If in 2020 47% of all companies were operating at a loss, while the total losses of these merchants increased to €1.8 billion last year, then in the last year the number of companies operating at a loss has decreased slightly, and also the ‘the amount of their total losses decreased, according to “lursoft“research data.
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“Lursoft” calculated that 45.4% of all companies that submitted reports for 2021 closed the past year with a loss. The total losses of these companies reached 1.43 billion euros last year.
The national airline AS “Air Baltic Corporation” has also been operating at a loss for the past three years. Although last year they were half of the previous year, AS “Air Baltic Corporation” kept the 1st place in the list of losers in 2021. The available annual report of “Lursoft” shows that after the turnover of the airline decreased by 72.8% in 2020 under the influence of the Covid-19 pandemic, increased by 44.1% last year. However, despite this circumstance, 195.9 million in 2021 EUR large turnover is still far from the positive growth of the pre-pandemic period, which was taken by AS “Air Baltic Corporation”. The airline closed last year with $133.65 million. Losses in EUR.
Considering that the Covid-19 pandemic continued to have a negative impact on the aviation industry last year, the initial market recovery expectations, which were included in the business plan of AS “Air Baltic Corporation”, have not come true. As a result, the funding in the amount of EUR 250 million, which the airline received as a capital increase from the Latvian government, was not enough to implement the business plan. “When it became clear in the second quarter of 2021 that the global pandemic would again have a significant impact on the airline’s commercial performance, management renewed the company’s business plan. It maintained the previous long-term goals, but the new plan includes new industry forecasts, mainly anticipating a slower recovery of the aviation industry”, reads the management report of “Air Baltic Corporation”.
At the end of 2021, about 1.6 thousand employees were employed in the company “Air Baltic Corporation”, which is 30.5% more than in the previous year. The increase in the workforce was influenced by the growing volume of flights towards 2020, as well as by expectations of a significant market recovery in 2022. It should be noted that, in total, 151.9 thousand jobs were provided in companies operating at a loss in 2021.
Data from “Lursoft” research shows that 44.4% of all companies that filed reports for 2021 worked with losses in the aviation sector last year. Compared to a year ago, the number of loss-making companies in this sector has decreased.
Lursoft has studied that the percentage of loss-making companies has also decreased in other sectors previously severely affected by the restrictive measures of the Covid-19 pandemic. For example, in the hospitality sector, 61.1% of all reporting companies made a loss in 2020, while their share dropped to 53.4% last year, which is almost the same figure as before the pandemic. It is similar in the collective catering sector, where even before the spread of the Covid-19 pandemic, 54.5% of companies were operating at a loss, in 2020 their share rose to 62.3%, but fell again last year at 51.9%.
Retail in the sector also represented by SIA”Lidl Latvia’, the percentage of loss-making companies hasn’t fluctuated that drastically. Lursoft data shows that in 2019, half of all retail companies were operating at a loss, in 2020 the percentage of such companies in the industry increased to 51 .9%, but last year it decreased by 49.4%.
SIA “Lidl Latvija” started its main activity only in the autumn of last year, therefore the revenues were not achieved for a full financial year. In 2021 SIA “Lidl Latvija” had a turnover of 101.4 million. EUR, continuing to work at a loss. Last year, the trader’s losses increased to 53.4 million. EUR. The losses occurred as the company continued to invest in developing the retail chain and related processes. It should be noted that SIA “Lidl Latvija” only opened its first 15 stores on October 7 last year, but by the end of the year the company had opened 18 stores. Currently, according to the information available to Lursoft, the company has 20 active structural units.
Lursoft studied it in 2021 with losses over 10 million Mark EUR, six companies worked.
The third highest number of losses was recorded last year for SIA “CG Investicias”, operating in the real estate sector, whose sole shareholder is IMG LV limited in Malta. Data from the Lursoft Multi report shows that the company has been operating at a loss for the entire period since its founding in 1999, with total losses exceeding 20 million during these years. EUR. Meanwhile, the total turnover of SIA “CG Investments” in the period from 1999 to 2021 is only 2.7 million. EUR.
SIA “CG Investicias” is a real estate project company whose objective is the construction of the “Da Vinci” business and a multi-storey residential building complex. After the development of the new construction project, the company expects to start construction works in spring 2023, but to complete and put the property into operation within the next 3 years. It should be noted that from SIA “CG Investments” 17.1 million EUR large losses in 2021, the largest part, i.e. almost 17 million. EUR was formed as a result of the revaluation of the object.
Among the top 10 losers of 2021 are also other real estate companies – AS “Pillar Capital” and SIA “Delta Property”.
Looking at how the share of loss-making companies in the real estate sector has changed in recent years, it can be seen that the changes in the sector over the past three years have been minimal, with half of all companies that filed annual reports operating at a loss in the sector throughout the period under review.
The situation has been different in recent years, for example, in the gambling sector, which is also represented by SIA “Alfor”, who worked with 13 million in 2021. EUR for large losses. Lursoft studied that in 2019 less than a quarter of all gambling companies were operating at a loss, but already in 2020, when measures were introduced to limit the Covid-19 pandemic, the number of companies operating at a loss in the sector it increased to 61.1%. Although the share of such companies in the gambling sector decreased last year, the indicator has still not managed to return to the pre-pandemic level, i.e. 52.6% of all gambling companies have closed last year with losses.
From the study of the annual reports presented by SIA “Alfor”, it can be seen that in 2019 SIA “Alfor” achieved its record turnover – 80.3 million. EUR. Already in 2020 this indicator dropped to 36.2 million. euros, but last year the decline continued, with turnover already down to 11 million. EUR. After SIA “Alfor” earned 21.2 million after tax in 2019. Profit in EUR, the next two years brought losses to the company.
At the same time, analyzing the share of companies operating with losses in industries, “Lursoft” studied that the share of such companies was even higher in other industries. For example, in the production of coke and petroleum products, in the production of other vehicles, as well as ancillary activities related to the mining industry, even more than 60% of companies worked with losses in 2021. Last year, nearly 60% of business losses also affected the sector relating to the functioning of libraries, archives, museums and other cultural institutions. It should be noted that even before the pandemic, i.e. in 2019, the percentage of loss-making companies in this sector was high: 55% (in 2020 it rose to 70%).
Sectors in which, compared to the total financial statements presented in the sector in 2021, the largest share of loss-making companies is recorded:
While an average of 45.4% of all companies were operating at a loss last year, there were also several industries where the percentage of such companies was lower.
The leader in this regard in 2021 was the health protection sector, where only a quarter of all companies operated at a loss. Although the healthcare sector has received significant additional funds from the state during the Covid-19 pandemic, Lursoft research data reveals that despite this circumstance, for example, in 2020, the number of loss-making companies in the healthcare sector has even increased slightly ( up to 28.02%), which could be explained by the fact that the restrictive measures of the Covid-19 pandemic have also forced several spectrum healthcare providers for a period of inactivity.
The other sector, in which the share of loss-making businesses is also less than 30%, is agriculture. Last year, losses in the industry were just 27% of all companies that reported for 2021.
