SEB survey shows the majority of large Baltic companies feel positive about business environment in the coming 12 months
According to the survey* of chief financial officers of large Baltic companies, most large companies are positive about their forecasts for the business environment in the coming 12 months. Large companies also feel financially stable - 83% of large Latvian companies convincingly rated their financial position as good or very good, which is the highest rating in eight years.
80% and 75% of large companies in Lithuania and Estonia, respectively, feel financially stable. Willingness to invest has also increased, especially locally: 61% of Latvian, 54% of Lithuanian and 66% of Estonian large companies plan to invest their surplus cash in the next 12 months. Risk appetite has also returned, and most companies believe that the time is ripe to take more risks on the company’s balance sheet, even in the long term.
Board member of SEB Ints Krasts points out: “Survey data show that the impact of the crisis is weaker than originally expected, and positive business sentiment has peaked in recent years. Although there is no lack of challenges, companies will focus on development in the next 12 months. 25% of large Latvian companies see development opportunities in digitalisation, process automation and innovation, 19% plan to launch new products or services, while 12% want to expand into new markets, which is a very good indicator in the Baltic context.”
The most urgent challenge is the reintroduction of restrictions
The majority of Latvian businesses (59%) cite the renewed restrictions due to the spread of Covid-19 as the most pressing challenge in the next 12 months. The challenges of skilled labour shortages (54%) and rising wages (41%) are not far behind. Most Latvian companies are also concerned about cost pressures, which are a stable and fast-growing problem across the Baltics.
Reducing impact on the environment has benefits
“Sustainability and green transformation are strong drivers of change that are already relevant for most large Baltic companies: 42% of Latvian, 38% of Lithuanian and 40% of Estonian companies have developed a strategy to reduce their environmental impact and are ready to take concrete steps. At the same time, the vast majority also see significant benefits in dealing with environmental issues, such as new business opportunities, cost reductions and changes in consumer behaviour. This is a very positive trend,” says Ints Krasts.
The most important investment objective for Latvian companies at the moment is to develop a sustainability strategy or improve the existing one (38%) and measuring of CO2 emissions (29%). For more than half of Latvian large companies, it is also important to know how their product or service affects the environment, and this is also measured. At the same time, 36% of companies are considering measuring their impact, but 13% have no plans yet to do so in the coming year. In general, companies cite the acquisition of knowledge and the application of laws, as well as the development of a clear strategy, as the main challenges in implementing sustainability policies.
*Once a year, SEB conducts a survey among CFOs of the largest companies in the Baltic Sea region and asks financial experts to give their forecasts on the business environment, key challenges and other topics. The survey was conducted in September 2021 and included 289 companies from Latvia, Lithuania and Estonia with an annual turnover of more than EUR 20 million.
