We present the views of experts who manage the finances of key Polish companies, based on a survey conducted this year by Allianz Trade in partnership with the Association of Polish Corporate Treasurers (PCTA). Their evaluations of the current situation starkly contrast those from last year: previously, most financial managers had an optimistic outlook for both their companies and the overall economy. This year, negative opinions prevail. The reasons cited include widespread uncertainty plaguing both the national and global economies, resulting in a decrease in company profitability and an increase in the risk of insolvency.
In brief:
- More believe company conditions have worsened (37% of respondents) than improved (31%).
- In contrast, in 2022, after two years of the pandemic, 55% of financial managers rated their companies’ health as improved, while only 15% saw a decline.
- Supported by facts – more companies experience a margin decrease than an increase. Conservative forecasts dominate future perspectives.
- The primary cause is multi-faceted economic uncertainty – a multitude of coexisting challenges were identified. A simple change, such as energy prices, isn’t enough for a quick and durable economic turnaround.
- A significant shift in perspective – more pessimism than optimism.
The optimism observed last year is now absent. The reasons include an expected drop in turnovers (anticipated this year by half of the key financial managers surveyed). Furthermore, 67% of respondents pointed out the negative effects of inflation, including the resultant increase in their companies’ financial costs (not just an increase in the prices of goods and services).
Hence, every second respondent believes that the average profitability (margin) of their own company will decrease in 2023. Only about one in ten financial experts expects the possibility of increased profitability for their company this year.
There are very balanced expectations regarding the improvement of companies’ health next year, leading to a rise in M&A
Most respondents (42%) forecast moderate company growth. Only a mere 18% stated that their company, despite global uncertainties, remains in a strong growth phase. Slightly more (20%) indicated that their company is (and likely remains) stagnant. A similar 18% foresee potential decline in their organization.
According to Małgorzata J. Grzegory, President of the Association of Polish Corporate Treasurers (PCTA), “The weakened state of many firms across various sectors is especially noticeable compared to the company situations during and shortly after the Covid-19 pandemic. In 2023, the situation is significantly different, with companies focusing on optimization and securing their financial status, including active management to reduce working capital. Some companies, both small and large corporations, are choosing to sell parts of their business. As not all companies are struggling and market demand and supply laws still apply, firms in stable conditions are keen on seizing M&A opportunities as a chance for growth.”
Concurrent risk factors push companies to reduce their potential – layoffs
High costs, especially those caused by the instability of electric energy prices and fuels, increase the risk of delays in fulfilling obligations. 37% of respondents see a direct consequence in the form of increased insolvency and bankruptcy of Polish companies. 25% expect an increase in payment delays, and 16% among them predict the most severe form: the bankruptcy of business partners.
“The improvement in economic prospects, according to respondents, is the least likely (11% expect improvement vs. 41% expect worsening). Sadly, these fears are materializing, including plans to reduce employment (in one out of four companies surveyed). Unemployment in Poland is currently, alongside the Czech Republic, the lowest in the EU. Therefore, finding an experienced and skilled worker is challenging. Companies tried to maintain employment as long as possible. Reducing it indicates they’re backed into a corner without room to maneuver. This speaks to the increasing strain on their working capital and the decline in margins due to rising costs and prolonged payment delays,” believes Sławomir Bąk, Board Member in charge of risk assessment at Allianz Trade Polska.
The Allianz Trade and Association of Polish Corporate Treasurers (PCTA) survey included 61 senior financial staff, primarily corporate treasurers (59%), from both Polish and international companies. They anonymously expressed their views on the macroeconomic situation. Most respondents work in large companies, with turnovers exceeding 200 million zł (86%) and mostly employing over 250 people (78%).
