Declining trust in growth forecasts of Romanian companies for 2018

Declining trust in growth forecasts of Romanian companies for 2018

For companies in Romania, 2018 started pessimistically, with shaky confidence in the evolution of the economy. Meanwhile, the evolution of business sentiment in the second semester seems to have deteriorated further. This indicates the results of the Business Outlook Barometer in Romania 2018, conducted by consulting company Valoria. The study asks simple but essential questions about the evolution of turnover, profits, investments, the number of employees or the evolution of wages as the decision-makers see in the companies in Romania. This research has the virtue of comparability between the two semesters and is conducted on a year-on-year basis.

Because the 623 large Romanian companies with a turnover of more than EUR 50 million for 2017 achieved 43% of the total turnover, 37% of the total gross profit, having 20% ​​of the total number of employees, we carried out a comparative analysis of the responses of this category of companies to the research conducted in the first semester and the second semester of 2018. The survey of the second half of 2018 is based on a questionnaire that received responses from 329 senior executives. 4% of respondents come from companies with a turnover of more than EUR 100 million, 5% of companies with a turnover of EUR 50-100 million, 11% with turnover between EUR 10-50 million, 31% with turnover between 1-10 million EUR and 49% under 1 million EUR turnover.

Declining trust in growth forecasts of Romanian companies for 2018 2

22% of large companies expect lower turnover than in the previous year

Compared to the first half of the year, in the second half only 14% of large companies say they will grow the turnover by 10%-20% from 25% in the first part of the year. The situation is similar in the 5%-10% range where the percentages drop from 29% to 14%. In the 1%-5% turnover growth brackets the percentages rise from 21% in the first semester to 33% in the second one. On the other hand, in the survey for the second half of the year, 22% of the large respondents said they expected the turnover to fall in 2018, which was not the case for the first half of the year when there were no such answers.

23% of large companies say they will get lower profits this year

If profit forecasts for large companies were more balanced in the first half, in the second half of the year we see a concentration of profit growth on the 5%-10% level. Thus, 40% of large companies, compared to 21% six months ago, expect profits to increase in the 5%-10% range. Also, 17% of large companies say they will have a profit increase of 1%-5%, versus 27% previously. As for large companies whose profit stagnates, this percentage increases from 7% in the first part of the year to 14% in the second half. There is also a percentage of 23% of respondents who are now forecasting negative profits for 2018, compared with only 8% in the first part of the year.

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