. This situation puts a strain on their financial stability.
The current economic context in France is uncertain. Growth is likely to continue slowing in 2025 due to unstable domestic policies and ongoing geopolitical tensions. This environment impacts both business leaders and households negatively, leading to high savings rates that detract from production.
INTERNATIONAL CHALLENGES FOR THE FRENCH ECONOMY
France’s position is challenged by its continuous failure to meet Eurozone convergence criteria. With none of the proposed plans hitting the mark, France is now under scrutiny for excessive deficits. Rating agencies have placed France on a negative outlook, and a downgrade would indeed increase debt costs. While the latest OAT issuances were well received, the widening spread with German rates underscores the rising debt burden.
Germany is a major economic partner for France and a key driver of the Eurozone. The slowdown in Germany, particularly due to decreased exports to China and Russia, poses a significant concern. Germany’s challenges are compounded by its strategic decision to phase out nuclear power, leading to higher energy costs and dependence on Russian energy. This, combined with its saving-oriented economy and demographic issues, creates a complex situation affecting the broader European economy, including France.
The international environment remains a significant factor of instability for 2025 forecasts. The upcoming US elections bring uncertainties, the ongoing conflict in Eastern Europe continues to be problematic, and persistent tensions in the Middle East threaten oil prices and disrupt international trade in the Gulf of Aden. Additionally, China’s economic recovery efforts and the growing pressure on Taiwan could become a new point of conflict, potentially destabilizing the electronics market.
On a more structural level, Europe is lagging in technological innovation behind the United States and Asia, particularly in areas like AI. The Draghi report highlights this gap and the potential risks, such as investment being diverted to more attractive regions and a brain drain of talent. The call for a massive EU investment plan underscores the urgency, but the divided stances among European countries, due to varying budgetary and debt situations, complicate the issue. This technological gap is a significant threat to Europe’s economic future.
INNOVATION: A DRIVER OF ECONOMIC RECOVERY
Innovation is often seen as a key driver for economic recovery because it shows that companies are optimistic about the future and willing to invest to meet new market demands.
However, it’s important to note that these investments tend to amortize slowly, making it a risk without guaranteed outcomes.
This delicate interplay between potential growth and inherent risk underscores why innovation is such a crucial, yet demanding, driver of economic recovery.
CREDIT INSURANCE: A LEVERAGE IN THIS CONTEXT
In recent months, we’ve observed an erosion of growth, a rise in failures across most European countries, particularly in France, and a recent study by the Banque de France reports a slippage in supplier payment terms, contradicting the LME law obligations.
In this context, credit insurance can provide a crucial visibility into the financial health of buyers and protection against unpaid invoices. This helps businesses secure transactions and navigate more smoothly in an uncertain economic environment, particularly useful in our current context.
Cartan Trade has a general underwriting policy that takes into account sector-specific micro-events and the situation of each company. It is essential in such circumstances to return to the fundamentals of cash management to protect one’s business.
After a period of enjoying low-cost credit access, it’s indeed crucial for businesses to return to sound cash management practices to ensure financial stability.
◆ This requires precise management of payment terms, which are deteriorating once again in France.
◆ After benefiting from state-guaranteed loans (PGE) and experiencing comfortable cash levels, companies now need to focus on securing their accounts receivable. This ensures liquidity and stability in financing their operating cycles, especially as payment terms in France are once again becoming more challenging.
◆ Finally, securing supplies during difficult economic times is crucial to maintaining operational continuity and minimizing risks.
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Market Study, Press Area, Featured
The construction sector is a cornerstone of the EU economy. It contributes around 9% of the EU’s GDP and provides direct employment to 18 million people and indirectly supports 24.2 million jobs. This sector in the EU is made up of approximately 5.3 million businesses, with over 99% of them being small and medium-sized enterprises (SMEs).
This highlights its significant role in driving economic growth and providing employment opportunities across Europe. But, its impact extends beyond economics, addressing critical social, climate, and energy challenges.
KEY CHALLENGES FACING THE CONSTRUCTION SECTOR IN EUROPE.
Improving Environmental Sustainability
◆ Aging Building Stock: Many buildings in Europe are old, leading to high energy consumption.
◆ Implementing new technologies and methods to improve productivity and sustainability.
◆ Low Renovation Rates: Increasing the rate of renovations is crucial to improve energy efficiency and reduce emissions.
According to Arthur D.litte, the renovation of 35 million buildings by 2030 presents a tremendous opportunity for the European construction sector. This ambitious goal is part of the EU’s broader strategy to improve energy efficiency and reduce carbon emissions, aligning with the European Green Deal.
◆ Promoting Energy Efficiency.
◆ Reuse and Recycling: Encouraging the use of recycled materials and reducing waste can help create a more sustainable construction ecosystem.
Complexity of Supply Chains
Dependence on Energy-Intensive Inputs: The construction sector relies heavily on materials like steel, glass, aluminum, cement, and various chemical products, which are energy-intensive to produce.
Supply Chain Management: Improving the efficiency and sustainability of supply chains is essential to reduce the overall environmental footprint.
Workforce Availability and Skills
◆ Construction requires a large workforce, but there is a shortage of skilled labor.
◆ Aging Workforce: Many experienced workers are retiring, creating a gap that needs to be filled.
◆ Attracting Younger Workers: Making the construction industry more attractive to younger generations through training programs and career opportunities is vital.
The large-scale skills partnership for construction under the EU Pact for Skills is a crucial step towards addressing the evolving needs of the construction sector. By aiming to train at least 30% of the workforce by 2030.
While the major construction and public works companies are well-equipped to carry out this transformation, subcontractors and the whole fabric of SMEs and ETIs remain under pressure. Access to training is much easier for these companies, as is investment in cleaner vehicles (because a major part of the construction industry’s carbon footprint lies in the transport of materials).
Bouygues Construction, for example, communicates extensively on this point with the implementation of a “climate strategy”. The roll-out of their in-house “Climate Action” training program continues, with 43% of employees already trained.
FOCUS ON THE SITUATION IN EUROPE
According to ING’s latest report, the European construction volumes are expected to see a decline of about 1.5% this year due to high interest rates and rising building costs. This is a down on ING’s previous forecast (-0.5%), mainly because of revised Eurostat data. However, the outlook for next year is more optimistic.
The production of building materials is beginning to show signs of recovery, likely driven by improvements in supply chains and increased demand for renovation and infrastructure projects.
Renovation is becoming a focal point in the construction sector.
Beyond new homes or new infrastructures, the RMI market (Repair, Maintenance and Improvement) is also key in the construction sector. “RMI market remains under pressure as cost of living continues to impact people’s large expense decisions”, explains Gael Umano, UK Risk Underwriter & Deputy Group Risk at Cartan Trade. RMI data is important to follow to better understand current trend and impact it can have on the smaller and medium size construction firms.
According to Eurostat, from 2021 to 2026, the building renovation market in Europe is estimated to increase by 55.6 billion $.
Despite the temporary disruptions caused by the Covid-19 pandemic and the energy crisis, the outlook for residential energy efficiency and sustainability upgrades could be promising. However, Cartan Trade is rather cautious about the short-term impact of the easing of interest rates and the ending of certain government subsidies (such as the PTZ in France).
FOCUS BY COUNTRY
The varying trends in house prices across the EU.
◆ Poland and Spain have seen significant increases in the prices of newly built homes recently.
◆ In contrast, France and Germany are experiencing declines in house prices for both new builds and existing homes.
◆ The Netherlands has also seen a slight decline in new house prices in the first quarter of this year.
The housing market in many EU countries is experiencing a resurgence in prices after a period of decline.
◆ In Poland, the prices of existing homes increased by over 4% in the first quarter of the year.
◆ Similarly, Spain and the Netherlands saw house prices rise by 2% during the same period.
◆ On the other hand, Germany, facing a more sluggish economic situation, experienced a decline in house prices by 1.1%.
According to Christophe Pennellier, Senior VP & Chief Risk Officer of Cartan Trade, the construction market remains under pressure and highly exposed to insolvencies (it was the sector that saw the biggest increase in insolvencies in 2024, particularly in France).
Indeed, the consumer market is still sluggish, pending the interest rate cut that is stifling the market. But the expected easing of interest rates will only allow for a very slow recovery in activity.
A significant upturn in building permits over a considerable period will be necessary to foresee a recovery of the entire sector.
CARTAN TRADE KEY FACTORS TO EVALUATE BUYERS’ FINANCIAL HEALTH
Gael Umano highlights several key factors that Cartan Trade, as a credit insurer, analyzes for large construction companies:
◆ Dependency to legacy contracts : Assessing the financial health of the company through the weight of legacy contracts, especially those with fixed prices, can pose significant challenges in a high or medium inflation environment.
A very recent case in the UK: ISG which filed for administration on the 19/09, blaming those legacy contracts for its failure. This is the largest construction bankruptcy in the UK since Carillion in 2018. ISG was around £2bn of turnover and about 2,000 employees.
◆ Level of Debt: High levels of debt in the construction sector can be particularly challenging when interest rates remain elevated.
◆ Structure of growth: Numerous construction companies are chasing growth at the expense of margins.
◆ Quality of the Order Book: The quality of a construction company’s order book is crucial, especially in terms of how contracts are negotiated (Fixed-Price or Inflation-Indexed Contracts).
In the years ahead, it will be also important to keep a close eye on the level of investment committed to transforming these companies and tackling their main challenges, as well as their level of debt.
By evaluating these specific factors, Cartan Trade can better analyze the financial resilience of construction companies and provide meaningful highlights to our customers to secure their trading.
Contact us for more about our credit insurance solutions.
Case study, Featured
In this use case, find out how MTP, a leading manufacturer of high-quality capital goods, specialized in industries such as aerospace, automotive and industrial manufacturing, managed the financial risks linked to its fast growth.
What are MTP’s risks if it doesn’t have credit insurance? What does it risk in the event of default and non-payment by one of its strategic customers?
◆ What is the context of the MTP company?
◆ What are the risks for the MTP company?
◆ How does the UNLOCK MULTI solution work?
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Featured, Market Study
The landscape of automotive innovation has shifted over time. Since the invention of the automobile over a century ago, Europe played a pioneering but today has no longer its position of prominence.
Indeed, in the early 2000s, China decided to go electric. But it’s only in 2015 the European Continent began its transition, confronted with:
→ Volkswagen Emissions Scandal (Dieselgate),
→ Rising Environmental Concerns and the Paris Climate Agreement.
So today, the landscape for electric vehicles (EVs) is evolving, bringing both economic and political challenges.
According to IEA, the surge in electric car sales during 2023 is impressive:
◆ Electric car sales are neared 14 millions.
◆ The total electric car stock reached 40 million.
◆ This growth represents a 35% year-on-year increase compared to 2022.
◆ The 2023 figure is over 6 times higher than the electric car sales recorded in 2018.
◆ 95% of which were: in China, Europe and the United States.
Compared with Western brands, Chinese EVs are more affordable. According to the European Commission, in the EU, Chinese EVs typically sell for 20% less than EU-made models.
After a 9-month investigation, the European Commission believes that China is infringing World Trade Organization rules, and has therefore decided to apply countervailing duties from 4th July, on imports of made-in-China vehicles of up to 38%, compared with the current 10%. Chinese BEV producers benefit from significant state subsidies, posing a threat to EU manufacturers.
The EU’s intervention follows the US’s decision to raise tariffs on Chinese electric cars from 25% to 100% a few weeks ago.
In a move aimed at ensuring fair competition and protecting its automotive industry, this new imposition of provisional countervailing duties on imports of battery electric vehicles (BEVs) from China, could spark a trade war. Indeed, Beijing has threatened to retaliate against European aviation, farmers and spirits makers.
So, both sides agreed to negotiate a possible compromise and have decided to engage in negotiations regarding planned import taxes on Chinese electric vehicles (EVs) in the European market.
These regions play critical roles in shaping the future of EVs. So it’s important for the EU to underscore the need for fair competition, environmental goals and strategic negotiations and avoid a trade war or economic retaliations, which would have repercussions for companies in the automotive sector, but not only
Case study, Featured
In this case study, find out how a machine tool supplier, INDEX, limited its exposure to the risk of non-payment following the acceptance of a new order from its customer PEI, by integrating Unlock Focus as an additional solution to its credit management procedures.
◆ What is INDEX’s context?
◆ What are the risks for INDEX?
◆ How does the Unlock Focus solution work?
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Press Area, Featured
On 2 May, Cartan Trade announced the appointment of Sébastien Guidoni as its new CEO. With over 23 years’ experience in transformation and acceleration acquired in a wide variety of roles within major insurance groups and start-ups, this appointment promises to accelerate growth and open up new perspectives for the company
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Sébastien Guidoni shares Cartan Trade’s new roadmap with us.
When I joined Cartan Trade a few months ago as COO, and now as CEO, I was impressed by how quickly the company has grown after just 2 years in existence and by the strong commitment of the teams, whom I would like to thank once again. The performance of the first start-up phase has been remarkable and market demand has exceeded our expectations.
Cartan Trade is now firmly established in four major European markets: France, the United Kingdom, Italy and the Benelux countries. The company is led by a solid team, ready to support its future growth.
Our mission is to democratise credit insurance by offering our customers, whatever their size, additional cover to secure their growth by transferring part of the risk of payment default by their buyers.
Market traction is strong and our pipeline is well-stocked with more than €10 billion cover committed, which gives me confidence in our ability to succeed in 2024. The new roadmap for the coming years has been validated by our shareholders, who have thus renewed their confidence in the project.
After this initial start-up phase, our current challenges are those of a company in a scale-up phase that is planning to grow over the next 3 to 4 years. Our ambition is to build a platform that can simultaneously control its growth, its claims ratio and its EBITDA, with the stated aim of demonstrating the scalability of our model.
Together with my Comex colleagues Alice de Brem (Sales and Marketing), Christophe Pennellier (Risk, Claims & Collection) and Julien Madec, who joins us at the beginning of July as CFO, we will have to constantly choose how to use our resources effectively to invest in the company in a sustainable way.
We also intend to strengthen our teams. Recruiting new talents will be essential, in all our business areas – sales, risk, finance – but also in data, where we aim to build an innovative and agile ecosystem.
Data is an area I know well. Building an ecosystem by coordinating several solutions requires effort. Although it’s still a little early to talk about it, data will play an increasingly important role at Cartan Trade.
To lead the development in Europe, Cartan Trade’s Executive Committee is supported by a strong Leadership team. It is made up of our regional directors: Anne Smadja for France, Matthew Wells for the United Kingdom, Paolo Cioni for Italy, and Xander Nieuwenhuijsen supported by Alice de Brem for the Benelux countries, as well as Gael Umano, deputy Head of Risk. With their teams, they are committed to developing Cartan Trade in their respective markets, supporting our customers and brokers locally in their day-to-day challenges and building sustainable portfolios.
Our priority is to continue our international development in our 4 markets before considering new expansions. Major product innovations are also in the pipeline and will be unveiled in due course.
I am convinced that Cartan Trade has all the necessary pillars to demonstrate the scalability of its model and thus convince many uninsured companies to place their trust in us.
Market Study, Featured
Pharmaceutical Industry
The Covid-19 pandemic thrust the pharmaceutical industry into the spotlight, intensifying the pressure to deliver swift results. Since, companies faced a host of challenges.
The pharma’s role within the healthcare system is weakening due to:
– A sudden surge in demand which encourages research and development, but that implies high financial burden
– Economic strains,
– Suffocating regulatory change.
To remain profitable, pharmaceutical companies need to change their operational strategy as the industry faces new challenges. This is what LloydsPharmacy, once the 2nd largest pharmacy chain in the UK, did but faced with a cliff edge.
LloydsPharmacy, which was founded in 1973, had a significant potential.
Ownership history:
Over the past decade LloydsPharmacy (Clinical Homecare, LloydsDirect, Lloyds Online Doctor and a wholesale AHH) had many owners.
– In 1973, Lloyds Chemist began when Allen Lloyd purchased his 1st pharmacy in Polesworth (UK).
– In 1997, LloydsPharmacy was purchased by Celesio AG and merged with Celesio’s existing UK subsidiary, AAH Pharmaceuticals, forming a network of 1300 pharmacies.
– In 2014, the american healthcare company McKesson acquired Celesio AG, becoming the parent company of LloydsPhharmacy along with its other units: LloydsPharmacy Clinical Homecare, LloydsDirect, Lloyds Online Doctor, and a wholesale arm called AHH.
– In April 2022, McKesson’s UK businesses, including LloydsPharmacy, the wholesaler AAH, and a travel health service, were purchased by the Aurelius Group for £477m.
Transforming the company:
LloydsPharmacy became an omnichannel company platform. This strategy was validated with the significant growth across its online offering during the pandemic.
After the purchase by Aurelius Group, as a result, LloydsPharmacy joined the Hallo Healthcare Group, the holding company brand name for some of the UK’s most renowned healthcare organizations.
So, how did a business which had 1,338 stores at the end of 2022, just a over year later disappear from the high street.
LloydsPharmacy began to exit the pharmacy market, since 2017 due to:
– Government funding cuts
– Higher operating costs.
The chain swung to a pre-tax loss of £148m in the year to 31 March 2017.
The closures began in 2017 and continued with 17 stores in 2018, 60 in 2019, 76 in 2021 and 41 in 2022.
According to the Companies House, for the year ending March 31, 2022, Lloyds Pharmacy recorded further losses, with:
– operating losses worsening from £-35m to £-57m,
– net losses of £-66m, down from £100.8 million the previous year.
The company stepped up its « rationalization program » in 2023. In October 2023, the chain was running 138 pharmacies, compared with 1,338 pharmacies in March 2022 (-90%), according to the figures of General Pharmaceutical Council (CPhC).
In July 2015, LloydsPharmacy purchased all 281 pharmacies in Sainsbury’s supermarkets for £125 million but decided to close all in January 2023.
Liquidation:
LloydsPharmacy filed for voluntary liquidation and blamed the cut in government funding for its widening losses and the reason behind its store rationalization program.
In 2023, the chain ceased trading, with pharmacy staff transferred to their stores’ new operators.
In the statement of affairs report, the liquidators (Martin Armstrong and Andrew Bailey of Turpin Barker Armstrong Accountants) revealed that the pharmacy business owed £293m to 514 creditors, including:
– £228m owed to Diamond DCO One Limited /Lloyds Pharmacy,
– £50m owed to Aurelius Crocodile, a holding company used to control the business.
However, the financial documents show that as LloydsPharmacy had just £8.2m at its disposal to pay off its debts.
As a conclusion The pharmaceutical industry has faced challenges in recent years:
Low Margins & Diversification
Due to low margins on medications, pharmacies are expanding their offerings to include non-prescription products (parapharmacy). But this expansion requires additional investments.
Competition Risks & Regulation
In fact, the distribution of medications is deregulated, allowing mass-market retailers to enter the sector. It will intensify competition for pharmacies
LloydsPharmacy serves as a notable example. Today, the pharmaceutical industry will need to anticipate these risks and protect itself against the risk of non-payment.
Featured, Solutions
Gaining new markets, especially export markets, is a unique opportunity to develop your sales. But it’s not without risk for your company.
Starting a business relationship with a new customer, or increasing your sales with an existing one, requires special care and the implementation of “safeguards”.
Whether it’s an existing customer or a new one, when you’re dealing with an international customer, the financial information is more complex to obtain, the dunning and collection procedures more sensitive, and your knowledge of the economic environment murkier.
This is especially true as international payment terms extend over longer periods. This is a risk you need to be aware of before taking on a new market.
Transferring the risk
However, there are effective solutions for transferring this risk to a credit insurer, offering essential protection for the sustainable growth of your company.
Unlock Focus allows you to benefit from complete support including information, risk monitoring, credit limit stability and collection, to secure a key transaction for your company. By opting for Cartan Trade’s Unlock Focus contract, your company is protected against the insolvency of the end buyer.
In the event of bankruptcy of the buyer during the period of manufacturing or in the event of non-payment of the goods on the due date of the invoice, your company is swiftly compensated by Cartan Trade, thus preserving your cash flow.
Being insured against unpaid invoices also gives your company the opportunity to benefit from optimised financing. Indeed, lending organisations are often more inclined to grant loans or credit lines when a transaction is covered by credit insurance.
Discover all the advantages of Cartan Trade’s Unlock Focus solution
In a nutshell, transferring the risk of non-payment to a credit insurer is an effective solution to increase your turnover with peace of mind in an unpredictable commercial environment, while protecting your company from financial losses due to customer non-payment. More info about Unlock Focus.
Unlock Focus is also available in a ‘Multi’ version to cover your outstanding amounts on your strategic customers, on a revolving basis over 12 months or in the event of business peaks when your internal credit limit is reached.
