Results of non-financial corporations in 2021 Q1

The information for the sample of firms reporting to the Central Balance Sheet Data Office Quarterly Survey evidences that in the first three months of 2021 firms’ activity continued to contract compared with 2020 Q1. However, it did so at a far slower pace than a year earlier, when the first effects of the COVID-19 crisis made themselves felt. Thus, from January to March 2021 there were further reductions, albeit minor, in gross value added and gross operating profit, while employment continued to fall across the sample as a whole. Nonetheless, lower depreciation and operating provisions allowed ordinary net profit to rise and, consequently, profitability indicators to recover slightly. The financial position indicators have, on average, shown a far more subdued performance than in 2020, with slight increases in the average debt ratios and stability in the share of profits used to pay interest. Also evident is a slight decline in average liquidity ratios, following the strong increase in the previous year. In any event, these aggregate developments in the firms’ economic and financial indicators were compatible with strong heterogeneity both at the sectoral level and in other dimensions. The article includes a box which analyses recent developments in the firms’ liquidity ratios, concluding that some of the firms that had increased their liquidity buffers as a precautionary measure in 2020 appear to have lowered this ratio in 2021 Q1, in step with the gradual dissipation of uncertainty over future macroeconomic developments.