Gloomy outlook: KfW panel: medium-sized companies are losing significant sales

According to a large-scale survey, German medium-sized companies are not doing well. Last year, small and medium-sized companies as a whole had to accept sales losses of 4.6 percent, as the current medium-sized business panel from the state-owned KfW banking group shows. Total revenue fell by 246 billion euros to 5.1 trillion euros. Even price increases could not cushion the decline: in real terms, the decline in sales was even 10 percent.

Only companies with an annual turnover of no more than 500 million euros were taken into account in the survey. According to the information, they represent 32.83 million employees in Germany. That is around 494,000 more people than a year ago. The average return on sales, i.e. the ratio of profit to sales, remained unchanged at 7.0 percent. On average, companies had 30.6 percent equity, a slight decrease of 0.6 percent compared to the previous year.

Pessimistic view of the future

On average, those surveyed are rather pessimistic about the future: for the current financial year, 35 percent of companies expect falling revenues and only 15 percent expect increasing sales figures. In the medium term, i.e. up to and including 2026, more companies than ever before in this survey (29 percent) expect their sales to decline.

Accordingly, the propensity to invest will also have declined in 2023. Compared to the previous year, the proportion of companies willing to invest fell by 4 points to 39 percent. Negotiations with banks about investment loans became rarer and more difficult. Smaller companies in particular are increasingly reporting failed negotiations and rejected credit lines.

In principle, German medium-sized businesses remain stable, says KfW economist Michael Schwartz, commenting on the figures. “However, there are some cracks in the foundation, which are mainly due to the economic situation.”