Company Revenues Could Rise Above Inflation This Year

According to the fourth quarterly survey of the K&H SME Confidence Index 2023, which indicates the expectations of micro, small and medium-sized enterprises in Hungary for the upcoming period, the turnover of companies may again rise above the annual inflation rate this year, K&H told MTI on Friday.

The bank has been continuously compiling the quarterly K&H SME Confidence Index since 2004. In the latest survey, business decision-makers of 400 Hungarian-based companies with annual sales of less than HUF 2 billion were asked between November 6-30, 2023.

In the release, it was highlighted that businesses expect a 7.2% increase in turnover and a 3.8% increase in profit in the year ahead. This continued a slowing trend in revenue growth dynamics, while profit expectations were virtually unchanged from the previous quarter, they stressed.

The survey showed that the revenue expectations of firms of different sizes for this year are split into two camps. Once again, medium-sized companies expect the strongest revenue growth, at 8.4%, while expectations for both micro and small companies have fallen to 7.1%.

The picture is more consistent across the sector in terms of profit expectations. Here, micro enterprises expect the highest profit growth of 3.9%, but expectations for small enterprises are at a similar level of 3.8%, while for medium-sized enterprises it is 3.6%, the statement said.

There is still no significant change in investment intentions, with 59 per cent of firms planning some kind of development this year. IT investment continues to lead the way in terms of ambition, with the share of firms considering this jumping from 27% to 34% compared to the previous quarter. This is followed by the replacement or modernization of company cars, which is also up from 16% in the previous quarter to 21%. However, the proportion of those planning to invest in machinery has fallen significantly, from 21% to 13%, K&H said.