The income of Spanish companies accumulated six months of decline in year-on-year terms in September, in a context of economic slowdown and moderation after last year’s record turnover levels, which continue to provide high profits at least to large national corporations.
In September, according to data published this Thursday by the INE, business income fell 8.3% compared to the same month of the previous year, accentuating the declines that began to be detected in April. That month they fell 4.8%, followed by falls of 2.6% in May, 4.9% in June, 3.8% in July and 6.9% in August.
This trend interrupts a progression of year-on-year increases since February 2021. Income has evolved upwards with inflation, whose annual rate reached 10.8% in July of last year, and then moderated. At that time, company turnover was advancing at rates of 30% year-on-year.
In its latest activity report, with data up to February, the Bank of Spain points to the economic slowdown as one of the key elements of the third quarter, after the rate increases applied by the ECB. After the 0.4% improvement in GDP in the second quarter, a smaller increase of 0.3% occurred in the third. Furthermore, the Bank of Spain Survey on Business Activity (EBAE) already points to a “weakening of company turnover.”
The INE shows that, if September is compared to August of this year, there has been an increase in business income of 0.9%, when generally during that month the increase usually exceeds 3.5%.
When analyzing sectors, it can be seen that energy companies and everything related to their extraction and supply, which a year ago were collecting record prices as a result of the invasion of Ukraine, are now registering a 49% drop in income. In commerce it also fell, by 0.9%, and industries fell by 2.3%.
A recent Hiscox report on SMEs indicates that it is precisely industrial companies that are suffering the most from the contraction in income, especially because 93% of them say they are detecting, on the other side of the income statement, cost increases. 61.3% of companies also report cost increases, which translates into lower margins.
On the other hand, the large corporations listed in Spain, those of the Ibex 35, increased their profits by 22% in the third quarter, up to 14,449 million euros, despite the economic slowdown. The improvement responds mainly to the banking sector, whose financial activity is not analyzed by the INE, and also to the tourism sector, with hotel companies and airlines at record levels of profits.
