28.09.2022
One in ten Cypriot businesses said they believe government support measures have helped, while two out of ten businesses believe they have helped sufficiently, according to a business panel survey released on Tuesday. This study captures the trends of the business community every six months and acts as a benchmark for Cypriot businesses, covering, among other things, trends and forecasts regarding business performance.
Metrics and indicators include, among others, employment, turnover, profitability and liquidity, as well as strategic choices and other related parameters. The total representative sample of the survey is 252 enterprises, the survey is conducted from June to July 2022.
According to the survey results, in terms of government support measures for businesses, only one in ten businesses (11%) believe that they have helped a lot, and two out of ten businesses (23%) believe that the measures have helped a little. The majority of enterprises, whose share is 66%, seem to be dissatisfied with the assistance they received as part of state support measures.
When it comes to the most important issues facing businesses today, the cost of raw materials and energy appears to be the two biggest concerns, with seven out of ten businesses (68%) including it in their offerings. They are followed by staffing problems and labor shortages with 49%, as well as lack of liquidity and excessive bureaucracy with 43% and 41% respectively.
The lack of raw materials was a concern for 31% of the participants, followed by a decrease in turnover from 27%, bank restrictions and requirements from 23%, problems with suppliers and staff costs from 21% respectively, while the image of Cyprus abroad and financing from banks were at bottom two places.
The results show that the training of existing staff, according to one in five companies, is the main way to solve the problems they face today. Equally important is finding new ways to promote products with a percentage of 17% followed by digitization with 14%. In addition, this is followed by the hiring of specialized personnel and the introduction of systems for measuring and monitoring performance with 11 percent, fundraising with 8 percent, as well as the use of European funds, cooperation with other companies and organizational changes with 7 percent, respectively.
In terms of turnover, it shows an increase compared to the very low percentages of the previous two editions of the survey, but, nevertheless, remains at a low level. In more detail, 24% of businesses report that their turnover has increased in the last six months, but the percentage of companies reporting a decrease in their turnover remains at a fairly high level: in general, this figure is 41%.
A similar trend, with slight increases in some cases but generally low levels, was observed in the profitability index as well as in the income and liquidity index. In terms of labor costs, according to participating companies, this indicates a significant increase compared to previous years, with 34% of enterprises saying they have increased and only 3% reporting a decrease.
The survey also shows that the cost of financing for businesses continues to rise, with 15% saying it has increased over the relevant time period. In addition, businesses’ spending on raw materials has been rising sharply, with eight out of ten businesses (81 percent) reporting that they have increased, even with last year’s higher performance. It is noteworthy that this percentage is very high even compared to all previous years of the survey.
In terms of the company’s value, as well as the company’s investment diversification index, some stabilization is observed compared to the previous year. What’s more, nine out of ten businesses expect their electricity costs to increase over the next six months, with only 1 percent saying they expect some decline.
According to business forecasts of turnover for the next six months, 30% of enterprises said that it will remain the same, 34% that it will show a decrease, and 28% expect an increase.
A slightly different trend can be observed in business profitability forecasts: 42% said they expect it to continue, 37% to decline and 11% to grow. As for the forecasts of other economic indicators for the next six months, the vast majority of companies (75%) state an increase in energy costs. A significant increase in the cost of purchasing raw materials (61%) is also expected.
As for the rest of the indicators, business participants generally expect stability in the next six months without particularly noticeable changes. Meanwhile, the survey also reflected the strategic choice of enterprises for the next half year, which is mainly focused on the introduction of new products and services, with a share of 27%.
This was followed by an increase in promotions by 19%, as well as a further reduction in commercial costs by 18%. Conversely, four out of ten companies (41%) reported no clear plan for the future.
Finally, with regard to future assistance from the state, business opinions converge on the issues of speeding up permitting procedures for new projects and investments, quick implementation and provision of benefits, as well as reducing bureaucracy.
