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Tesi’s Growth Company Pulse Survey: Weaker than expected performance in 2023, moderately positive outlook for 2024

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The recent survey by Tesi (officially Finnish Industry Investment) reveals Finnish growth companies performed even more weakly than forecast last year: growth in net sales was sluggish, while profitability and liquidity declined. Planned investments were also postponed across a wide front. Nevertheless, the year started with a cautiously positive outlook: growth is expected in both net sales and exports, and growth-oriented companies have set their growth targets higher. Research & development has been continued, with a trend towards growth, regardless of the challenges.

The latest Growth Company Pulse Survey conducted by Tesi (officially Finnish Industry Investment) reveals that companies forecast average growth of two per cent in net sales in 2023. Combined with significantly higher inflation, in real terms this means a decline in net sales. The outlook for 2024, on the other hand, is cautiously positive, with companies forecasting five per cent growth in net sales for the current year. The highest growth forecasts were made by smaller companies. 

In addition to modest growth in net sales, Finnish SMEs experienced a slight fall in both profitability and liquidity in 2023. Companies reported shrinking order books, especially in the manufacturing and construction sectors.  

“The survey shows that expectations for the coming year are positive, but there are dark clouds on the horizon – particularly over the longer term – as there is an important decline in manufacturing’s order books. In light of these figures, no widespread profitability crisis is predicted for 2004, but more formidable challenges seem to be accumulating for residential construction and certain industrial sectors,” comments Henri Hakamo, Tesi’s Chief Strategy and Research Officer. 

Exports appear to have flat-lined in 2023. A slight increase in exports was seen in the manufacturing, information & communication, and accommodation & food services sectors. In almost all sectors, companies operating in international markets– or planning to do so – are aiming for export growth.  

Compared to last year’s survey, the biggest change is in labour shortages, which have significantly improved: in 2022 two-thirds of companies suffered from labour shortages whereas now only one-fifth do. Most labour shortages were for ongoing jobs, as was the case last year. In some sectors there was a labour surplus and in the construction sector, for instance, there were layoffs and redundancies. 

Appetite for growth despite economic challenges 

Despite the challenging economic climate, Finnish SMEs have not lost their appetite for growth. Some 14 per cent of companies are strongly growth-oriented, while 52 per cent are aiming to grow according to opportunity. This represents only a slight difference compared to last year’s figures. 

“Although the market is challenging, companies have invested surprisingly more in R&D than previous years, and this trend is growing. Across all the sectors reviewed, companies exhibited an appetite for growth and also a desire to expand their international operations,” reports Hakamo. 

Growth is not sought only from within Finland: about one-quarter of growth-oriented companies are also seeking international growth. Companies in the information & communication and manufacturing sectors, in particular, are pursuing international growth. 

The report indicates that those companies that are more growth-oriented are more systematic and focused: their three-year growth targets are higher than before, especially those companies in the manufacturing and administration & support services sectors. 

“Overall, Finnish SMEs have held up well considering the very challenging times. Companies have an appetite for growth, and an uptick in investment is expected. An interesting detail is that all sectors are making plans for exploiting artificial intelligence and believe it will provide a competitive edge over the long term,” says Hakamo. 

“Companies are also improving their sustainability. For instance, the number of companies conducting emissions calculations has doubled in one year and concrete steps to reduce emissions have now been taken. Furthermore, investments in the reduction of emissions will likely increase in the coming years,” says Klaus Majanen, Senior Analyst at Tesi. 

“It’s extremely positive that companies in Finland have set their sights on higher growth. This shows that despite the challenging times Finnish companies have potential as well as ambition,” sums up Tesi’s CEO Pia Santavirta. 

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The year 2024 started with a cautiously positive outlook: growth is expected in both net sales and exports, and growth-oriented companies have set their growth targets higher. Research & development has been continued, with a trend towards growth, regardless of the challenges.
The year 2024 started with a cautiously positive outlook: growth is expected in both net sales and exports, and growth-oriented companies have set their growth targets higher. Research & development has been continued, with a trend towards growth, regardless of the challenges.
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Tesi (officially Finnish Industry Investment Ltd) is a state-owned, market-driven investment company that invests in venture capital and private equity funds and directly in Finnish startups and growth companies. 

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