Large companies consider the acceleration of inflation, rising financing costs and problems with the availability of employees to be the biggest threats. The unpredictability of energy prices also emerged as a new concern in the study.
Finns large companies are putting the brakes on their growth expectations and are now mainly focusing on securing their operations, according to OP Group's recent Large Business Survey.
The companies' financial situation is stable, but Finland's weak economic situation and the uncertainty of the operating environment are reflected in their growth expectations. More and more companies have become more cautious than before, when, among other things, the economic downturn and the uncertainty related to interest rates eat away at the desire to invest.
In last year's Large Enterprise Survey, there were 19.4 percent of companies willing to expand, now only 12.1 percent. Just two years ago, every third large company was aiming for growth. Instead, as a general rule, 47.5 percent of large companies now aim to make operations more efficient and increase productivity.
Weak growth expectations are also reflected in investments. 52 percent of tangible and 40 percent of intangible investments are intended to be used to secure the continuity of the current business. The share of these respondents is the highest in five years.
“Investments mainly secure current operations, not so much develop new ones. However, the silver lining of the situation is that the companies have adapted to the weak economic situation. Investments have not collapsed, but are still being made, especially in the area of digitalization and responsibility,” says the CEO of OP corporate bank Katja Keitaanniemi.
Companies are expecting an increase now mainly from abroad. Both demand, subcontracted purchases and the number of personnel are expected to grow faster in 2024 abroad than in Finland. Compared to last year, production is estimated to increase, especially in the euro area.
“The fact that growth and demand is expected to pick up in the international market is positive, but the development as a whole for Finland is quite weak.”
The biggest companies see the acceleration of inflation, the rise of financing costs and the availability of employees as threats.
67 percent of the respondents estimate that the uncertainty of the interest rate will bring problems to the company in the next few years. The concern about interest rates is not only related to the increase in the companies' own debt service costs, but it is also feared that it will reduce customer demand. In addition, uncertainty is believed to lower or postpone investments.
The unpredictability of energy prices also emerged as a recent concern in the study. 69 percent of the respondents estimate that the unpredictability of prices weakens the competitiveness of their company. This is the first time this has been asked.
“What is interesting is whether the challenge is more the high price level or the fluctuation of prices. Unpredictability as a whole is a red garment for companies. Stability is extremely important when thinking about investments,” says Keitaanniemi.
In a cheerful state Keitaanniemi considers it a surprise that even in uncertain times large companies intend to continue investing in responsibility. The companies that responded to the survey expect investments related to sustainable business to grow by almost three percent in 2024. Only investments in digitizing products and services will grow more strongly.
Almost 56 percent said in the survey that they had to change their subcontractors or suppliers because of responsibility requirements. The reading has grown by 13 percentage points in a year.
“It's a str
ong message to SMEs and the subcontractor field that the responsibility requirements must be reacted to and answered,” Keitaanniemi says.
OP Group's Large Enterprise Survey was conducted for the 12th time. The research has been carried out in cooperation with the Nibs think tank founded by Aalto University professors.
In the fall of 2023, 176 management team members from a total of 141 large Finnish companies or large subsidiaries operating in Finland answered the survey. The combined turnover of the companies is more than 244 billion euros based on the latest confirmed financial statements.
#Companies #Finnish #large #companies #focus #securing #operations #growth