State financial companies bring in €515M in 2020

Portugal’s main public financial companies made €550 million in profits in 2020, down €358.5 million than in 2019.

The report presents a detailed portrait of the patrimonial situation of the 143 state companies that make up the State-Owned Enterprises Sector (SOE), in particular the 88 non-financial companies.
According to a report ‘State Companies Sector 2019-2020’ the State-owned bank ‘Caixa Geral de Depósitos (CGD) is largely responsible for the positive performance, despite having posted a net result of €491.6 million, less than the €775.9 million achieved in 2019.
The electrical and transport systems company Efacec (now privatised) suffered a sharp fall in its business turnover (-38.9% on 2019), suffering a loss of €-73.4 million in 2020 (the year in which the government took over 71.73% of its capital share)”, states the report released on Tuesday by the Public Finances Council (CFP).
According to the body led by Nazaré Costa Cabral, “2020 was marked by the start of the activity of Portugal’s development bank Banco Português de Fomento (BFP) which should post a positive net result of around €8.8 million in its first activity year”.
“Within the socio-economic context of post Covid-19 recovery and uncertainty as to the development of the Russia-Ukrainian conflict in which EU funds have a huge importance for Portugal, the BPF is expected to perform a central role in coming years”, the report states.
The CFP also highlights Parpública which is an umbrella company for State companies which has a €1.9Bn State capital share.

NOTES:

The shareholder function in these 143 entities is exercised by the central State and the shareholding amounted to €30 986 million in 2020, representing 15.5% of the national GDP (+1.7 p.p. than in 2019). The 158 958 professionals working in the sector at the end of 2020 (+3.5% than in 2019) represented 22.1% of public employment and 3.4% of national employment. The COVID-19 pandemic had a very negative impact on the economic performance of these entities, with gross value added (GVA) contributing 3.1% to GDP and 3.6% to national GVA in 2020 (-1.3 p.p. and -1.5 p.p. than in 2019, respectively).

Two sectors of activity concentrated more than 80% of the economic and financial aggregates of the State’s non-financial companies at the end of 2020: the health sector (NHS), which had the largest number of professionals (78%), turnover (55%) and relevant operating expenses (65%); and the transport and storage sector, which gathered the largest share of assets (70%) and share capital invested by the State (67%).

All NHS State companies recorded negative net results in 2020, for an aggregate total of €-775.7 million (€-750.1M EUR in 2019) and more than half had negative equity, a total of 22, at the end of 2020.

The State’s net financial effort totalled €5.1Bn in 2020, 14.6% less than in 2019, representing 2.5% of that year’s GDP. Revenue from the SOE fell by 32.9% to €248M, due to the decline in dividends (€-214 million). Financial flows to the sector also fell, totalling €5.6Bn in 2020 (-16.7% than in 2019), distributed between capital grants (36.3%), transfers and subsidies (33.6%) and loans (30.1%).