Corporate Profitability Rises in Q4 2021 But Still Lagging in 2019 – Conjuntura

Corporate Profitability Rises in Q4 2021 But Still Lagging in 2019 – Conjuntura

The profitability of Portuguese companies rose to 6.8% in the fourth quarter of last year, a slight increase compared to the 6.6% recorded in the previous quarter.

At the end of 2021, the return on the company’s assets was 1.1 percentage points higher than the value observed at the end of 2020, but it is still lower than the value recorded in the fourth quarter of 2019 (7.6%). Bank of Portugal.

In the public sector, profitability remained in the negative territory, albeit with a slight recovery, as it moved from -5% to -3.1%, while private companies witnessed an increase in their profitability to 7.2%, which is a slight increase compared to 6.9% recorded in the previous period. .

In an analysis by areas of activity, industries (10.4%), transportation and warehousing (9.6%) and electricity and water (7.8%) were those that recorded the highest return on assets (ratio between results before depreciation, depreciation, interest, corporate tax, and total assets) during this period.

In small and medium enterprises (SMEs), this indicator rose from 6.4% to 6.5%, while in large companies there was a noticeable increase to 9.0% (versus 8.5% recorded in the previous quarter).

Increasing corporate financial independence

With regard to financial independence, as measured by the weight of equity on the balance sheet, this ratio rose to 40.3% in the fourth quarter, “a number higher than the figure recorded at the end of 2020, but also higher than the figure observed at the end of 2019”, as Male Bank of Portugal.

In private companies, this indicator rose to 40.6%, a slight increase compared to the 40.5% recorded in the previous quarter and a noticeable increase compared to the 39.6% recorded at the end of 2020 and 38.5% recorded in the last quarter. For the year 2019. In the analysis by areas of activity, the headquarters (60.9%) scored the highest value.

By size, small and medium-sized companies saw an increase in their financial independence from 39.6% to 39.9%, after declining in large companies from 36% to 35.6%.

In the public sector, financial independence increased to 31.5% from 27.8% in the previous quarter.

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