Neither the problems in the supply chain, nor the impact of the outbreak of the crisis have slowed down the recovery trend of Spanish non-financial companies, which "has experienced a notable recovery", according to the report from the Bank's Central Balance Sheet of Spain referred to the first quarter of 2022 and published this Friday.
It shows that both activity and corporate profits, dividends and even average profitability rise above the levels recorded a year earlier, although the average of the companies analyzed by the agency has not yet recovered the levels prior to the pandemic.
Ordinary business profits grew by 62% during the first three months of the year, “which translated into a rise in average levels of profitability, although again without reaching pre-pandemic values. This positive economic evolution led to an improvement in the debt repayment capacity, with decreases in the average ratio of debt to ordinary surpluses [gross economic result (REB) plus financial income], and in the percentage of ordinary results destined, on average, , to the payment of interest”, explains the report.
That's an 8.1% increase from the first quarter of 2021, but it's still 25.6% below pre-pandemic levels. A 53% increase in financial income contributed to this boost in profits, in turn encouraged by a 74% growth in dividends received by companies. “Although the interest collected also increased, by 30.1% and financial expenses grew by 8%, due to greater indebtedness and despite the decrease in the average costs of the outstanding debt of companies,” explains the Bank of Spain.
This increase in profits is in line with the increase in activity with a volume of sales that, in nominal terms, grew by 45.3% compared to those registered in the same period of 2021, "an evolution that contrasts with the decrease in 3.3% registered a year before”, points out the analysis. In the period there is also a slight decrease in the liquidity ratio in most companies and sectors, although on average, "it is at comfortable levels and higher than those before the pandemic".
Personnel expenses increased by 5.9% between January and March, in year-on-year terms, an evolution that has been driven both by the increase in average effective workforce3 and, to a lesser extent, by the rise in average remuneration, which grew 1.8%. In particular, effective average employment increased by 4.1% in the first quarter of 2022, compared to the 2.7% drop a year earlier. In this way, the average workforce stood at levels similar to those of the same period in 2019.
Regarding the evolution of employment, almost half, 49.5%, increased their workforce. This is 14 percentage points more than in the previous year. The growth of permanent workers, 4.1%, stands out. The increase in personnel with a temporary contract was 3.9%, with intense dynamism in the commerce and hospitality sectors, where employment grew by an average of 7.1%.
In the breakdown by sectors, the evolution is heterogeneous, with a clear leadership in the recovery of commerce and hospitality, while branches such as electricity show a drop in their returns due to the impact of the energy crisis. The energy sector has also seen its debt ratios deteriorate to the highest level in the quarterly series since 1994.
Regarding the year-on-year variation in business margins in the first quarter of 2022, large differences are also visible. Although the hotel industry and commerce stood out for their dynamism with an increase in profitability levels of 9.1% and 7.3% respectively. The energy sector profitability decreased by 1%. It all depends on the ability they have had to transfer the increase in costs to customers, for example in the case of energy, while the electricity companies reduce profit margins, these skyrocket in the refining sector since oil rose less than its final products such as gasoline and diesel.
