Is Lucibel (EPA:ALUCI) Using Too Much Debt?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. Importantly, Lucibel SA (EPA:ALUCI) does carry debt. But is this debt a concern to shareholders?

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What Risk Does Debt Bring?

Debt and other liabilities become risky for a business when it cannot easily fulfill those obligations, either with free cash flow or by raising capital at an attractive price. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, plenty of companies use debt to fund growth, without any negative consequences. The first step when considering a company's debt levels is to consider its cash and debt together.

What Is Lucibel's Debt?

The image below, which you can click on for greater detail, shows that Lucibel had debt of €3.09m at the end of June 2025, a reduction from €3.37m over a year. However, because it has a cash reserve of €232.0k, its net debt is less, at about €2.86m.

A Look At Lucibel's Liabilities

The latest balance sheet data shows that Lucibel had liabilities of €1.09m due within a year, and liabilities of €5.59m falling due after that. On the other hand, it had cash of €232.0k and €1.67m worth of receivables due within a year. So its liabilities total €4.78m more than the combination of its cash and short-term receivables.

This deficit casts a shadow over the €2.86m company, like a colossus towering over mere mortals. So we'd watch its balance sheet closely, without a doubt. After all, Lucibel would likely require a major re-capitalisation if it had to pay its creditors today. The balance sheet is clearly the area to focus on when you are analysing debt. But you can't view debt in total isolation; since Lucibel will need earnings to service that debt. So if you're keen to discover more about its earnings, it might be worth checking out this graph of its long term earnings trend.

See our latest analysis for Lucibel

Over 12 months, Lucibel made a loss at the EBIT level, and saw its revenue drop to €6.3m, which is a fall of 13%. That's not what we would hope to see.

Caveat Emptor

Not only did Lucibel's revenue slip over the last twelve months, but it also produced negative earnings before interest and tax (EBIT). Indeed, it lost a very considerable €2.9m at the EBIT level. When we look at that alongside the significant liabilities, we're not particularly confident about the company. We'd want to see some strong near-term improvements before getting too interested in the stock. Not least because it burned through €1.1m in negative free cash flow over the last year. So suffice it to say we consider the stock to be risky. There's no doubt that we learn most about debt from the balance sheet. However, not all investment risk resides within the balance sheet - far from it. Be aware that Lucibel is showing 4 warning signs in our investment analysis , and 3 of those can't be ignored...

If you're interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.