The profit of the business sector decreased in Q2

According to Statistics Estonia, in the 2nd quarter of 2016, the total profit of the business sector was 671 million euros, which was 6% less than in the same period a year ago.

Compared to the 2nd quarter of 2015, total profit decreased in almost all economic activities. The biggest contribution to the growth in total profit was made by trade and information and communication enterprises. The growth in the profit of the business sector was negatively influenced mostly by manufacturing and transportation and storage enterprises.

In the 2nd quarter of 2016, enterprises sold goods and services for 12.6 billion euros, which was 1% more than in the same period a year ago. The turnover of trade enterprises, having the biggest share in the total turnover of the business sector, increased 2%, influenced mostly by a decrease in the turnover of wholesale trade. At the same time, the turnover of retail and motor trade continued to grow. The turnover of manufacturing enterprises increased 3%.

Compared to the same period a year ago, the total costs of enterprises increased 2%, which includes a 6% increase in personnel expenses. The number of persons employed as well as the number of hours worked increased 4%. The labour productivity of the business sector on the basis of value added amounted to an average of 5,400 euros per person employed per quarter, remaining on the level of the previous year.

The investment activity of enterprises continues to be at a low level. In the 2nd quarter of 2016, enterprises invested 496 million euros, which was 5% less than in the same period the year before. The investments were made mostly in machinery and equipment and buildings. The main investors were manufacturing, trade, transportation and storage enterprises, who made about a half of the total investments of all enterprises. Compared to the 2nd quarter of 2015, investments in transport equipment and computer systems increased, while other investments fell.

Diagram: Total profit of the business sector, 1st quarter 2010 – 2nd quarter 2016

Source: Statistics Estonia

Businessman Oliver Kruuda doesn’t agree with suspicions

Businessman and owner of Tere AS, Oliver Kruuda, said in an interview with ERR’s TV news on Thursday that he didn’t agree with the suspicions raised against him, but that Tere would likely need to be broken up. Kruuda had been arrested earlier this week on suspicions of tax fraud.

Kruuda said in the interview that there were different interpretations of the situation rather than a tax fraud case. He doesn’t see a reason why Tere AS should file for bankruptcy, but instead said that the company would be reorganized.

Read more from ERR News

Estonian aircraft maintenance company opens warehouse at Gatwick

Estonian aircraft maintenance company Magnetic MRO opened a warehouse at Gatwick, the UK’s second-largest airport, which will enable it to improve the supply of goods to its customers.

Establishing a warehouse at Gatwick was part of Magnetic MRO’s growth strategy and reflected customers’ growing interest in its services, the company said.

Read more from ERR News

The profit of the business sector decreased in 1Q

According to Statistics Estonia, in the 1st quarter of 2016, the total profit of the business sector was 521 million euros, which was 12% less than in the same period a year ago.

Compared to the 1st quarter of 2015, total profit decreased in almost all economic activities. The biggest contribution to the growth in total profit was made by information and communication enterprises. The growth in the profit of the business sector was negatively influenced mostly by manufacturing and transportation and storage enterprises.

In the 1st quarter of 2016, enterprises sold goods and services for 11.7 billion euros, which was 2% more than in the same period a year ago. The turnover of trade enterprises, which have the biggest share in the total turnover of the business sector, increased 7%, influenced mostly by an increase in the turnover of wholesale trade. The growth was supported also by retail and motor trade. The turnover of manufacturing enterprises stayed on the level of the previous year.

Compared to the same period a year ago, the total costs of enterprises increased 2%, which includes a 6% increase in personnel expenses. The number of persons employed as well as the number of hours worked increased 3%. The labour productivity of the business sector on the basis of value added amounted to an average of 4,900 euros per person employed per quarter, i.e. 2% more than in the 1st quarter of 2015.

The investment activity of enterprises continues to be at a low level. In the 1st quarter of 2016, enterprises invested 443 million euros, which was 5% less than in the same period the year before. The investments were made mostly in buildings, and machinery and equipment. The main investors were manufacturing, trade, energy and transportation enterprises, who made more than a half of the total investments of enterprises. Compared to the 1st quarter of 2015, investments in transport equipment and computer systems increased. Other investments fell, with the biggest decrease registered in investments in land.Diagram: Total profit of the business sector, 1st quarter 2010 – 1st quarter 2016

Source: Statistics Estonia

Profit of the business sector decreased in 2015

According to the preliminary data of Statistics Estonia, in 2015 the total profit of the business sector was 3.0 billion euros, which was 8% less than the year before. The increase in the business sector’s total profit turned to decline after five years of growth.

Compared to 2014, the total profit decreased in almost all economic activities. The biggest contribution to the total profit was made by real estate activities. The growth in the profit of the business sector was negatively influenced mostly by manufacturing and energy enterprises. The profit of manufacturing decreased 16% compared to 2014, mainly due to the decreased profits in the manufacture of electronics and fuel oil products.

In 2015, enterprises sold goods and services for 49.1 billion euros, which was 3% less than the year before. The turnover of trade enterprises, which have the biggest share in the total turnover of the business sector, decreased 3%, influenced mostly by a decrease in the turnover of wholesale trade. At the same time, the turnover of retail trade and motor trade continued to grow. The turnover of manufacturing enterprises stayed the same as the year before.

Compared to 2014, the total costs of enterprises decreased 2%, while personnel expenses increased 7%. Both the number of persons employed and the number of hours worked increased 2%. The labour productivity of the business sector on the basis of value added amounted to an average of 22,100 euros per person employed in a year and stayed on the same level as in 2014.

The investment activity of enterprises continued to decrease for the third year in a row. In 2015, enterprises invested 2.3 billion euros, which is 4% less than the year before. Similarly to 2014, the largest investments were made mainly in equipment and machinery and in the construction and alteration of buildings. The main investors were manufacturing, energy and trade enterprises with about a half of the total investments of enterprises. Compared to 2014, the investments in acquisition of buildings and in equipment and machinery increased. Other investments decreased, with the biggest decrease registered in investments in land.

In the 4th quarter of 2015, enterprises sold goods and services for 12.7 billion euros, which was 2% less than in the same period of 2014. In the 4th quarter of 2015, enterprises invested 759 million euros, i.e. the same as in the 4th quarter of 2014.Diagram: Total profit of the business sector, 2002–2015

Source: Statistics Estonia

Expenditure on research and development fell last year

According to Statistics Estonia, in 2014 the expenditure on research and development (R&D) in Estonia amounted to 286.7 million euros, which was 12% less than in 2013.

It was somewhat expected that in 2014, R&D expenditure remained on a downward trend as the large investments made in 2010–2012 to start the pilot project in the oil industry led to the exponential increase in total spending on R&D. In 2013, the pilot factory reached the production phase and the share of investments began to decrease. The impact of this was clearly recognizable in 2014.

In 2014, half of R&D expenditure in Estonia came from the State Budget. The share of R&D financing in the total general government expenditure was 1.87%.

The R&D expenditure in non-profit institutional sectors (higher education, government and non-profit private sectors) was 161.9 million euros, which was 5% less than in the previous year. This was mainly influenced by the higher education sector, where spending fell by 8% compared to the previous year.

The R&D expenditure in the business enterprise sector was 124.8 million euros, which accounted for 44% of the total R&D expenditure. Spending decreased by a fifth compared to the previous year mainly at the expense of investments. The share of investments in R&D expenditure in the business enterprise sector was 19%, which is the lowest in the recent years. This is influenced by the overall economic situation, where investment activity had started to decline already in 2013 and in 2014 business investments were a tenth smaller than in the year before.

R&D intensity i.e. the ratio of R&D expenditure to GDP was 1.44% in 2014, which meant a decrease of 0.28 percentage points compared to the previous year. According to Eurostat’s preliminary data, Estonia did not fit into the top ten countries based on the R&D intensity index, but retained its position at the top of the following ten.

Compared to 2013, the R&D personnel in non-profit institutional sectors increased from 7,517 to 7,562. Calculated in full-time equivalents (only by working time spent on R&D) the number of employees increased from 3,789 to 3,998. In full-time equivalents, R&D personnel were nearly half of the total, which means that almost every other person has been looking for extra work. In the business sector, R&D personnel also increased (from 2,767 to 2,930) while in full-time equivalents, the number fell from 2,069 to 1,798. R&D labour costs in the business enterprise sector remained at the same level as in the previous year.

Diagram: R&D expenditure, 2002–2014

Source: Statistics Estonia

 

The profit of the business sector increased in 3Q by 5 pct

According to Statistics Estonia, in the 3rd quarter of 2015, the total profit of the business sector was 892 million euros, which was 5% more than in the same period a year ago.

Compared to the 3rd quarter of 2014, total profit increased in almost all economic activities. The biggest contribution to the growth in total profit was made by real estate and information and communication enterprises. The growth in the profit of the business sector was negatively influenced mostly by transportation and storage and manufacturing enterprises.

In the 3rd quarter of 2015, enterprises sold goods and services for 12.4 billion euros, which was 2% less than in the same period a year ago. The turnover of trade enterprises having the biggest share in the total turnover of the business sector stayed on the level of the previous year, influenced mostly by a decrease in the turnover of wholesale trade. At the same time, the turnover of retail trade and motor trade continued to grow. The turnover of manufacturing enterprises decreased 3%.

Compared to the 3rd quarter of 2014, the total costs of enterprises decreased 3%, while personnel expenses increased 7%. The number of persons employed as well as the number of hours worked increased 2%. The labour productivity of the business sector on the basis of value added amounted to an average of 5,800 euros per person employed per quarter, i.e. 5% more than in the 3rd quarter of 2014.

The investment activity of enterprises continues to be at a low level. In the 3rd quarter of 2015, enterprises invested 578 million euros, which was 6% less than in the same period the year before. Compared to the corresponding quarter of the previous year, investments continued to decrease for the second year in a row. The largest investments were made mainly in buildings, and machinery and equipment. The main investors were manufacturing, energy, trade and real estate enterprises, with more than a half of the total investments of enterprises. Compared to the 3rd quarter of 2014, only the investments in the acquisition of buildings and in machinery and equipment increased. Other investments decreased, with the biggest decrease registered in investments in vehicles.

Diagram: Total profit of the business sector, 1st quarter 2010 – 3rd quarter 2015

Source: Statistics Estonia