VALORIA

  |  10.10.2017

Year-end with growth adjustments for businesses in Romania

According to the survey report "Business evolution in 2017" released today by Valoria, in the second half of the year, companies have made significant adjustments to previously projected figures for turnover, profit, employee numbers, salary levels and investments for this year.

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The percentage of companies expecting negative profits is now 20% compared to only 6% at the beginning of the year, while the percentage of companies which do not make investments in 2017 reaches 26% in the second half of the year versus 10% in the first half.


"Business evolution in 2017 is a research on the Romanian business environment. We ask managers the most important questions, which eventually find their answer in the company's profit and loss account or cash flow. This analysis shows how the business outlook of the Romanian companies evolved in the second half of 2017. Unfortunately, the comparative data indicate a change in the business sentiment, the appetite for investment being the one that eroded the most, indicating a preservation instinct already activated by tax and legislative developments in recent months", says Constantin Magdalina, Emerging Trends and Emerging Technologies Expert, co-author of the research.


Forecasts on the evolution of turnover


Compared to the first half of 2017, the company growth forecasts get even more conservative. In the last 6 months, we see a slight percentage increase of companies expecting a fall in turnover this year, from 13% to 17%. There are negative adjustments of 1-4 percentage points in the percentage of companies expecting their turnover to grow in 2017, offset by an additional 8 percentage points over the range of 5% -10%.


In construction and real estate, the number of companies that forecast a turnover increase in 2017 is 65% in the second half of the year versus 83% previously. For IT companies, only 65% expect increases now, compared with 89% at the beginning of the year, and for professional service firms, the percentage drops to 65% from 94% previously.


Forecasts on the evolution of profit


The profit forecasts for the second half of 2017 are pessimistic. Although 31% of companies (vs. 32% previously) expect their profit to grow by 1% -5%, 19% expect the company's profit to be higher by 5% -10% and 10% forecast an increase from 20% to over 30%. The highest drop is seen on the 10% -20% range where the percentage drops from 21% to 12%. Also, in September 2017, 28% of companies (compared to 12% previously) have negative expectations about their profits in 2017.
At industry level, 20% of IT firms expect a profit growth of 10-20%, while 40% of industrial production firms expect their profit to grow by 1% -5%, just like 50 % of tourism, 64% of transport and 83% of utilities and energy companies.


Forecasts on the evolution of investments


According to the survey results, 26% of companies (compared to 10% in the first part of the year) say they will not make investments in 2017. Moreover, companies wanting to increase investments this year fall from 79% in March to 68% in September 2017. We also notice that only 15% of companies want to increase their investments by 10% -30% versus 36% previously. Most companies in telecommunications (50%), construction and real estate (38%) and professional services (25%) say they do not make investments this year.

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