Profitability of Austrian Manufacturing Industry Staying Satisfactory. Cash flow Data for 1996
Franz R. Hahn
The earning capacity of Austrian manufacturing industry, as regularly assessed and analyzed by WIFO, has remained stable in 1996. The cash-flow/sales ratio stood at 9½ percent, maintaining the year-earlier level. The beginning cyclical recovery in the second semester, favorable exchange rate movements and buoyant activity in East-Central Europe prevented a fall in profitability. In the current year, profitability is set to strengthen. In the basic goods sector, the profit situation weakened somewhat, the cash-flow/sales ratio falling from 10.4 percent in 1995 to 9.0 percent. Neither did companies producing technical manufactures on the whole benefit from the cyclical turnaround: according to WIFO calculations, the cash-flow sales ratio weakened from 8.3 percent in the previous year to 7.5 percent in 1996. However, earning capacity rose for the suppliers of construction materials (from 14.0 to 16.0 percent), as well as for manufacturers of traditional consumer goods (from 9.7 to 10.5 percent). In the chemical industry, the cash-flow/sales ratio remained flat at 10.5 percent. The altogether satisfactory trend was brought about mainly by cuts in costs, coming mainly from labor costs (–1 percent), raw materials (–7 percent excluding oil) and a real-effective depreciation of the schilling by 2 percent (for manufactures). Low domestic interest rates also contributed towards higher net earnings. Rationalization and personnel reductions (–3.5 percent) boosted profits via productivity gains (+4.5 percent). No such boost came from sales prices of manufactures which barely rose above the year-earlier level (+0.3 percent estimate). The average equity capital ratio of Austrian industrial companies has been significantly above 30 percent since 1994. Relatively favorable profit developments enabled further progress in 1995 with the equity capital ratio rising to nearly 33 percent. A markedly weaker performance in 1996 is unlikely. Available indicators and econometric estimations suggest a further rise in earning capacity for 1997, with the cash-flow/sales ratio exceeding 10 percent by a significant margin.
Ertragskraft der österreichischen Industrie weiterhin zufriedenstellend. Der Cash-flow im Jahr 1996; Profitability of Austrian Manufacturing Industry Staying Satisfactory. Cash flow Data for 1996
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