Declining RevenuesA sharp revenue contraction undermines scale economies and weakens the company’s ability to cover fixed costs. Sustained top-line declines risk shrinking backlog, reduce bargaining power with suppliers, and impair investment capacity in engineering projects over the medium term.
Negative Profitability And MarginsNegative gross and net margins indicate structural cost or pricing pressure that erodes core profitability. Persistent unprofitability limits retained earnings, hampers reinvestment in operations or service capability, and elevates default risk if market conditions don’t improve.
Cash Flow Stress And High LeverageNegative free cash flow combined with elevated leverage constrains liquidity and financial flexibility. This increases refinancing and covenant risk, reduces capacity for capex or working-capital funding, and forces dependence on external financing or asset sales in adverse conditions.