The Association’s Economic Observatory highlights the trend towards cooling volumes while one in two producers assumes a decrease in profits of more than 4% due to continuous increases
by Enrico Netti
Sales of branded products are slowing down. This is the alarm coming from Centromarca which in the latest edition of the Economic Observatory, drawn up every six months in collaboration with Ref Ricerche, highlights the deterioration in sales forecasts for the next six months. If you look at the last three months, from January to March 2022, 48% of the managers interviewed say that sales have “increased / greatly increased”. This is clearly lower than 60% of the previous survey (September 2021). The percentage of those who do not find particular variations remains constant (24%). Sales forecasts for the next six months show a downsizing: only 33% of respondents will “increase”, compared to 43% recorded in September 2021. The main concern is linked to the increase in production costs to which the manufacturing industry brand looks with concern. Unit production costs are growing, determined by the strong tensions present in the commodities markets. All managers (98%) indicate a growth dynamic of over 2%. Price increases of over 5% are expected for energy (49% of companies), raw materials (47%), packaging (46%) and transport (40%). For 65% of respondents, the price of energy will continue to rise. For its part, the brand industry is holding back on the transfer of cost increases to consumer prices. Although 58% of managers report price increases above 2%, 39% say they have kept selling prices unchanged. Taking into account the dynamics of costs and the prospects of revenues, 46% of companies hypothesize a contraction in profits of more than 4%, 47% expect substantial stability and 7% their growth of more than 4%. As regards the dynamics of demand – given the trend in inflation and the economic situation – 77% of respondents indicate that consumers will reduce spending on consumer goods in 2022, while 21% believe that levels will remain stable. «The dramatic Ukrainian crisis amplifies the combined effect of the pandemic and tensions on the prices of raw materials and energy goods – underlines Roberto Bucaneve, Director of Centromarca -. The result is more prudent consumer spending behavior. The strategies of the industries must therefore deal with significant increases in production costs and with the uncertainty linked to the ability of the downstream market to absorb price increases in line with the dynamics of costs ».