The sales of small and medium businesses (SMEs) are growing less than their costs, causing “a sharp reduction” in their profit margins. According to data from the ‘Cepyme Indicator’ corresponding to the month of May, for all SMEs the total costs rose 23% in the first quarter of 2022, while sales grew 19.8%. “This reduces the margins and leads to a worsening of the liquidity and of the competitiveness of the company”, summarizes the report.
The ‘Cepyme indicator’ produced by this employer’s association is constructed from the analysis of 15 different economic indicators that refer to sales, employment, the number of companies, labor costs, services and supplies, interest rates, the risk premium of loans, and access to credit. Indicators related to solvency (number of contests, average payment period and percentage of liabilities over equity) and competitiveness (net return on assets, productivity and company size) are also assessed.
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Cepyme concludes that SMEs are going through their most critical situation since 2014 and warns that SMEs face the next rise in interest rates and the credit tightening with high levels of indebtedness increased during the pandemic. In 2021, the liabilities of SMEs on their net worth grew 10 points, to 96%. In addition to the reduction in margins, the report detects the greatest increase in work expenses in years (5.7% in the first quarter of 2022), as well as a “collapse” in the cost effectivenessfrom 3.7% in 2019 to 3% in the first quarter of 2022.
“After the pandemic, the Spanish company shows signs of having fallen behind in the recovery. Although there is more activity, it is much less profitable. This situation is further aggravated at the beginning of 2022 due to the inflationary crisis“, is the general conclusion derived from the May edition of this report.