October 26, 2022
In 2021, 39.1% of businesses reported negative net profits, which the Bank of Portugal describes as “an improvement compared to 2020 (44.5%) but not yet compared to 2019 (36.9%).”
According to a Bank of Portugal report released on Friday, the improvement in activity and profitability reduced the proportion of businesses in a “possible condition of risk” in 2021, but 39.1% of those businesses still showed a loss, down from 44.5% in 2020 and 36.9% in the year before the epidemic.
In 2021, 39.1% of companies had negative net results, which is an improvement over 2020 (44.5%) but not yet compared to 2019 (36.9%), according to the Bank of Portugal’s (BdP) “Annual Economic and Financial Indicators of Non-Financial Companies,” released today for 2021.
“The drop in the percentage of enterprises in a potential risk position was transversal to most industries,” the central bank stated.
EBITDA stands for earnings before taxes, interest, depreciation, and amortization. Additionally, 33% of businesses had negative EBITDA (38% in 2020), and 14.8% of businesses’ EBITDA was insufficient to pay financing costs (18.6% in 2020).
The proportion of firms having negative equity—firms whose liabilities were more than their assets—”had a minor decrease, from 26.7% in 2020 to 26.3% in 2021.
According to statistics based on the Simplified Business Information (IES), business turnover rose by 15.2% in 2021 compared to 2020 and 4.6% compared to 2019.
As opposed to the comparison with 2020, where the increase was “transversal to all sectors of activity, demonstrating that 2021 was a year of economic recovery,” the comparison with 2019 does not show the same trend because “some sectors of activity have not yet reached the pre-pandemic values, in particular, those related to tourism, such as transport and storage and accommodation and catering.”
The BdP states that the rise in activity seen in the previous year “positively affected corporate results, which, measured before depreciation, amortization, interest, and taxes (EBITDA), increased by 40.9% compared to 2020,” in an increase “across most sectors of activity, although with different expressions.”
Return on assets (the ratio of EBITDA to total assets) increased to 7.6%, surpassing 2020’s 5.8% and matching that of 2019. Return on equity (the ratio of net income to equity) increased to 8.3%, more than twice the 2020 rate (3.5%) and surpassing 2019’s 7.4%.
Source: econews.pt
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