State-owned investment company Tesi is charting the impacts of the corona pandemic on Finnish SMEs with a survey based on collaboration amongst a broad spectrum of experts. The first stage of the questionnaire was conducted 3rd – 14th April 2020. Altogether 801 companies, with annual net sales of €2m – €200m and personnel of 5 – 520 people, took part in this stage. The aim is to form a broad-based and neutral overview of SMEs’ current situation from a range of perspectives: external factors, internal procedures, and the impact of intervention to support SMEs.
The sectors covered by the review were selected based on their importance to Finland’s GDP. The sectors chosen for the first stage focus on: industry; wholesale & retail trade; professional, scientific and technical activities; information & communications; and, partly, hospitality & catering. The review will be supplemented within a couple of weeks to also include: construction; transport & warehousing; and administrative & auxiliary services. The number of respondents to the review will then rise to 1,600 companies. The survey will be repeated each month.
Main results of first stage of questionnaire survey:
- The corona crisis has substantially depressed SMEs’ net sales: one-half of respondents estimate their net sales have decreased, while 15% believe their net sales have fallen by over 40%. SMEs expect their net sales in April to decline even more from their levels in March. Exceptions exist in some sectors: for instance, about one-third of grocery businesses have increased their net sales during the corona crisis.
- Companies have limited options to adapt because, apart from hospitality & catering, 65% of companies are able to reduce their cost levels by at most 20% compared to before the corona pandemic hit. SMEs have so far utilised only about 20-30% of the adjustment options available to them. The option most commonly used by companies to reduce costs is to lay off employees.
- Roughly one-half of SMEs are experiencing reduced profitability. Companies in the hospitality & catering sector have seen a more drastic reduction in EBITDA compared to other sectors: over 40% of companies reported their monthly EBITDA dropping by 80-100 %. EBITDA of industrial companies has also fallen by over 50%.
- Most companies have enough solvency for a number of months, but roughly 10% of companies will not survive over the next month regardless of sector. Of the smallest companies (5-9 employees), 55% believe they will become insolvent during the next three months. Of the largest companies (over 100 employees), 34% believe their cash reserves will last less than three months.
- The crisis has had a profound impact on supply chains across all sectors. Over 65% of industrial companies and of wholesale & retail businesses have experienced disruptions to their supply chains, particularly in the delivery reliability and logistics of materials and raw materials.
- The value of investments decreased by 30-50% this year, depending on sector. Some 30-40% of SMEs expect a reduction of at least 30% in the value of tangible and intangible investments and of development projects during the rest of this year compared to the corresponding period in 2019.
- Of the SMEs that have received support from Business Finland or Finnvera, some 80% estimate that the support facilitated the company’s operations. Until now, the number of companies that have received state support during the corona crisis is fairly limited: less than 10% of respondents reported that they had received.
“It’s important to think about the overall impact of the various effects of the corona pandemic on Finland’s GDP, and to judge exactly when and how hard the economic impacts will hit different sectors. The hospitality & catering sector has suffered severe and sudden impacts, while in Finnish industry, for example, the consequences could be long-lasting and changes in supply chains could have a far-reaching effect on the functionality of ecosystems. Tesi aims to provide comprehensive help to both Finnish companies and public authorities, by offering financial instruments and by providing timely market data. A positive aspect of the crisis is the extremely pleasing opportunity to observe the wide-ranging collaboration between academia, private companies and government ministries. Everyone has a genuine desire to work in close collaboration to find the best solutions,” says Tesi’s Chief Digital Officer Henri Hakamo.
About the survey:
The survey commissioned by Tesi was prepared and compiled by Helsinki GSE, Finland’s Ministry of Economic Affairs and Employment, Professor Vihriälä’s working group, Business Finland, Finnvera, and other experts from both the public and the private sectors. The aim is to provide a real-time and sector-specific overview of Finland’s economy, thus making up-to-date information available to policymakers to target correctly-timed measures for mitigating Corona impacts.
The first-round review (n=801) was conducted by phone interviews arranged by market research company Taloustutkimus during the period 3–14 April 2020. The sectors were selected based on their impact on Finland’s GDP (VAT, employment) and its growth (growth in VAT and work productivity). The range selected for companies’ annual net sales was €2 million – €200 million and for number of employees 5 – 250. A sufficiently representative sample was ensured for each sector in terms of company size and geographical distribution.
The review will be supplemented within a couple of weeks to also include: construction; transport & warehousing; and administrative & auxiliary services. The number of respondents to the review will then rise to 1,600 companies. The survey will be repeated each month.
The results of the survey (only in Finnish)
More information:
Henri Hakamo, Chief Digital Officer, Tesi
henri.hakamo@tesi.fi, +358 40 050 2721
Tesi (Finnish Industry Investment Ltd) is a state-owned investment company that wants to raise Finland to the front ranks of renewing economic growth by investing in funds and directly in companies. We invest profitably and responsibly, hand-in-hand with co-investors, to create the world’s new success stories. Our investments under management total 1.2 billion euros. Ambition for ownership and success www.tesi.fi | www.dtg.tesi.fi | @TesiFII