More than half of CFOs in Baltic large companies are optimistic about business opportunities in 2019

Survey of Chief Financial Officers in large companies in Baltic states, which was conducted in September by SEB bank, indicates that majority of large companies have an optimistic outlook about the nearest future. 52% of Latvian and Lithuanian CFOs are convinced that 2019 will be favourable for their businesses, while in Estonia 51% of financiers share this view.

In comparison with the previous year the share of optimistically-minded companies in Lithuania has essentially remained at the same level (54% in 2017 and 52% in 2018). However in Estonia it has increased from 42% to 51% and declined in Latvia from 61% to 52%. Meanwhile 8% of large companies in Latvia, 11% in Lithuania and 16% in Estonia are worried that next 12 months will bring bad news for their businesses.

Labour costs are eating into profitability
Just like for the past few years Latvian and Lithuanian entrepreneurs have said that surging labour costs (22% in Latvia and 19% in Lithuania) and availability of qualified workforce (22% in Latvia and 18% in Lithuania) are the main challenges for their companies. In Estonia where salaries are highest among all three Baltic states, CFOs (24%) have mentioned increasing pressure of costs on profit margins as their main concern, leaving labour costs and skilled workers as second-rate challenges (16% and 16%). Worries about profitability are the third most frequently mentioned concern in Lithuania.

Ints Krasts, board member of SEB Latvia: "Workforce related challenges have been the main concern for large companies in Baltics already for several years. The average wage has increased by 22% in Estonia, 24% in Latvia and 30% in Lithuania during last three years. Apparently, as a result of this trend, companies are becoming increasingly worried whether their current business model is able to deliver the returns expected by shareholders. I think that the number of companies facing this challenge will only grow in the upcoming years. Each company will have to come to its own solution - be it boosting efficiency, raising prices for their services or simply accepting lower profit margins."

Large companies are feeling financially strong
At the same time large companies have said that they feel financially strong. 79% of Latvian CFOs have assessed the financial position of their company as good or excellent, which is the highest share since SEB started polling Baltic CFOs in 2014. 77% of Lithuanian and 69% of Estonian entrepreneurs have expressed similar confidence. Besides, every fourth respondent (24%) in Latvia has said that finances of their company are in an excellent shape.

About the survey
This is the sixth survey of Chief Financial Officers in Baltics. Results reveal whether CFOs expect that next twelve months will bring good or bad news for businesses, identify which are the main concerns and challenges and give an insight in other topics as well. 226 largest companies with annual turnover over 20 million euros from Latvia, Lithuania and Estonia participated in the survey, which was carried out during September of this year.