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Most Belarusian Flagships Are Either Loss-Making Or Low-Margin

Most Belarusian Flagships Are Either Loss-Making Or Low-Margin

Businesses just swallow the government support without getting a clear positive effect.

Belarusians summed up the financial results of the first third of 2021. Among others, officials measured the indicators of profitability of sales, the website banki24.by writes.

Return on sales is the ratio of profit from product sales to revenue over a period of time. As a rule, the higher the profitability, the greater the effect the company receives from the sale of goods, works or services.

This indicator is good because it allows you to look at the company's performance in isolation from its debt burden. If an enterprise has significant debts, but the profitability of sales is good and stable over time, then financial support from the state or another owner will help it get on its feet.

If, with a high debt load, an enterprise has a chronically low or negative profitability, then the chances of financial recovery disappear every month. Such businesses only swallow the state support without obtaining a clear positive effect.

At the end of 4 months of 2021, statistical agencies calculated that 26.4% of large and medium-sized enterprises in the real sector were unprofitable. This means that they had losses from the sale of products.

Another 31.1% of flagships had margins ranging from 0% to 5%. In the bulletins of state bodies, such enterprises are classified as low-profit. Given the current level of inflation and interest rates in the economy, the business model of such enterprises is questionable.

Only among the flagships of Minsk the share of unprofitable and low-profit ones did not reach half - 47.9%. On average in the capital, 26.1% of flagship companies suffered losses on sales, and 21.8% had a profitability of 0-5%.

The enterprises of the Mahiliou region were in the worst position. In this region, the share of unprofitable and low-margin flagships has reached 70%. At the same time, losses were incurred by 31.7%, and profitability from 0% to 5% showed 38.3%.

Also, the Mahiliou region ranks last in the country in terms of the share of highly profitable businesses. In 2021, only 2.2% of the flagships of the Mahiliou region showed a profitability of 30% and more.

Due to such sad indicators of the flagship enterprises, Mahiliou residents also close the salary list of Belarus. It is difficult to pay big salaries when you have insufficient or no profit at all.

In other regions, the shares of unprofitable and low-profit flagships were as follows: Brest - 53.2%, Vitsebsk - 64.6%, Homel - 62.4%, Hrodna - 51.3%, Minsk - 60.3%. Attention is drawn to the pronounced division along the "west - east" axis. Enterprises live better in the west of Belarus than in the east.