Entrepreneurs prepare for a year with higher turnover, but lower profitability

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The latest edition of the VISTAGE Argentina Business Confidence Index paints an unfavorable scenario for the profitability of the private sector.

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This index has been prepared since 2006. The study corresponding to the fourth and last quarter of 2023 included 355 businessmenCEOs, executives and entrepreneurs, who expressed their opinion on the current economic scenario in Argentina and the future of their organizations.

In measurement, 83% believe the economy has worsened compared to a year ago, while 13% believe it has remained unchanged and 4% believe it has improved. Looking ahead to the next 12 months, 50% think the situation will get worse; 37%, who will be better off; and 13%, that there will be no changes.

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Regarding investments in fixed assets for the next year, 47% believe that they will remain the same, 31% indicate that they will decrease and 22% that they will increase. With high inflation involved, 44% believe that their company’s turnover will grow in the next 12 months, while 32% say it will decrease and 24% expect no changes.

When it comes to the volume of units sold over the next 12 months, 43% of business leaders estimate it will decrease, 31% say it will increase, and 26% say it will stay the same.

The Business Confidence Index also focuses on estimates related to profitability. Second For 55% of survey participants, profitability will decrease in the next 12 months. For 26% it will remain the same and for the remaining 19% it will increase.

On the other hand, by paying attention to how the prices of the products and/or services that your companies sell will behave in the next 12 months, 61% of entrepreneurs expect they will increase; 21%, which will remain the same and 17%, which will decrease.

The employed workforce is another of the axes on which the Index focuses. 58% say it will remain unchanged next year. 25% point out that it will grow and 17% indicate that it could reduce.

On the problems that companies are facing today, 43% of business owners say it’s economic uncertainty, but they also point to problems related to higher costs of energy, raw materials, wages, etc. (24%); financial issues (14%); other inconveniences related to the search, hiring, retention or training of staff (10%); problems with growth that is too slow or too fast (8%); or other types of problems (1%).

Finally, those consulted estimate an annual inflation of 213% by 2024 (66 points higher than what was indicated in the Business Confidence Index for the third quarter of 2023) and believe that the exchange rate will be around $1,804 ($1,177 more than expected in the previous index).

“The Index results convey the impact of political-economic uncertainty. Increases in prices of products and services and decreases in company profitability are some of the most worrying findings. However, nearly 60% of business leaders do not believe this will result in a reduction in workforce. This is promising“said Guadalupe San Martín, CEO of Vistage Argentina.

Source: Clarin

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