Profitability: More than one-third of businesses report 11-30% drop

When it comes to profitability during the pandemic, businesses have suffered decrease and 32% of 536 businesses across 26 trade sectors surveyed in Asia Pacific reported 11-30% drop, said Euler Hermes recently when releasing results of a study.

The trade credit insurer also warned that global insolvencies might rise by 15% in 2022 after two consecutive years of decline,  as government support gradually phases out.

Survey highlights

• 72% of respondents have been negatively impacted by the pandemic, where growth in overseas markets and difficulty in financing imposed the biggest challenges. 
• 81% of respondents reported that they have suffered decrease in profitability under the pandemic. 
• 10% of the business leaders confessed their profitability had dropped by 50% or more. 
• The top three sectors that endured the biggest impact on profitability were electronics (15%), food (14%) and services (11%).
• As for small and medium-sized enterprises (SMEs), 85% of respondents saw their profits reduced under the pandemic, with one in four experienced profit reduction of 31% or more. 
• The top three sectors where SMEs suffered the most decrease in profitability are similar to that of larger corporates, ranking from the electronics (15%), food (13%) and services (13%) sectors.

Optimism in upcoming export opportunities
The good news is that most economies in Asia Pacific are exiting the pandemic faster than other regions and already benefitted from different levels of economic recovery, said Euler Hermes.

According to the survey, 51% of respondents said that they are confident in export opportunities in the next 12 months. 

This is attributed to the unprecedented government support implemented and the accumulation of household savings in many developed countries, the trade credit insurer noted. 

The top three sectors that are the most optimistic about export opportunities are electronics (16%), chemicals (12%) and food (10%), according to survey results.

As for business focus in the next 12 months, 38% of respondents listed achieving business growth within existing portfolio as top priority, followed by exploring new markets and new customers (27%) and reducing loss through improving credit and risk management (20%), the firm said.