The corporate reporting season is in full swing, according to Pavel Shpidel

About 50% of companies will report in the next three weeks, but what are the market expectations for this year?

Usually the market is more optimistic than potential trends with rare exceptions.

For example, in 2021, the final result was better than originally predicted (one year before the implementation of the forecast, i.e. the forecast for 2021 formed in 2020) due to inadequate fiscal and monetary stimulus, which greatly inflated demand.

In 2022, the bottom line turned out better due to inflation and commodity companies supporting overall revenue.

Forecasts for 2023 are consistently downgraded throughout 2022 and into early 2023. While revenue growth for 2023 was previously estimated at 6%, now it is only 1.5% and this is at par, which guarantees an inflation-adjusted reduction (the first decline since 2020).

As for operating profit, there is a similar trend of continuous deterioration in the forecast for 2023.

The consensus forecast of the market agrees that in 2023 there will be the first (minus 0.4%) since 2020 (minus 13.9%) decrease in operating profit at par. Since 2003, annual operating profit has declined three times – in 2008, 2009, and 2020. In 2015-2016 and 2019, they stayed near zero, but in a positive area.

In 2021, profit grew by a record 50%, in 2022 profit growth was 7.4%.

Comparing Q4 2019 with a peak in Q1-Q2 2022, operating profit increased by 33%, but is declining from Q3 2022 with seasonal adjustments. At the moment, profit is 25-27% higher than in Q4 2019.

In 2023, business margins may drop to 12% – the levels of 2018-2019, which is noticeably lower than the maximum (13.3%) formed in Q1-2 2022. However, by historical standards, business margins are still high, because. in 2015-2017, a good result was 10.5%.

Thus, the market is betting on a limited recession in 2023 in corporate reporting, but there is reason to believe that the situation will be worse than expected trends. Decomposition of the main risk factors in selected materials.

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