PWC Survey: revenue fell by more than 50% in 68% of business surveyed
By Natalia Kochiashvili
Wednesday, November 25
PwC Georgia has published the results of an updated survey that reflects the expectations of the Georgian private sector. The survey was conducted under the auspices of the Investors Council and it is an update to a report published in May. The Private Sector Survey was conducted between September 11 and October 2 through an online survey of 774 businesses.
Demand decline is the most pronounced side effect of COVID-19 for all sectors. Demand decline in 68% of companies surveyed has already led to more than a 50% drop in revenue since May 2020. That figure has changed slightly compared to 65% in the April survey. Closing the borders hit the hotels and restaurants most of the respondents, 84% of whom had significantly reduced revenues. Their expectation is positive compared to the April survey and if half of the companies in the previous survey predicted a drop of more than 50% in the next 3 months Compared to the period, only one-fifth of the companies have this expectation at this stage. The almost equal number of respondents (about 66%) in the hotel and food sector still expect a reduction of more than 50% in revenues.
In terms of the difficulties associated with COVID-19, the following types of issues were identified: The problem of closed borders was exacerbated for all companies, especially self-employed respondents (the issue is problematic for 39% of respondents, compared to 28% in April); Late payments from self-employed and micro-enterprises from clients (reached 22% and 33%, compared to 15% and 24% in April); Exchange rate difficulties mainly affect micro and small companies (increased to 49% and 56%, compared to 39% and 49% in April).
Supply chain delays seem to have become less of a problem for all companies as the surveyed companies began to adjust to the new reality. The number of companies that reduced supply chain difficulties because of COVID-19 was reduced from 33% to 13%. However, when companies are asked how much they are currently experiencing delivery-related delays, almost 80% of respondents answer in the affirmative. The increased price of transportation has been named as the main problem of supply chain disruption.
Changes made by companies since May 2020 have reduced pressure on liquidity. The number of respondents who have already faced the problem of liquidity decreased from 28% to 10% at the end of September. Among companies, the most optimistic are large companies, with about 70% of respondents not expecting any liquidity problems in the next 6 months. In the April survey, business interruptions were the most common of the safeguards used by self-employed, micro, small, and medium-sized companies. In the current survey, all surveyed companies, except large companies, were forced to limit production capacity. At this point most of the time only employees of large companies were able to continue working from home.
The companies surveyed used a variety of safeguards to address their liquidity problems. About 16% of respondents applied to the tax authorities for tax deferrals. Approximately 75% of the companies were able to defer their liabilities in full or in part. Mostly medium and large companies turn to financial institutions to restructure their loans and attract additional financing. Finally, almost half of the respondents used government-subsidized wage subsidies and income tax exemption initiatives for individuals.
Compared to the April survey, the trend of layoffs has decreased. In the current survey, more respondents indicated that they either do not plan to reduce staff or plan to reduce the number of staff. 75% of the surveyed companies that had their activities suspended during the quarantine period were able to resume their activities after the end of the quarantine. Closed borders remain a major constraint for the 51% of companies that have failed to resume operations.
