Net income and ROE of non-financial companies increased in 2023 despite the decrease in turnover
The net income of non-financial companies increased by 5.7% year-on-year in 2023, reaching €94.1 billion, while their return on equity (ROE) stood at 8.3%, up by half a percentage point, according to the “Financial Situation of Non-Financial Companies” report from the Bank of Spain.
This increase in profitability occurred despite the decrease in turnover, which fell by 1.1% in 2023, mainly due to the decline in the activity of large companies, which reduced their sales by 3.6% year-on-year. Small and medium-sized companies, on the other hand, increased their turnover by 1.5%.
The improvement in profitability was due to several factors, including the increase in operating margins, driven by the containment of costs, and the decrease in financial expenses, thanks to the low interest rates.
By sector, the one with the highest ROE was the energy sector, with 16.8%, followed by the real estate sector, with 12.4%, and the information and communications sector, with 10%. The sectors with the lowest ROE were the construction sector, with 2.4%, and the transportation and storage sector, with 4.4%.
The report also shows that the indebtedness of non-financial companies decreased by 1.2% in 2023, standing at €1.25 trillion. This reduction was mainly due to the decrease in the debt of large companies, which reduced their liabilities by 3%, while the indebtedness of small and medium-sized companies increased by 1.4%.
The Bank of Spain expects the net income of non-financial companies to continue growing in 2024, although at a slower pace than in 2023. The ROE is also expected to remain stable, around 8%.
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