„Compared to the edition at the beginning of 2020, the 2021 research indicates the reserved attitude of companies regarding the evolution of turnover, profit, and investment. However, managers and executives expect 2021 to be more favorable for business compared to 2020. Even if we see a differentiated return of different sectors of activity, transport, logistics, IT, communications remain in high demand, as it has changed. mode of consumption and way of life.”, says Constantin Magdalina, Emerging Trends, and Technologies Expert, co-author of the research.
Forecast on turnover
Compared to the forecasts from the beginning of 2019 and 2020, the growth perspective of companies is more reserved in 2021. Of the responding companies 22% in 2021, compared to 11% in 2020, expect lower turnovers, and 13% in this year, compared to 4% last year is expected to stagnate. However, 21% of companies forecast that their turnover will increase by 5%-10%, followed by 16% who budgeted an increase of 10%-20%. On the other hand, the percentage of companies expecting increases of over 20% will decrease from 18% in 2020 to 12% in 2021.
At the level of industries, an increase of 10%-20% is forecast by 29% of industrial production companies, 25% of professional service companies, 39% of IT companies, and 49% of those in the pharmaceutical industry.
Forecast on profits
The forecasts regarding the evolution of the profit from the beginning of 2021 are in line with the trend regarding the turnover, being more pessimistic. Although 26% of companies (compared to 25% previously) expect their profit to increase by 1%-5% this year, we see a significant decrease on the level of 10%-20% from 25% in 2020 to 15% in 2021. The percentage of companies that say that their profit will increase by more than 5%-10% also decreases, from 26% in 2020 to 18% in 2020. Unfortunately, the percentage of companies that predict a decrease in profit almost doubles, from 10% in 2020 to 22% in 2021.
At the level of industries, a profit increase of 10%-20% is forecast by 38% of trading companies, 34% of those in agriculture and food, and 55% of those in the pharmaceutical and health industry.
Forecast on investments
From the results of the analysis, we notice that the percentage of companies that say they will reduce their investments almost triples, from 6% in 2020 to 17% in 2021. Moreover, the percentage of companies that say they will increase their investments by 10% -20% is now 10 % compared to 16% last year, and the percentage of those who say they will increase investments by 5% -10% decreases from 24% in 2020 to 19% this year.
At the industry level, most professional services companies (42%), in the pharmaceutical industry (57%), and transport (33%), say that they will increase investments by 10% -20% this year.
Forecast on the number of employees and wages
In 2021, 26% of the responding companies do not expect any increase in the number of employees, compared to 25% in 2020 and 26% in 2019. At the beginning of this year 22% of companies, compared to 23% in 2020 and 27% in 2019, say they expect their staff to grow between 1%-5%, and 6% of companies, compared to 12% in 2020 and 10% in 2019, expect their number of employees to grow between 10% and 20%. Unfortunately, the data show that the percentage of companies that will reduce the number of employees will increase from 13% in 2020 to 28% in 2021.
At the same time, the results of the study show that 23% of construction and real estate companies, 34% of information technology, 32% of agriculture and food, 29% of telecommunications, and 37% of companies in the pharmaceutical and health industry estimate increases in the number of employees of 5%-10% this year.
At the beginning of 2021, 36% of the responding companies do not anticipate salary increases, the maximum of the last 5 years. Instead, the percentage of companies that say they will reduce wages in the next 12 months will increase from 2% in 2020 to 11% in 2021. Moreover, the percentage of companies that say they will make salary increases in 2021 decreases from 82% to 53%. On the other hand, 52% of companies in industrial production, 49% in trade, 39% in telecommunications will increase their salaries by 1%-5%.
Top 5 challenges and opportunities
The most important challenges for companies at the beginning of 2021 are the following: business development (71%), increased costs (67%), cash flow (58%), increased competition (46%), and changing consumer behaviors (43%).
The most important opportunities of 2021 for Romanian companies are the following: the realization of new products/services and the focus on innovation (56%), digitalization and automation (43%), expansion on the European single market (38%), recovery measures economic growth (35%) and the growing market (27%).
Strategic priorities of companies
The three main strategic priorities of the responding companies at the beginning of 2021 are the following: streamlining the portfolio of products and/or services and sales channels (67%), improving relationships and customer loyalty (61%), and consolidating the company's financial situation (55%).
Moreover, the executives and managers of the responding companies say that the three main measures that would lead to improving the business environment in Romania are: digitalization of state institutions (78%), political and fiscal stability (71%), and the provision of facilities and grants (63%).
„ The answers of the executive directors regarding the growth prospects of the companies they lead indicate a reserved perspective. Compared to the results of the 2020 Evolution of Business in Romania research, those of 2021 reveal the doubling of the percentages of companies that expect decreases in turnover, profit, and the number of employees and the tripling of those that predict a decrease in investments. So, what will grow the least in 2021? The salaries and the investments. What will decrease the most in 2021? The number of employees and the profits.”, says Dumitru Ion, CEO of Kompass Romania și Doingbusiness.ro, co-author of the survey.
About the survey
This survey on managers' perception of the evolution of the Romanian business environment in 2021 is based on a questionnaire that analyzes the perceptions of 388 top executives from companies operating in various industries. The questionnaire was applied between 12 January 2021 and 5 February 2021. Of the respondents, 8% came from companies with a turnover of more than EUR 100 million, 7% from companies with a turnover between EUR 50-100 million, 15% with turnover between EUR 10-50 million, 46% with turnover between EUR 1-10 million and 24% below EUR 1 million in turnover. 43% of the respondents have the position of CEO/President/General Manager. This survey was conducted in partnership with Doingbusiness.ro.
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You can read the study in RO in the document below: