Profitability Dutch private sector deteriorating

The number of Dutch non-financial companies whose profitability deteriorated has risen further in the first quarter of 2013. The number has not been this high since mid-2009. Profits have been in decline almost continually over the past years, as the Business Cycle Survey Netherlands (COEN) shows.

Long-term decline

In the first quarter of this year, a growing number of entrepreneurs in the non-financial sector suffered loss of profitability. Since the start of the survey in 2008, entrepreneurs reporting loss of profitability have nearly always outnumbered those reporting improvement. In the first quarter of this year, the profitability of only 8 percent of companies improved, whereas more than 38 percent indicated deterioration. The remainder – more than half – reported that the results were more or less the same as in the fourth quarter of 2012. On balance, the number of companies indicating loss of profitability in the first quarter was the highest since mid-2009.

Profitability relative to preceding quarter

Nearly all sectors less profitable

The pressure on profitability in the first quarter is noticeable across nearly all sectors. Turnover and employment also declined in those sectors. The only sector to show improvement was mineral extraction. Turnover and employment also improved in this sector. The cold weather conditions in the first quarter boosted natural gas production.

Most construction companies reported a decline in profitability. On balance, more than half of construction companies achieved disappointing results. With 40 percent, the slump was also above average in the sector hotels and restaurants. The sector manufacturing industry recorded the smallest downturn (on balance 19 percent). 

Turnover and profitability, first quarter 2013

Michel van Kooten and Sidney Vergouw