25.08.2023
2022, THE MOST PROFITABLE YEAR FOR ROMANIAN COMPANIES, AN INCREASE IN PROFITS IS EXPECTED IN 2023 AS WELL
Last year, Romanian companies enjoyed unprecedented revenues and profits, and for 2023, an increase in profits and profitability is expected on the back of a significant reduction in energy costs, Romanian news agency Agerpress reported, citing an analysis by business intelligence platform Termene.ro.
"In 2022, there was an increase in the total number of companies submitting their annual financial statements, and for the first time in the last 5 years they exceeded the threshold of 810,000", according to the study on the development of the business environment in Romania in 2022, carried out from Termene.ro.
Against the background of high inflation (over 13%), revenues in 2022 reached a record level compared to both 2021 and the other analyzed years, namely 2020 and 2019. Thus, the total revenues declared by the companies managed to exceed 2 trillion lei for the first time, namely – 2.392 trillion lei.
As in terms of revenues, 2022 registered a record in terms of profits of Romanian companies and also in terms of their average profitability.
If in 2020 the total profit of Romanian companies was 103 billion lei, being the first year in which the threshold of 100 billion lei was exceeded, in 2021 the value of the total profit increased by almost 50%, reaching 149 billion lei, and in 2022 an increase of another 50% was achieved, and thus the total profit exceeded 204 billion lei.
According to the quoted source, the profitability of companies in 2022 is based on the emergence of the phenomenon of "greedflation", inflation fueled by artificial price increases. Thus, against the background of rising prices of raw materials, prices increase not only to cover the corresponding price increase, but also to generate higher profits than before. At the same time, the emergence of a labor force coming mainly from Asia, which accepts lower wages than the local labor force, generates a decrease in the final price.
A further increase in profits and profitability is forecast for 2023 on the back of a significant reduction in energy costs (electricity, gas, fuel), while prices continue to maintain their levels (in some cases even rise) in the first half of 2023. Termene.ro's analysis also shows a continuing trend of increasing the share of cheap labor willing to work for wages close to the minimum in the economy at the expense of local labor.
2022 was the first year since the start of the pandemic in which the number of private sector jobs did not decrease from the previous year and remained constant at 4.01 million, the cited document noted. However, the number of registered workers last year remained at a lower level compared to 2019, when 4.12 million workers were registered. This decline in the number of people employed in the private sector is due to the appetite of Romanians for entrepreneurship, visible through the record number of active companies, to automation processes that reduce the need for the human factor, but also to the phenomenon of the migration of the Romanian workforce to developed countries, also says the analysis of the business intelligence platform Termene.ro.
The analyzed data takes into account the public situation as of July 17, 2023.
