ICT Industry Trends Italy - 2022

ICT sales in Italy recorded robust growth in H2 of 2020 and in 2021, as spending from businesses and employees on digital goods and services increased due to the expansion of remote working and e-learning. We expect that ICT spending from consumers will slow down in the coming months, due to a certain saturation after the recent spending spree and lower disposable household income due to high inflation. However, spending by businesses and public bodies should continue to grow, driven by fiscal support (Recovery and Resiliency Plan) in order to spur the digitalisation of the country. Shortage of chips supplies continues to burden the industry, but the negative effects should gradually ease. ICT wholesalers still face shortages of stock due to persistent supply chain bottlenecks.

After increases seen in 2021, we expect profit margins of Italian ICT businesses to remain stable this year because most companies are able to pass on higher costs for semiconductors, energy and transport to end-consumers. However, in the ICT wholesale and retail segment, high competition is adding pressure on margins.

ICT businesses in general have a medium to high working capital requirement, and banks are willing to provide loans to the industry. Payments in the ICT industry take between 60 and 120 days on average, depending on the size and market power of individual businesses. Payment behavior in the sector has been good in the past two years. The number of payment delays and insolvencies has been low during the past 12 months. Both should remain stable in the coming twelve months, supported by ongoing ICT investments by businesses and public bodies.

Our underwriting stance is generally open for producers of computers and telecommunication equipment and of consumer electronics. We take a more neutral approach for electronic component producers, which are most affected by semiconductor shortage. In the ICT retail segment high competition is adding more pressure on margins than in other subsectors. ICT distributors try to diversify their product mix to improve their profitability.