(Boursier.com) — Kroll, the leading independent player in services related to risk management and financial advice, reveals, for the 10th consecutive year, the results of its study on the impairment of goodwill recorded by CAC 40 companies.
Following on from the year 2021, marking the end of the Covid crisis, CAC 40 companies again recorded, in 2022, lower goodwill impairments… The amount of impairments amounted to 3.0 billion d euros, compared to 5.7 billion in 2021, representing 0.7% of the amount of pre-impairment goodwill, compared to 1.3% at the end of 2021.
Impairment of goodwill at its lowest in 10 years
Down 47%, this amount represents the lowest amount observed in the last 10 years. Given the approaches considered for the implementation of impairment tests, essentially based on future prospects, these impairments augur confidence in medium-term performance, despite the economic consequences of the Russian-Ukrainian conflict and the rise in interest rate.
Three business sectors affected by impairments
In 2022, 19 companies in the index recorded goodwill impairments, compared to 15 in 2021, 10 of which represent nearly 94% of the total amount. These impairments are concentrated in three business sectors, Telecommunications / Media (38.3%, impairments), Automotive / Equipment (26.1%) and Consumer Goods (13.3%).
The impact on goodwill results in particular from specific risks related to business activity (in particular for Telecoms, in certain geographical areas, affected by the increase in discount rates) and from a degraded economic environment due to the Russian-Russian conflict. Ukrainian (particularly Automotive and Consumer Goods, following divestments in Russia).
More generally, it is estimated that almost a third of the goodwill impairments observed in 2022 are linked to the effects of the Russian-Ukrainian conflict.
Goodwill at its highest for 10 years
Taking advantage of the perspective of the study initiated in 2013, it appears that the goodwill of CAC 40 companies reached, in 2022, its highest level in 10 years. Over this period, this amount (net of depreciation) increased by 147.8 billion euros and thus increased by nearly 50%.
“Despite the persistence of the Russian-Ukrainian conflict, the rise in interest rates and the regulatory impact linked to climate change, the impairment of goodwill recorded by CAC 40 companies for 10 years was at its lowest in 2022, while the total amount of goodwill was at its highest. This is a marker illustrating the vitality of the companies in the index in terms of external growth, notwithstanding the successive crises that punctuated this period, and which bodes well for confidence in medium-term performance. term” concludes Carine Tourneur, Managing Director, and head of Kroll’s evaluation activities in France.
Methodology
The study was based on the financial information contained in the annual reports published by the CAC 40 companies. The 2023 edition covers all the companies in the index as of December 31, 2022.
Among the companies in the index, 38 companies close their accounts on 31 December. For the companies Alstom (closed on March 31) and Pernod Ricard (closed on June 30), the analysis of goodwill was based on data at the date of the last available annual closing.