In 2013, Duff & Phelps launched its inaugural study of goodwill impairments recognized by European companies.
Now in its fourth edition, the 2016 European Goodwill Impairment Study (2016 Study) continues to examine general goodwill impairment trends across countries and industries within the European market. As with past editions, the analysis in the 2016 Study is focused on companies in the STOXX® Europe 600 Index, which is comprised of large, mid and small capitalization companies across 18 countries of the European region.
Highlights from The Study Include:
- The total amount of the goodwill impairments reached €6 billion in 2015, a significant increase compared to 2014
- The Financial Services and Utilities industries were the most exposed to impairments
- A limited number of market players were particularly affected: three companies amounting to 75% of the total impairments
- Germany is at the top of the list compared to other European country’s goodwill impairment records
- German companies recorded an €11.6 billion goodwill impairment historic high in 2015
- German Utilities companies suffered from a shift towards Renewable Energy and a more decentralized production while the Financials industry has been impacted by tightened regulation and low interest rates
- Goodwill impairments in Spain reached a maximum of three years, with a total of €1.5 billion
- A limited number of market players were particularly affected: three companies amounting to almost 80% of the total impairments
- 81% of the total impairments in Spain analyzed in this study were in the Financial and Industrial sectors
- UK goodwill impairments were the lowest in five years at €7.7 billion
- Approximately 83% of Energy companies in the UK recorded goodwill impairments
We will likely see increased pressure on all industries in the latter part of the next financial year as goodwill calculations should reflect an uncertain business environment in the face of Brexit