Figures show tough November

Nearly 100 Western Australian companies entered external administration last November, giving the state its highest share of the national total in nearly a decade.

WA companies accounted for 11.1 per cent of those going into external administration, of about 870 across the country.

That was the highest point since January 2006, when the state’s share was 11.5 per cent of about 300 companies.

The poor figures suggest a continuation of sluggish WA growth, with state final demand registering a fall of 1.3 per cent in the September quarter while unemployment rose.

Merchandise exports have been lower, too, falling from highs in early 2014.

The combined pressure is pushing WA businesses hard.

It was also the worst November for WA since Australian Securities and Investments Commission records began in the 1999 financial year, with an increase in external administrations of about 106 per cent on November 2014.

About 44 per cent of the latest WA number was through court appointed wind-ups, while creditor wind-ups and voluntary administrations each made up 21 per cent of the total.

Some of the worst-hit sectors were construction, about a 10th of the total, business and personal services, at more than a quarter, and manufacturing and mining, about 7 per cent each.

Insolvency appointments were also up for WA, about double the level in the previous November, at 142.

FTI Consulting senior managing director Quentin Olde said that, after a slow start to the year, national external administration appointments had gathered pace over the course of 2015 and were now well above the numbers for 2014.

“While recent events have highlighted the critical importance of retailers managing their inventories and the difficulties created when stock fails to sell, our level of inquiries show that it is not just the retail sector facing challenges,” he said.

“We’ve also seen rises in the level of industry-specific enquiry, coming from the mining, mining services and agribusiness sectors.”

Mr Olde said the December period would prove to be a crucial one for the retail industry.

“The Christmas trading period is always a crucial period for retailers, and often a make-or-break event for those dealing in slower moving big ticket items,” he said.
“Managing inventory through this period is critical.”