Stock Exchange Listed companies are expected to report billions of euros in profits, which will bring a lot of good to both Finland and shareholders.

Economic is recovering briskly around the world, although the escalation of the coronavirus pandemic overshadows the near-term outlook.

In many states, restrictions were tightened at the end of last year to prevent infections. Therefore, consumer and business confidence in the economy in Finland has also weakened.

Despite the worsening of the pandemic, the earnings season for Finnish listed companies is starting again. Many of them are industrial companies, and the economic recovery, especially in the euro area, has been strongest in industry.

From the perspective of the Finnish economy, it is also positive that, according to a survey by the Confederation of Finnish Industries, industrial investment is expected to grow by 17 per cent to EUR 9.9 billion this year.

The worsening pandemic has the strongest impact on the service industries, which account for more than a third of Finland’s gross value added. Companies in the service sector are typically small, and not many of them are listed on a stock exchange.

Read more: The International Monetary Fund warns of slowing economic growth – there are four reasons for the slowdown

Great The October-December earnings period for listed companies will begin today, Thursday. The October – December interim report is published by the telecommunications operator Elisa and the forestry company UPM.

According to the forecast of the information service company Refinitiv and the finance company Nordea, the combined turnover of listed companies has increased by 11 per cent from the corresponding period last year and the operating profit excluding non-recurring items by 32 per cent.

This indicates that the economic recovery has been strong both domestically and abroad, as the main markets for most industrial companies are abroad.

The assessment of the recovery in the industry in particular is confirmed by the fact that two steel companies, the largest forest companies and the engineering company Metso Outotec, are among those who have increased their operating profit the most.

The changes in operating profit increases are significantly larger than the companies that have lost the most operating profit according to the forecast.

The comparison is a bit confusing for Nokia, a manufacturer of network devices, whose projected decline in operating profit is due to the exceptionally strong comparison period of the previous year.

Last year, Nokia exceeded investor expectations in all three reported quarters. Two weeks ago, the company issued a earnings warning that its profitability has improved more than expected last year and will improve rapidly this year.

Read more: Nokia’s problems are easing: profitability is improving faster than expected again this year

Nordean the main asset management strategy Anssi Saari estimates that the earnings period as a whole is becoming very good.

“The eurozone economy will grow by four per cent this year and the Finnish economy by three per cent. A strong economic cycle in key market areas will increase the demand for Finnish industrial companies in particular, as the business of many depends heavily on the development of the business cycle. ”

New orders from engineering companies have been growing for some time and, according to several international forecasts, the shortage of components should gradually ease. Over the current year, the rise in energy prices should also level off.

“What matters is what companies say about the growth prospects for orders and the extent to which orders received have been successfully monetized when component shortages seem to ease. I do not think that Finnish industrial companies have suffered, at least to a very large extent, from rising costs. ”

According to Statistics Finland, new orders in manufacturing grew by 30 per cent in January – November last year.

Inflation has accelerated in the euro area in the autumn, mainly due to higher energy prices, which in many ways affect the prices of various commodities.

“Forest companies produce energy, which is why they can even benefit from higher electricity prices. The acceleration in inflation has hardly affected the costs of industrial companies very much, as wage pressures in Finland and the euro area are moderate. ”

The situation is different in the United States, where there are signs of high wage demands. It will lead to an increase in companies’ labor costs and a decline in profitability if the inflated costs are not passed on to the prices of goods and services.

Saari considers it very possible that many companies will change their outlook even brighter in their near-term interim reports.

“The turmoil in the stock market in recent days is due to very different reasons than the results of the companies, which have also strengthened in the United States. My assessment is that the unrest is temporary. ”

Financial group OP’s analyst Henri Parkkisen in his view, the increase in companies’ costs is a key issue during the financial year.

“The companies’ turnover has grown quite rapidly due to increased demand, but it is not so important. The key question is how cost inflation has affected companies’ profitability. ”

According to him, the results of foreign companies that have published their interim reports so far show that cost inflation is gnawing at the profitability of companies in many ways.

“Raw materials, components, transportation, energy and labor have become more expensive. Of course, it’s good to note that there are differences between companies: it affects the profitability of some quickly and others more slowly. ”

The crucial question is how companies have prepared for and possibly hedged against rising costs.

“The earnings period will be a real test of how companies dare to assess the development of their profitability in this uncertain business environment.”

The last one In connection with the interim reports for the quarter, the boards of listed companies also present their dividend proposals to the general meetings.

At the worst of the coronavirus pandemic, dividends paid to shareholders declined, but are now likely to rise. Based on the forecasts, it is possible that dividends will be paid approximately as much as they were paid from the 2019 results.

Dividends are also good for Finnish public finances, as they increase tax revenue.

For a long time Over time, the most important development of export markets, as they are many vital to many listed companies. There are plenty of open questions, making it difficult to predict the future.

The International Monetary Fund (IMF) on Tuesday summed up the slowdown in global economic growth on four issues: supply stagnation, accelerating inflation, record indebtedness and persistent uncertainty.

Fortunately, the IMF believes that at least supply bottlenecks and accelerating inflation will ease this year.