44% of companies with losses

Around 44% of non-financial companies in Portugal presented negative results in 2020 with turnover falling 9.7% and own capital levels down 3.8% — nearly half the amount seen in 2019 according to data from the Bank of Portugal.

According to the Annual Non-Financial Sector Economic-Financial Indicators 2020, published on Wednesday “company profitability fell in 2020” because of the pandemic, to an average business turnover of around 9.7%.
“This reduction is across the board for the majority of companies and was sharper in those sectors most affected by the pandemic, namely accommodation and hospitality (-42.5%), arts, entertainments, sports and recreation (-35.5%) and in transport and warehousing (-24.2%)”, notes the central bank.
Nevertheless, “In some sectors the volume of sales and services increased, a case being construction (3.0%) and information and communication (4.4%)”.
According to the Bank of Portugal, this reduction in activity affected company results which measures before EBITDA fell 18.9% on 2019.
Last year, asset profitability (the ratio between the EBITDA and the title asset) fell to 5.9% (7.6% in 2019), while own capital profitability (ratio between the net result and own capital) fell 3.8%, half of the value in 2019.
“In other words, for every €100 invested by shareholders, €3.8 were made in net result (€7.4 in 2019)”, states Portugal’s central bank.
This fall in profitability was sharper in transportation and warehousing, accommodation and hospitality (-20%).
Some 44.5% of companies presented net negative results and found themselves in a situation of risk in 2020, compared with 36.9% in 2019. This increase in the percentage of companies in risk in these sectors rose from 45.7% in 2019 to 67.3% in 2020.
Moreover, “38% of companies showed a negative EBITDA (31.1% in 2019) and for 18.7% of companies the EBITDA was insufficient to cover credit expenses. (14.1% in 2019)
The BoP data also shows a “slight increase in the percentage of companies with negative own capital (companies whose debt value exceeded the asset value), which went from 25.5% in 2019 to 26.4% in 2020.