Almost 40% of companies made a loss in 2021
According to the Bank of Portugal, in 2021, 39.1% of companies had negative net results, which translates as "an improvement compared to 2020 (44.5%) but not yet compared to 2019 (36.9%)."
The increase in activity and profitability decreased the percentage of companies in a “potential situation of risk” in 2021, but 39.1% still presented a loss, compared to 44.5% in 2020 and 36.9% in the pre-pandemic year 2019, the Bank of Portugal reported on Friday.
According to the ‘Annual Economic and Financial Indicators of Non-Financial Companies’ of the Bank of Portugal (BdP), updated today for 2021, in that year “, 39.1% of companies had negative net results, which translates as an improvement compared to 2020 (44.5%) but not yet compared to 2019 (36.9%).”
According to the central bank, “the reduction in the percentage of companies in a potential risk situation was transversal to most sectors”.
Additionally, 33% of companies had negative EBITDA (earnings before tax, interest, depreciation and amortisation) (38% in 2020) and, in 14.8% of companies, the EBITDA generated was not enough to cover financing costs (18.6% in 2020).
The percentage of companies with negative equity (companies whose value of liabilities exceeded the value of assets) “had a slight reduction, from 26.7% in 2020 to 26.3% in 2021”.
Statistics calculated on the basis of the Simplified Business Information (IES) confirm that in 2021, companies’ turnover increased by 15.2% compared to 2020 and 4.6% compared to 2019.
However, if the increase compared to 2020 was “transversal to all sectors of activity, demonstrating that 2021 was a year of economic recovery”, the same is not observed in the comparison with 2019 since “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”.
According to the BdP, the increase in activity recorded last year “positively affected corporate results, which, measured before depreciation, amortisation, interest and taxes (EBITDA), increased by 40.9% compared to 2020”, in a rise “across most sectors of activity, although with different expressions”.
With regard to return on assets (ratio between EBITDA and total assets), it rose to 7.6%, higher than in 2020 (5.8%) and equal to that of 2019, while return on equity (ratio between net income and equity) reached 8.3%, more than doubling the 2020 percentage (3.5%) and exceeding the 7.4% of 2019.
According to the central bank, “the most penalised sectors in 2020 – transport and storage and accommodation and restaurants – reached positive EBITDA figures in 2021, but still remained with negative net income and return on equity.”
In 2021, the BdP data also point to a continuation of the “trajectory of increase in the financial autonomy” of companies: “Overall, companies continued to strengthen their equity and financial autonomy (measured by the weight of equity in the balance sheet) increased to 38.7% (38.0% in 2020),” it states.
“This increase – it notes – was observed in most sectors, with emphasis on the transport and storage sector, which showed an increase of 4.6 percentage points, to 23.4%.”