There are three main conclusions of the first report of the Observatory of Business Margins presented yesterday by the Ministry of Economy. First of all, that the vast majority of business sectors have managed to recover the level of margins they had before the pandemic. The more detailed picture is completed by an energy sector with the largest margins, up to 25% in the case of gas and electricity, and at the other end, a food chain that has not yet returned to pre- covid.
The energy sector is the one that gets the most margins in the first quarter of the year, with “abnormally high” levels, the observatory says. Its strong recovery after the covid crisis and the drop in Russian exports have caused the gross return on sales of the fuel production and distribution sector to go from 2% at the end of 2020 to close to 17% at the beginning of 2023.
In the case of electricity and gas supply, the margin is even higher, exceeding 25% in the first months of 2023. In this subsector, margins fell in the first half of 2021 and since then have maintained an increasing trend. In any case, the observatory warns that there is a lot of heterogeneity in this area and that not all companies would have increased margins in these volumes.
For its part, the food chain, although at the beginning of the energy crisis it was the least affected, from 2021-2022 the rise in the price of raw materials punished its margins, so that it continues below of its historical average, although with a rebound in the first quarter of this year. Specifically, in these three months it has rebounded by nearly one percentage point.
For its part, a sector as punished by the pandemic as services, had its most marked impact in the areas most linked to tourism, such as transport or hospitality. In this case, they had a drop of nearly 75% between the end of 2019 and the first quarter of 2021, due to the drop in demand. From that moment, a recovery began that led to a return to the pre-covid level at the end of 2022.
These are data that the Spanish Government considers to support its energy taxes. “In the sectors of generation, production and distribution of fuels, as well as generation and distribution of electricity and gas, we have seen a very significant expansion of business margins, which confirm that both the levy and previous measures to moderate extraordinary profits were justified” , says the Secretary of State for Economy, Gonzalo García Andrés.
The observatory, which evaluates margins according to the gross operating result on sales, starts with its own weaknesses and criticisms of the employer. The weaknesses come because it does not provide for a sector as important as finance or the self-employed. The financial sector is not analyzed because it is not taxed by VAT, which is one of the instruments used by the observatory. However, to justify the banking tax, Economia indicates that bank margins depend to a large extent on interest rates, which have gone up. The self-employed also do not appear, also due to a lack of information, since the data taken as a reference do not appear in the information provided by self-employed workers.
Criticisms from employers have come on the one hand for not taking into account the self-employed. The president of ATA, Lorenzo Amor, considers that if self-employed workers have not been included, the report of the Observatory of Business Margins loses its representativeness. He criticized it on his Twitter account.
The complaint of the president of the CEOE, Antonio Garamendi, has more substance. “They should worry about the accounts of the State and less interfere with what we do”, Garamendi said in line with his usual position on this observatory. It has always been described as an interventionist instrument, designed to point out companies, and precisely for this reason, last week the CEOE planted the Ministry of Economy, which had called a meeting with social agents about the observatory.
