46% of interviewed big businesses in Baltic States said the business environment of the next six months will be positive. The proportion of positively thinking businesses in Lithuania and Estonia has increased since last year, while that in Latvia has remained the same, according to results of a survey of financial directors carried out by SEB Bank.
Lithuania’s largest companies seem optimistic the most out of all Baltic States – the number of positively thinking CEOs in Lithuania has grown by 4 percentage points since September 2014, reaching 57% in total. Estonia’s CEOs are sceptical the most – only 36% describe the business situation as positive (23% last year).
The proportion of positively thinking CEOs in Latvia remains stable – 44%. The proportion of CEOs who describe the situation as negative has increased from 11% to 17% since last year.
SEB Bank board member Ints Krasts: «Changes to the geopolitical situation along with the events in Ukraine and Russia’s embargo have significantly impacted the mood of large business in Baltic States. 50% of interviewed companies were positive at the beginning of 2014. By the end of the year, 40% of interviewed CEOs still described the situation as positive. Now we see that the worst case scenarios have not come to pass. Companies have found new markets, new partners, and their general expectations for the future continue to improve.»
Lithuanian and Estonian companies invest in the future; Latvia waits
In many areas, however, the opinion of Latvian CEOs differs from that of their colleagues in Lithuania and Estonia. 43% of Lithuanian and 54% of Estonian large companies plan to invest in business development in the near future (31% in Latvia). The proportion of companies in Latvia that plan to pay dividends to their stockholders has grown to 18% since last year (14% in Lithuania and 10% in Estonia). 31% of large companies in Latvia plan to divert loose funds to cover standing commitments (20% in Lithuania and 15% in Estonia).
«More and more Lithuanian and Estonian companies plan to invest in development. Half of Latvian companies plan to divert loose funds to cover commitments or pay stockholders dividends. I believe this tendency carries major risks because we see a similar picture in the segment of medium and small companies. Without investments in business development, Latvian companies risk falling behind in their competitiveness. In addition, considering that interest rates are currently at their lowest, now is the perfect time for companies to consider investment plans and secure long-term funding,» – said Krasts.
Big companies expect rise in turnover
Opinions of Latvian CEOs differ in regards to possible changes in turnover as well. 49% of large companies in Latvia predict turnover rise in the next 12 months. 38% expect turnover to remain the same and 13% believe turnover may experience a sharp drop. 58% of CEOs in Lithuania and 51% of CEOs in Estonia expect increase in turnover values.