Valoria survey: Companies are bracing up for a though year

Valoria survey: Companies are bracing up for a though year

According to the survey „Business evolution in 2017”, amid the political turmoil at the beginning of this year, companies’ growth forecasts are quite reserved.

No less than 19% of the companies expect their turnover to dwindle this year, whilst 43% forecast an increase of only 1%-10% in 2017.


„The research ‘Business evolution in 2017’ on the business environment in Romania complements the information in the national statistics. We asked managers the most important questions with regards to aspect which impacted the income statement or cash flow. While it is worth saying that about macroeconomic developments we have the official statistics, through this research we find out about the companies’ forecasts directly from the source”, says Constantin Magdalina, Emerging Trends and Technologies Expert and one of the authors of the survey.


Forecasts of turnover


According to the responses received, 28% of companies expect an increase between 10% and 20% in turnover this year. Most companies (43%) predict an increase of 1%-10% in 2017. The industry level analysis revels that the percentage increases provided for this bracket (1%-10%) are very different. Thus, 54% of companies in trade say they will have a tunover growth of 1-10% this year, 46% in industry/manufacturing, 41% in services and only 33% of IT. Companies that expect stagnation or decline in revenue this year are 16% in industry/ manufacturing, 13% from services, 8% commercial (retail & wholesale), 11% of IT and 17% in construction.


Forecasts of profit


Profit forecats for 2017 are slightly more optimistic. Although 32% of companies are expected to increase their profit rate in the range from 1% to 5%, 18% expect the profit of the company to increase between 5% and 21% between 10% and 20%; 17% of companies foresee to get profit rates from 20% to over 30%. However, 12% of companies have negative expectations about their profit for 2017.


Forecasts of investment


According to the suvey results, 16% of companies say they will increase investments by 1% -5% in 2017, 39% will increase investments by 5%-20% compared to the previous year, and 24% say they will increase investments by 20%-30%. Unfortunately, 10% of companies say their investments will stagnate this year. while 11% say their investments will decrease in 2017 compared with 2016.


Forecasts of number of employees


17% of companies do not expect any increase in the number of employees in 2017. Meanwhile, 39% of companies say they expect their staff to increase by 1%-5% this year. Only 24% of companies expect headcount to increase by 5%-10% and 13% of companies expect headcount to increase with 10%-20%.


Forecasts of wages


În 2017, 41% dintre companii se a?teapta ca salariile sa creasca intre 5% ?i 10%, 25% dintre companii se a?teapta la salarii in cre?tere cu 10%-20%, iar 24% dintre companii care se a?teapta la cre?teri de 1%-5%. Numai 4% dintre companii nu se a?teapta la schimbari in ce prive?te nivelul salariilor in 2017.
In 2017, 41% of companies expect to increase wages by 5%-10%, 25% of companies expect to increase wages by 10%-20% and 24% of companies expect a wage growth of 1%-5%. Only 4% of companies do not expect changes in wage levels in 2017.


Top 5 challenges and oportunities in 2017


The top 5 challenges for companies in 2017 are the following: general state of the economy (41%), political and legal instability (28%), reduced level of domestic investments (23%), problems with finding skilled labor (17%) and the sharp rise of wages (13%).


The top 5 opportunities identified by the companies for 2017 are the following: digital transformation (37%), exports and the opening of other markets (33%), creative partnerships with other companies (27%), growth of domestic consumption (19%) and European funds (17%).


„This analysis is the result of the need to understand the economic environment in Romania. It recorded the respondent's opinion on the evolution of turnover, profits, investment, employment, and wages. In macroeconomic terms, Romania recorded the highest growth in the EU in 2016. At the beginning of 2017, the company answers seem to indicate a reserved optimism. Even though the realities of each industry are particular, one can read the signs of a cautious forecasting in each company, in a year which shall put pressure on the businesses and not only”, says Elena Badea, Managing Partner Valoria, co-author of the research.