BCG Transform Index:
FranceFinancial study on sector performance
APRIL, 2023

Disclaimer
The basis for this study is a data set extracted from Capital IQ for companies listed on European stock
exchanges with a minimum revenue of €500 million
Companies from the financial industry and Ukraine/Russia are excluded

The analysis covers data from 2018 through the last twelve months (LTM)
LTM refers to available data from Q4-2021 through Q3-2022
The ranking is based on a comparison with other industries within the same country
Please note that the statements made relate specifically to this data set1Copyright © 2023 by Boston Consulting Group. All rights reserved.

Our data set includes 1,373 European companies, of which 159 are French, that meet these selection criteria

Most resilient
sectors

Most impacted
sectors

Rankingcompared with
European average
BCG
recommendation
Source: BCG Analysis•

The Metals & Mining sector scores highly across all dimensions, capitalizing on the surging demand after thepandemic (strong economic growth) and price increase from constrained supply in recent past•

The Health Care sector shows strong performance in profitability and financial stability, taking advantage ofdigitalization and the increase in demand for health care services•

Although the Energy sector exhibits rather poor financial stability, it shows high profitability and solvency,with producers benefitting from recent supply constraint and rising prices•

Although the Chemicals sector scores highest in financial stability, it performs poorly in profitability andsolvency, resulting in an overall ranking well below the European average•

The Automotive industry struggles across all dimensions, indicating that rising input prices and supply chain
disruptions put pressure on the sector, particularly on suppliers•

The Leisure and Tourism sector remains significantly affected by the pandemic as well as by the current
headwinds, esp. rising interests, with poor performance across all dimensions•

The French Health Care industry has been more resilient amidst the crisis due to the strong performance ofFrench pharmaceutical companies, among other factors•

The French Automotive industry has been more impacted due to declining sales and increased restrictions,also related to the shift toward green energy

In the context of persistent crises, companies cannot continue to remain in a reactive firefighting mode, butrather must focus on proactively seizing opportunities supported by an adaptable cost structure (that fitsearnings), a strong financial position, and an adjusted go-to-market strategy. In a nutshell: Resilience is key tobeing successful

Take-aways
Operational view
Post-pandemic, revenue is on the rise
across all sectors, and EBITDA margins
have returned to pre-Covid levels inmost sectors. However, themomentum for profit growth is now
waning—a trend that is also evident
across many other European countries

Solvency
The proportion of French companies
with negative free cashflow in theLTM is only 14%, which is markedly
lower than the European averageof 27% and might also be due to a“clearing effect from insolvencies”

Financial stability
Net debt has risen for the first timesince 2019, with 59% of it being
investment grade, a better share than
Europe's 45% investment-grade debt

2

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Sector performance and resilience in the face of past andprevailing crises

Sectors providing fundamental input for industrial production or health proved
to be the most resilient industries

12345Metals & Mining
Metals & Mining

Health Care
Chemicals

Other
EnergyEnergyAutomotive

TMT
Other

Profitability

Solvency

Financialstability

10572284921

5106219911928919

SUM

Industry position in the European ranking
Note: A ranking was assigned to each industry based on its performance in three dimensions. The detailed ranking methodology can be found in the appendix.
Source: Capital IQ, BCG analysis

3Copyright © 2023 by Boston Consulting Group. All rights reserved.

Points given for industry performance in three dimensions

Leisure and Tourism remains the industry that has been most severely affected,
in line with the European ranking, while Automotive performs notably worse

67
8910

ConsumerIndustrials

Industrials
Health Care

Chemicals
Consumer

Automotive
TMT

Leisure & Tourism
Leisure & Tourism

Profitability

Solvency

Financialstability

76518

68418

43

1017

322

7

1

1

3

5

SUM

Industry position in the European ranking
Note: A ranking was assigned to each industry based on its performance in three dimensions. The detailed ranking methodology can be found in the appendix.
Source: Capital IQ, BCG analysis

4Copyright © 2023 by Boston Consulting Group. All rights reserved.

Points given for industry performance in three dimensions

Operational view | After being strongly impacted by the pandemic, revenues
are rising across all sectors with EBITDA margins mostly fully recovered
EBITDA margin in France in %, 2018–LTM

6.6%
1,545
134
428

18.6%

-18.1%

127

1,647
137
457

1,558
103

32
327

65

76

336

364

228
75
284

37

16 34
118
65

172018

2019

71

130

Source: Capital IQ, BCG Analysis

499

111

1,349416

31318-3.2%

1,899

30

467

4134
317

506

11%
14%

11%
14%

21%

22%

16%

17%

23%

23%

94

85

9%

380

322

291310270

2615102
79

30
20111
90

2020

2021

LTM

12%

14%

13%
13%

9%

0.6%

12.6%

13%

8%

22%

22%

19%

25%

24%
12%

11%

18%

17%

10%

11%
17%

12%
4%

15%

6%

17%

15%
25%
15%
9%
15%

20%
12%

21%
14%

22%
12%

22%
12%

22%
13%

2018

2019

2020

2021

LTM

Automotive

Chemicals

Health Care

Leisure and Tourism

TMT

Consumer

EnergyIndustrials

Metals & Mining, Const. Mat.

Other
5

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Revenue in France in bn EUR, 2018–LTM

Solvency | Only 14% of French companies have negative FCF in LTM, which
is significantly lower than the European average of 27%

2021

LTM

159

834

4

1294%

100%

100%

75%

67%

6%

0%

0%

25%

33%

159

834

4

1286%

88%

88%

75%

75%

14%

13%

12%

25%

25%

Automotive

Consumer

Chemicals

Energy

48%

28%

28%

31%

1530

74

23

22

100%

100%

86%

75%

87%

100%

0%

0%

14%

25%

13%

0%

1530

74

23

22

73%

71%

100%

91%

95%

27%

29%

0%

9%

5%

Health Care

Industrials

Leisure andTourism

Metals &Mining,Const. Mat.

TMT

Other

21%

29%

16%

32%

22%

16%

93%
7%

Total

Europeanbenchmark fornegative FCF in LTM
Positive FCF

27%

Negative FCF

Source: Capital IQ, BCG Analysis

6Copyright © 2023 by Boston Consulting Group. All rights reserved.

Distribution of companies with negative/positive FCF in 2021 and LTM in %

Financial stability | Net debt has been decreasing gradually since 2019 withdebt quality improving significantly in LTM
Net debt by rating1 in France in % and bn EUR, 2018–LTM

Net debt in France in bn EUR, 2018–LTM
-3.0%
568

558

5654138

409
4677
1477
31
92
5651

125

16

13100

109

4035
111

114
5710675

73

19212018

2019

2020

Automotive

Chemicals

Health Care

Consumer

EnergyIndustrials

1645

534

582

518
427
121

1285

1445

37

105

108

56

549

540

60

144

10571

61%
64%

94

47%

55%

6%
10%

4%

47%

10%

7%

34%

34%
LTM

932%

29%

LTM

2018

2019

2020

2021

Leisure and Tourism

TMT

Investment Grade

Mid-Grade

Metals & Mining, Const. Mat.

Other

619

2021

519

5159%

Sub-Performing

1. The ratings are based on the Net Debt/EBITDA leverage measure. Debt with a Net Debt/EBITDA ratio below 3.5 is considered investment grade, while debt with a ratio between 3.5 and4.5 is classified as mid-grade. If the ratio exceeds 4.5, it is considered sub-performing debt. If EBITDA is negative, net debt is automatically classified as sub-performing.
7
Source: Capital IQ, BCG Analysis

Copyright © 2023 by Boston Consulting Group. All rights reserved.

38.8%

-2.9%

8
Copyright © 2023 by Boston Consulting Group. All rights reserved.

Appendix

BackupProfitabilitySolvency

Financial stability

Total ranking

The profitability ranking isbased on EBITDA growth
between 2019 and LTM, with
the industry having the lowest
EBITDA growth being assigned
the fewest points (1) and theindustry with strongest EBITDA
growth the most points (10)The solvency ranking is basedon the growth sector's overall
cash account LTM, thepercentage of companies withgrowth in cash LTM, and theinterest coverage ratio, withthe worst overall performanceassigned the fewest points (1point) and the strongest themost points (10)The financial stability
ranking is based on the LTM
equity ratio and net debt rank,which is determined by
the proportion of mid-grade
and sub-performing debt, withthe worst overall performanceassigned the fewest points andthe strongest the most points

Once the points for eachdimension have been
determined, a total ranking
score is calculated by summing
the points of each dimension.
The highest sum of points
indicates the best
performance, the lowest thepoorest performance9

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Ranking methodology

Backup

Number of French companies within each industry in the underlying database159343023812Source: Capital IQ, BCG Analysis

1574

Automotive Consumer Chemicals

Energy22

HealthCare

Industrials

LeisureandTourism• Financial industry
and companies
from Ukraine andRussia excluded

4Metals& Mining,
Const. Mat.

• Companies listed
on European stock
exchange with atleast €500M
revenues

TMT

Other

10

Copyright © 2023 by Boston Consulting Group. All rights reserved.

Selection criteria:

Backup

The data set consists of European companies that meet the selection criteria
for this study
1,3732441057828394335
27 12 3238
165632125551 45
211581

38
Total

Count ofcompanies
that meetselection
criteria

6895

Source: Capital IQ, BCG

11Copyright © 2023 by Boston Consulting Group. All rights reserved.

159 164

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