Most large companies in the Baltics are cautious about their business opportunities in 2020

According to the results of the 2019 survey of the CFO of the largest Baltic companies* carried out by SEB banka, most large companies in the Baltics are wary in their forecasts regarding business growth over the next 12 months. Less than half (40%) of the CFO of large Latvian companies are positive that the year 2020 will be favourable for their business, whereas the surveyed Estonian and Lithuanian experts shared this opinion in 49% and 51% cases, respectively.

Compared to the results of the survey carried out last year, the share of optimistically-minded companies has declined the most in Latvia, i.e., from 56% in 2018 down to 40% this year, whereas in Lithuania it has gone down only by 1% (from 52% in 2018 down to 51% this year). Conversely, in Estonia, the share of optimistically-minded companies has increased by 1% - from 48% in 2018 to 49% this year. Concurrently, 10% of large companies in Latvia, 8% in Lithuania and 18% in Estonia have concerns that the forthcoming 12 months will not be favourable.

Ints Krasts, member of the board of SEB banka:  “Now that the positive contribution created by the labour market has been exhausted, productivity is becoming an increasingly important source of growth for companies. The survey data also show that productivity is an issue getting more prominance on the agenda of the Baltic companies (71% in Latvia, 64% in Estonia and 61% in Lithuania). To boost productivity, companies have been placing the greatest emphasis on digitalisation and automation in their business strategies (43% in Latvia, 44% in Estonia and 31% in Lithuania).  While companies are also considering improving their marketing and sales strategies, so far, however, relatively little thought has been given to lauching higher value products and services (14% in Estonia, 13% in Lithuania and only 6% in Latvia). Considering the global trends, companies will focus more and more on productivity and efficiency along with sustainability and responsibility. Therefore, at the time of increasingly focusing on global environmental issues and changing our daily habits aimed at becoming more environmentally friendly, it is worth asking - is my company sufficiently green and sustainability-focused? And if yes, does it manifest itself only in words or in real action? As a bank, in partnership with companies, we have been increasingly focusing on responsible investing, appreciating sustainable and environmentally friendly business." 

Same as in previous years, the key challenge for business growth has been an increase in labour costs (47% in Latvia, 64% in Lithuania and 60% in Estonia). At the same time, 43% of Latvian corporate finance directors have also pointed out to the shortage of qualified specialists as a major challenge. In Lithuania and Estonia, on the other hand, there is more concern about the increasing cost pressures on corporate profit-making ability (60% in Estonia and 51% in Lithuania, compared to 29% in Latvia). In the global context, the biggest concern for companies is the likely emergence of a new crisis in the Eurozone, as well as the tense trade war between the US and China. 

At the same time, big companies feel themselves to be financially stable. 74% of large Latvian companies rated their financial position as good or very good. 65% Lithuaniam and 76% Estonian large companies felt to be financially stable. Furthermore, every other company will carry on investing their free funds (51% in Latvia, 55% in Lithuania and 62% in Estonia).

Baltic CFO Survey 2019 results

*SEB banka carries out an annual survey of CFO of major Baltic companies, inquiring of their thoughts on the business environment, key challenges and other maters. The latest survey was carried out in September 2019, with 226 companies from Latvia, Lithuania and Estonia with an annual turnover of over EUR 20 million taking part in it.