Euler Hermes Publishes Post-Pandemic Recovery Survey Report 81% Reported Decrease in Profitability

Euler Hermes Reports 81% Profit Decline in Post-Pandemic Survey

Hong Kong, 28 October 2021 – Euler Hermes, the world’s leading trade credit insurer, publishes its Post-pandemic Recovery Survey Report today, which garnered responses from 536 business leaders across 26 trade sectors in Asia Pacific, to understand how the pandemic has affected their profitability and their views on the post-pandemic outlook.

Impact of Covid-19 pandemic on business operation and profitability

The survey found that 72% of respondents have been negatively impacted by the Covid-19 pandemic, where growth in overseas markets and difficulty in financing imposed the biggest challenges. Furthermore, 81% of respondents reported that they have suffered decrease in profitability under the pandemic. While the biggest share of respondents (32%) saw their profits dropped by 11-30%, 10% of the business leaders confessed their profitability had dropped by 50% or more. The top three sectors that endured the biggest impact on profitability were electronics (15%), food (14%) and services (11%).

As for small and medium-sized enterprises (SMEs), 85% of respondents saw their profits reduced under the pandemic, with 1 in 4 experienced profit reduction of 31% or more. The top three sectors where SMEs suffered the most decrease in profitability are similar to that of larger corporates, ranking from the electronics (15%), food (13%) and services (13%) sectors.

Optimism in upcoming export opportunities

It is encouraging to see that most economies in Asia Pacific are exiting the pandemic faster than other regions and already benefitted from different levels of economic recovery, with 51% of respondents stated that they are confident in export opportunities in the next 12 months. This is attributed to the unprecedented government support implemented and the accumulation of household savings in many developed countries. The top three sectors that are the most optimistic about export opportunities are electronics (16%), chemicals (12%) and food (10%).

As for business focus in the next 12 months, 38% of respondents listed achieving business growth within existing portfolio as top priority, followed by exploring new markets and new customers (27%) and reducing loss through improving credit and risk management (20%). Such findings are roughly identical to those reported by SMEs. 

Step up credit and risk management in post-pandemic recovery

Commenting on the report, Paul Flanagan, Regional CEO at Euler Hermes Asia Pacific, says, “I am overwhelmed by the 536 responses received from the business leaders across the region. They were instrumental in helping us to align the macroeconomics trends and trade forecasts with on-the-ground business sentiments. Our survey was designed to find out how companies fare under the challenges brought by the Covid-19 pandemic and how have they positioned themselves to maximise growth during the recovery stage. With exploring new business opportunities and improving credit and risk management among the top priorities in the post-pandemic recovery phase, business leaders should leverage credit experts’ knowledge and data in order to strategise their growth plans while minimizing risks concurrently.”

Matthew Wells, Regional Commercial Director at Euler Hermes Asia Pacific, says, “As government support gradually phases out, our economists are expecting global insolvencies to rise by 15% in 2022, after two consecutive years of decline. As the global leader in trade credit insurance, we constantly seek to improve our product and service offerings by listening directly to our customers, especially during changing economic climate. We remain committed to stand firmly by our customers, to guide them through the uncertainties and to seize the economic upswing ahead.”