Economy
Corona crisis continues to burden medium-sized companies
SMEs as a whole came through the crisis comparatively well. Photo: Sebastian Willnow / dpa-Zentralbild / dpa
© dpa-infocom GmbH
According to the KfW development bank, Germany’s medium-sized companies have so far got through the corona pandemic relatively lightly. However, the crisis is not over yet.
After billions in sales losses in 2020, the corona crisis is also leaving deep marks on Germany’s medium-sized companies in the current year.
Every third company expects further declines in sales, according to a survey by the state development bank KfW. According to the information, it would be the first time since the survey by the KfW SME Panel in 2003 that revenues have fallen for two years in a row.
Nevertheless, according to KfW’s assessment, SMEs as a whole have come through the crisis relatively well. “Thanks to their solid equity base built up in the years before and their ability to react quickly and flexibly to the changed requirements of the crisis, the small and medium-sized companies got through the crisis relatively lightly despite the sharp decline in sales,” summarized KfW chief economist Fritzi Koehler-Geib.
However, business closings, contact bans, hygiene regulations or travel restrictions to contain the pandemic left their mark. According to KfW calculations, the turnover of small and medium-sized companies in Germany decreased by a total of 277 billion euros or around 6 percent to 4,349 billion euros last year. According to KfW, the cuts were severe, but manageable compared to the economic and financial crisis in 2009. This also applies to employment: the downsizing in SMEs has remained moderate.
Some medium-sized companies even benefited from the crisis by relocating consumption: especially food retailers, drugstores, online retailers, delivery services, the pharmaceutical industry as well as online services and software companies.
In addition, the crisis made companies with an annual turnover of up to a maximum of 500 million euros inventive: adjustments to business models and, above all, strong growth in digital sales channels often proved to be a lifeline and, according to KfW economists, prevented worse things from happening.
However, the crisis is not over yet: According to the KfW survey, every third medium-sized company (36 percent) is assuming that their sales in the current year will be below the previous year’s level. On average, these companies expect a decline of around a fifth. 41 percent of the companies expect stable development, 11 percent assume increasing revenues.
Despite the decline in revenues in the past year, the small and medium-sized companies were, according to the information, overall profitable. The return on sales – the ratio of profit to sales – fell only slightly in 2020 compared to the previous year. The development bank attributes this primarily to government aid in the pandemic.