The margins of many economic sectors have hovered near pre‑pandemic levels, yet with notable differences among industries. The food supply chain, for instance, remains below its initial post‑pandemic level. At the start of 2021, energy companies began to operate at considerably higher margins than before. Just two months after Vice President Nadia Kalvino announced its creation, the first report—handled by the Employment Margins Observatory—offers a comprehensive early look. This observatory was established at the initiative of the Ministry of Economy, in collaboration with the Tax Office and the Bank of Spain, and with the opposition of the CEOE.
The study measures margins based on gross operating profit (often comparable to EBITDA) and on sales (or invoices). It does not focus on net profits after taxes or extraordinary items. The document notes that the margins in the food chain fell by about 25 percent between mid‑2021 and late‑2022, with roughly a 40 percent decline across the agri‑food sector as a whole. The root causes include a steep rise in raw material prices, such as gas and fertilizers, compounded by difficulties in transferring increased costs to consumers. The latest food price movements are cited as contributing to these pressures.
Falling prices in raw inputs between January and March helped margins improve somewhat, though they remained below historical averages. In the broader food wholesale and retail sectors, margins hovered near their historical norms, around 10 percent and 5 percent respectively, yet still below their early‑2021 peaks.
ignited energy
The evolution of energy‑related businesses followed a markedly different path. The report attributes the abrupt margin shifts in the production and distribution of fuels to a surge in consumption over the past two years, coupled with sanctions on Russia, global supply constraints, and higher wholesale energy prices. As a result, margins rose sharply—from about 2 percent at the end of 2020 to around 17 percent by early 2023. The study notes that changes in the selling prices of Spanish products do not strictly track shifts in production costs or international price quotes, making margins volatile and prone to rapid movement in both directions.
A similar trend emerged in the electricity and gas supply sector. Margins grew from about 10 percent at the start of the inflationary period to roughly 25 percent at the beginning of the current year. The report emphasizes a notable heterogeneity: manufacturers in nuclear and renewable energy sectors, less affected by international energy cost increases, benefited from higher selling prices. In contrast, some marketers who do not own production assets faced a temporary squeeze, as they could not fully pass electricity cost increases to their customers under existing contracts.
margin control
Gonzalo García Andrés, the Minister of State for the Economy, interprets these data as supporting government policies on energy margins. He noted that this situation justifies government measures aimed at moderating energy profits. The banking sector was not exhaustively analyzed in the report due to methodological constraints, though other sources corroborate its role in the economy. He commented that there is nothing in the broader industrial landscape that is truly abnormal.
He urged all companies to contribute to margin moderation as inflation pressures ease. The aim is to cushion households and improve purchasing power. He pointed out that the inflation‑adjusted margins for the eurozone remain among the lowest in Spain, and a moderation in costs could translate into real gains in consumer purchasing power. The next quarters will reveal how and whether energy price dynamics begin to normalize, according to Observatory projections and other data sources observed in recent quarters.
According to Bank of Spain data, company margins (excluding self‑employed individuals) stood at 9.6 percent in the first quarter, up 2.4 percentage points from the previous year but still 1 percentage point below the pre‑pandemic level. In the trade and hospitality sector, margins reached 4.8 percent, up from 5.9 percent in the first quarter of 2022 and 5.5 percent at the end of 2019. The energy sector registered margins of 16.4 percent, compared with 6.3 percent a year earlier and 15.2 percent before the pandemic. In manufacturing, margins stood at 5.9 percent, versus 7.5 percent and 5.6 percent in the cited periods. Within the information and communications industry, margins reached 20.8 percent, compared with 18 percent a year ago and 23.9 percent in 2019.