BCG Transform Index:
Spain & Portugal
Financial 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 region
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 and 70 Spanish and Portuguese companies that meet the selection
criteria

Sector performance and resilience in the face of past andprevailing crises

Take-aways
Operational view

Most impacted
sectors

Rankingcompared withEuropean 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 Chemicals sector scores highly in solvency and financial stability, benefitting from the industry's highdegree of diversification stemming from the wide range of application fields of its products•

The TMT sector grapples particularly with issues concerning profitability and financial stability with its
margins not fully recovered to the pre-pandemic baseline•

The pandemic and current challenges continue to significantly impact the Leisure and Tourism industry,
particularly in terms of profitability and financial stability with lower margins compared with 2018•

The Industrials sector struggles across all dimensions, most likely due to high input and energy prices forproduction as well as supply chain disruptions and a looming recession•The Spanish and Portuguese sector Other containing companies in areas as diverse as printing, cork
production, and environmental services has performed notably better than in the European ranking•

The Spanish and Portuguese Industrials sector has been more severely hit by increasing input prices, highenergy costs, and supply chain disruptions compared to the European average

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

Revenues have surpassed pre pandemic levels, however EBITDA
margins have not yet returned to preCovid levels in all sectors.
Furthermore, the momentum forprofit growth is now slowly waning, atrend that is also evident in theEuropean area

Solvency
The proportion of companies in Spain
and Portugal with negative freecashflow in LTM is 20%, which is lower
than the European average of 27%

Financial stability
Net debt has risen in LTM for the firsttime since 2019, with just 20% of it
being investment grade. This
performance is markedly below
Europe's 45% investment-grade debt
and among the poorest shares in theEuropean region

2

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

Most resilient
sectors•Sectors providing fundamental input for industrial production proved to be themost resilient industries

12345Metals & Mining
Metals & Mining

ChemicalsChemicals

Other
EnergyAutomotive
Automotive

ConsumerOther

Profitability

Solvency

Financialstability

1010929

971026696217391956718

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

Although the Industrial sector ranks relatively high in Europe, it is the most
severely affected industry in Spain and Portugal

678910

EnergyIndustrials

Health Care
Health Care

TMT
Consumer

Leisure & Tourism
TMTIndustrials
Leisure & Tourism

Profitability

Solvency

Financialstability

8821845413353

11236111

113

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 | While revenues have surpassed pre-pandemic levels, EBITDA
margins have not yet fully recovered in several sectors
EBITDA margin in Spain and PT in %, 2018–LTM

20.1%

-4.6%
443
1059

1

1160

1

164
67114

112

5560

660

365
911
1158

793

782

6

251

17172018

2019

2020

819

157

116

19

Note: LTM = Q3-2022
Source: Capital IQ, BCG Analysis

395

63

1141

613422-12.2%

527-13.6%

67243

850

5522021

23%

25%

11%
16%12%
19%

13%

10%

104
39%
18%

11%
13%
6%
18%

11%

11
22

9%

7.9%

11.8%

14%
6%
19%

16%
11%
8%
19%

23%
4%

18%
6% 4%

9%

10%

15%

14%
12%
8%
17%
16%
8%
14%
16%

28%

28%

29%

24%

23%

17%

16%

13%

15%

17%

2021

LTM

-7%

LTM

2018

2019

2020

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 Spain and PT in bn EUR, 2018–LTM

Solvency | 20% of Spanish and Portuguese companies have negative FCF in LTM,
which is below the European average of 27%
Distribution of companies with negative/positive FCF in 2021 and LTM

84%

2021

16%

7080%

LTM

20%

28

1

100%

100%

100%

0%

0%

0%

28

1

100%

88%

100%

134

18

77%

75%

89%

100%

100%

23%

25%

11%

0%

0%

134

18

3

385%
15%

50%
50%

83%
17%

3

3

757%
43%

100%

67%
33%

7

1182%
18%

1155%

100%
45%

0%

13%

0%

Automotive

Consumer

Chemicals

EnergyHealth Care

Industrials

Leisure andTourism

Metals &Mining,
Const. Mat.

TMT

Other48%28%

28%

31%

21%

29%

16%

32%

22%

16%0%0%Total

Europeanbenchmark fornegative FCF in LTM
Positive FCF

27%Negative FCF

Note: The number of companies within each sector is lower than 5 in Automotive, Chemicals, Health Care, Leisure and Tourism, and Metals & Mining, Const. Mat.
Source: Capital IQ, BCG Analysis

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

70Financial stability | Net debt has increased significantly in LTM, with thepercentage of sub-performing debt notably higher than 2018 baseline
Net debt by rating1 in Spain and PT in % andbn EUR, 2018–LTM

Net debt in Spain and PT in billion EUR, 2018–LTM

233
20240
5406259
40234
43112

112

20241
209

30266

124

109

535

625

3

1

1737
6717

1

39%

60

60

66

76562018

2019

2020

2021

LTM

Automotive

Chemicals

Health Care

Leisure and Tourism

TMT

Consumer

EnergyIndustrials

Metals & Mining, Const. Mat.

Other

-1

5

2018

20%
5%

23%
75%
64%

61

57

23%

36%
7

1

237

27%
30%

940

738

26%

25%

101

242
9%

44%

2019

54%

2020

2021

Investment GradeMid-GradeLTMSub-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.

16.0%
201

10.5%

0.3%

9Copyright © 2023 by Boston Consulting Group. All rights reserved.

Appendix

BackupProfitability

Solvency

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 performance

10

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

Ranking methodology

Backup

Number of Spanish and Portuguese companies within each industry in theunderlying database

70

2

41

Automotive Consumer Chemicals

Source: Capital IQ, BCG Analysis

18138Energy• Companies listed
on European stock
exchange with atleast €500M
revenues

HealthCare

Industrials

3

3

LeisureandTourism

Metals& Mining,
Const. Mat.

7

TMT

11

• Financial industry
and companies
from Ukraine andRussia excluded

Other

11

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

Selection criteria:

Backup

The data set consists of European companies that meet the selection criteriafor this study
1,373
244

105
7828394335
27 12 3238
165632125551 45
21158138Total

Count ofcompanies
that meetselection
criteria

6895

Source: Capital IQ, BCG

12Copyright © 2023 by Boston Consulting Group. All rights reserved.

159 164

Backup

Other

Prosegur Compañía de Seguridad, S.A.
Indra Sistemas S.A.
Semapa - Sociedade de Investimento e GestãoThe Navigator Company
Applus Services, S.A.

Industry breakdown

Vidrala, S.A.
ENCE Energía y Celulosa, S.A.
Corticeira Amorim, S.G.P.S., S.A.
Altri, SGPS, S.A.

Industry

Companies

Source: Capital IQ, BCG

13Copyright © 2023 by Boston Consulting Group. All rights reserved.

Prosegur Cash, S.A.

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