Due to the war in Ukraine, the complicated geopolitical situation and the increasing inflation pressure are negatively affecting the income statements of the companies. And increases in both energy and raw material costs reduce profits by up to 80%, in a dynamic that forces most companies to revise their prices upwards. The sectors with the most electricity usage, for example metal and some branches of textileThey are the ones who suffered the most from the coup.
The imbalances between supply and demand recorded as a result of the Covid health crisis have begun to create a surge in energy, raw material and transportation prices over the past year, a trend far from stopping or even intensifying during this early period. 2022, after the Russian invasion of Ukraine. The rise in inflation is 10.5% per year in the province of AlicanteIt is the clearest proof of this spiral, which has not seen the end yet and has serious consequences for companies.
One of the sectors that suffer the most from this situation is metal, as it is a very intense sector in energy use. Luis Rodríguez, president of the Metal Entrepreneurs Federation of the State of Alicante (Fempa), does not hesitate to point out the commercial margins “minimized. While the incidence of cost increases in our sector, especially in energy, is brutal, there are other issues that affect it, such as raw materials and wages. In the end, profits may have fallen by 80% or more.”
For this reason, many companies are left with no other way out but to pass these increases on to the prices they charge their customers. “At first – he emphasizes – almost heroic resistanceIt also depends on the contracts signed at that time, but had to reflect the current reality in the renegotiations”.
Textile, especially the finishing sub-sector, big electricity consumer, is another one of those industries that has been particularly damaged by this inflationary trend, where some companies have had to file temporary employment regulation files. Pepe Serna, President of the Valencia Community (Ateval) Textile Entrepreneurs Association, said, “We are going through a very complex situation. We found ourselves when we thought we were starting to overcome the effects of the pandemic.” with a conflict of war where he did nothing but complicate things.”
Although it does not escape the problem, its effect on shoes is more moderate. According to Marián Cano, president of the national and regional employers’ association, “up to now, companies have followed a policy of cutting margins, but what has happened in recent months has left them unattended. review ratesbecause the situation is unsustainable.
As a result of strong seasonality, the toy managed to avoid the strong increase in costs in the first quarter of the year. currently low production. In any case, and according to José Antonio Pastor, managing director of national manufacturers, “From now on, companies will have to put up with these price increases, and the repercussions of this are currently unpredictable. They are extremely critical.”
Accordingly, a study conducted by consulting firm Grant Thornton reveals that: about 70% of business owners They expect to increase the prices of their products due to the inflation spiral of the Valencian Community and, accordingly, the province of Alicante, which increased by 29 points compared to a year ago.
Increase in light costs growth
The increase in energy prices has become the biggest problem of industrial companies in the short term and one of the main factors that will limit their own growth capacity.
According to research by consulting firm Grant Thorton, 79% of employers think so. As a solution to this challenging environment, companies continue to rely on the progress they can make in foreign trade. Thus, while 41% was expected to increase its exports at the beginning of last year, this figure has now increased to 58% considering the business opportunities abroad.
As 42% of businessmen plan to allocate some of their funds to this section, another noteworthy information in the survey is the information referring to digital transformation. On the other hand, in line with the same question, more than half of the companies also discussed their intention to increase their cyber security investments.