Lower turnover, lower profits for majority of Maltese SMEs in 2010

The survey, which was conducted among 250 GRTU members via telephone as against the e-mailed surveys in previous years, showed that in the first six months of 2010, 24.80% had the same turnover as in the previous half-year, 20% had a decrease of up to 10% in turnover, another 19.2% had a decrease of up to 20%, and 14% of respondents had a decrease of more than 20% in turnover.

On the other hand, only 14.4% has an increase of up to 10% turnover when compared to the same period last year, 4.80% had an increase of up to 20% in turnover, while only 2.80% had an increase of more than 20% in turnover when compared to last year.

Asked how they compared their turnover for the January-June 2010 when compared to the same period last year, 53.20% of respondents said that it was less than last year, 24.80% said that it had remained the same as last year, while only 22.00% said that turnover had been more than last year.

This scenario was repeated when asked by GRTU to report about their profits for the first six months of 2010 when compared to the same period last year.

21.60% of respondents said that their profits for the first six months of 2010 had been over 20% less than last year, 18.40% of respondents had reported that profits had been up to 20% less than last year, 21.20% of respondents had reported that profits had been up to 10% less than last year, while 24.40% of respondents had reported that profits had remained the same when compared to last year.

On the other hand, only 9.20% of respondents had reported that profits had increased up to 10% when compared to last year, 3.60% of respondents had reported that profits had increased by up to 20% when compared to last year, while only 1.60% had reported an increase of more than 20% in profits when compared to last year.

Asked by GRTU how they compared their profits during the first six months of 2010 when compared with the same period last year, 61.2% of respondents replied that their profits had been less than last year, 24.40% had reported that their profits had remained the same when compared to last year, and only 14.40% of respondents said that their profits had increased when compared to last year.

Among the reasons given by entrepreneurs for registering lower profits, there was the effects of the financial crisis, the high price of utilities and taxation which reduced consumer spending power, expenses to run an enterprise were always increasing, competition with too many businesses for the same consumer, from the internet and from foreign business setting up in Malta.

In this respect, GRTU Director-General Vince Farrugia lambasted the Government for not taking enough action to combat illegal competition from abroad.

“If it had not been for the GRTU’s daily insistence with the customs department to curb illegal imports in Malta, then the Government would not take any action,” Farrugia lamented.

“The Customs Act conferred to Customs officials the power to check cargo documents even after it has left customs, but Customs’ officials was not doing so,” he insisted.

The GRTU Director-General explained how illegal imports were affecting mostly the IT sector, where illegal importers did not pay either Eco Tax nor VAT.

Among the reasons give by entrepreneurs for registering higher profits, there was cost-cutting, increased range of products or services, investing more, economy seemed to be recovering, advertised more, and changed line of business.

Farrugia lambasted the Government for not implementing the micro-credits scheme that was promised in the last Budget.

“It has been postponed first to February, then March, now August. Maybe in December we will celebrate the scheme again, and will be only implemented next June,” the GRTU Director-General warned.