Financial statistics of enterprises improved in 2016

Märt Leesment

After a few years of stagnation, 2016 can be considered rather successful for enterprises – the turnover, investments as well as the number of active enterprises increased by 4%. The improved results were reflected also in profits – the profit for the reporting year increased by 11%. Productivity indicators improved also.

The number of active enterprises continued to grow, reaching nearly 81,900, which is 4% more than in 2015. 91% of active enterprises were micro-enterprises, i.e. with less than 10 persons employed. The growth in the number of micro-enterprises was also the most significant. The number of enterprises with 50 and more persons employed decreased. The largest number of enterprises – 20% – operated in trade, 15% in professional, scientific and technical activities and 12% in construction. The largest share of new enterprises were construction enterprises.

The turnover of enterprises increased in 2016 by 4%, reaching 55 billion euros. Turnover increased the most in human health and social work activities and in water supply; sewerage, waste management and remediation activities (both 15%). Turnover decreased in enterprises operating in other service activities (8%), education (4%) and agriculture, forestry and fishing (3%). Micro-enterprises accounted for only 30% of the total turnover of enterprises.

The biggest share (41%) of the total turnover of enterprises was generated in trade. Compared to 2015, turnover in trade increased by 5%. Of the turnover of trade enterprises, 58% was generated in wholesale trade, 29% in retail trade and the share of wholesale and retail sale and repair of motor vehicles and motorcycles was 13%. The share of the first two has decreased somewhat compared to 2015. A considerable increase, however, occurred in the turnover of enterprises specialising in the wholesale and retail sale and repair of motor vehicles and motorcycles (mainly enterprises selling motor vehicles). Even though the sales of motor vehicles increased, the turnover of retailers of motor fuel dropped, mostly due to cheaper fuel. 37% of the retail trade turnover is generated in non-specialised stores selling predominantly food and beverages. However, this economic activity grew at a slightly slower pace than trade in total. In relative terms, turnover in trade increased the most in enterprises specialising in the retail sale of watches and jewellery, in non-specialised wholesale trade and in enterprises selling via mail order or the internet.

A considerable part (22%) of the total turnover of enterprises was generated in manufacturing, where turnover increased by 2% compared to the previous year. The biggest share of the turnover was generated in the manufacture of wood and products of wood (17%), the manufacture of food products (13%) and the manufacture of computers, electronic and optical products (14%). The share of the turnover generated in these economic activities decreased slightly – in the first two, turnover decreased, and in the third economic activity, turnover increased less than on average in manufacturing. The fall in the turnover of the manufacture of food products was due to a fall in the turnover of enterprises specialising in the processing and preserving of fish, crustaceans and molluscs and in the manufacture of bakery and farinaceous products. A significant increase in turnover was recorded in the manufacture of other transport equipment, the manufacture of wearing apparel, the manufacture of leather and related products and the manufacture of electrical equipment. Manufacturing is largely oriented towards export markets ‒ sales to non-residents amounted to 62%. The respective indicator for 2015, however, was 63%. The share of sales to non-residents in turnover, i.e. export intensity, differed by economic activity, amounting e.g. in the production of beverages to 18% but in the production of computers, electronic and optical products to 94%.

The number of persons employed in enterprises continued to increase by 2%, reaching 462,300. A quarter of persons employed were engaged in manufacturing, a fifth in trade and a tenth in construction. Approximately 2,000 additional persons became engaged both in construction and in trade. Employment decreased in agriculture, forestry and fishing, but also in manufacturing and in mining and quarrying. In the case of the first two economic activities, it should be noted that the 2015 level was relatively high and the number of persons employed exceeded that in previous (post-crisis) years. The decrease in mining and quarrying may have occurred mainly due to a fall in production, but the long-term impact also comes from the mechanisation of production.

Labour costs increased by 6% due to wage pressure, but their share in the cost base of enterprises remained at around 13%. By economic activity, labour costs accounted for the biggest share of total costs in human health and social work activities (50%) and for the smallest share in wholesale and retail trade and in the sale and repair of motorcycles (6%).

In 2016, the total profit of enterprises for the reporting year increased by 11% and exceeded 3.4 billion euros. In the previous two years, profit decreased. A considerable increase in profit was recorded in enterprises specialising in professional, scientific and technical activities, where profit grew by nearly 243 million euros (i.e. by three quarters). In this economic activity, growth relies largely on the activities of head offices; management consultancy activities, but also on scientific research and development. Also trading companies contributed substantially (171 million euros) to the profit growth of enterprises. Agriculture, forestry and fishing enterprises sustained a loss of more than 150 million euros. The loss was mainly due to forestry and logging enterprises, but negative impact came also from enterprises specialising in crop and animal production, hunting and related service activities.

Enterprises specialising in wholesale trade and wholesale and retail sale and repair of motor vehicles and motorcycles ensured growth in the trade profit. In retail trade, profit decreased slightly. One of the reasons for this is strong competition. Significant decrease in profit was seen in the retail sale of motor fuel.

The growth in profit was reflected also in improved profitability indicators. The value of the profit margin (i.e. the net profit to turnover ratio) was 6.16% in 2016 and 5.79% in 2015. Compared to preceding years (2011‒2014), the indicator for 2016 was somewhat lower. A considerable growth in profit improved the value of the profit margin in professional, scientific and technical activities. Due to incurred losses, the profitability indicator for agriculture, forestry and fishing turned negative.

The average labour productivity per person employed by value added (i.e. the value added to number of persons employed ratio) increased by 6% and amounted to 26,800 euros. In 2016, the growth in the value added slightly exceeded the growth in labour costs, bringing about an increase in labour cost productivity after four years of decline. Labour productivity was the highest in water supply; sewerage, waste management and remediation activities and the lowest in other service activities. According to the 2015 data, the value added per person employed generated in Estonian enterprises was among the lowest compared to the respective indicator for other European Union countries. This was the case also in other Central and Eastern European countries.

Improved economic performance enabled enterprises to lay the ground also for further growth. Investments of enterprises in fixed assets in 2016 amounted to more than 3.7 billion euros, i.e. 4% more than a year earlier. Economic activities that contributed the most to investment growth were transportation and storage and administrative and support service activities. Investments in intangible fixed assets increased but their share remained modest (around 4%). Investments made by enterprises operating in the industrial sector (excl. construction) decreased significantly. Investments continued to be the largest in real estate activities. Next by investment volume was manufacturing. Investments were mainly made in the acquisition, construction and reconstruction of buildings and in equipment, machinery and fittings. The main reason behind the growth in investments was an increase in the acquisition of transport equipment by a third. However, the growth resulted from the low base level in 2015; in 2012‒2014, the level was higher than in 2016. The biggest negative impact on investments came from the decrease in investments made in construction and reconstruction of buildings. Investments per person employed were the largest in real estate activities and in electricity, gas, steam and air conditioning supply. Investments per person employed were the smallest in other service activities, human health and social work activities and in education.

Profit in reference year, investments in fixed assets (incl. financial leasing) and turnover per person employed, 2006‒2016