In the second quarter of 2014, the total gross profit before tax of non-financial companies amounted to 38.2 billion euros, 4.3 billion more than in the second quarter of 2013. Although this indicates a slight recovery after three years of declining second-quarter profits, it was still 4.5 billion euros lower than in the second quarter of 2010. The increase in the second quarter of 2014 was mainly the result of higher profits at foreign subsidiaries and a slightly improved performance in domestic operations.
Better domestic results
The result from domestic production activities (the gross operating surplus) was 1 billion euros higher than last year, 30.8 billion euros. This is still below the level in 2010-2012. The increase is primarily caused by a higher value added, although this is partially offset by higher expenditure on taxes (less subsidies) and on wages and social security contributions. The profit ratio, gross operating surplus as a share of gross value added, was also higher than the year before, because gross operating surplus grew relatively faster than value added.
The value of production of non-financial companies in the second quarter of 2014 was 1.6 billion euros higher than twelve months previously. Production was mainly higher in the basic metals and machinery industries, and in business services. The higher production was achieved through intermediate consumption which was marginally below the level of the same quarter in the previous year. This resulted in an increase in gross value added of 1.6 billion euros.
Higher profit for foreign subsidiaries
After two quarters of declining earnings for foreign subsidiaries, the second quarter of 2014 showed an increase in their profits. Earnings grew by 2.9 billion euros compared to the second quarter of 2013, to 7.2 billion euros. In the first quarter of 2014 earnings of foreign subsidiaries were still 2.3 billion euros lower than twelve months previously. In the fourth quarter of 2013 they were extremely low, at 1.1 billion euros.
Dividends almost at the same level
Despite the increased profits, non-financial companies paid their shareholders about the same amount in dividends as in the second quarter of 2013 (12.1 billion euros). Foreign shareholders received 3.2 billion euros directly in dividends; added to this another 0.6 billion euros in retained earnings in the Dutch non-financial companies were earmarked for foreign investors.