Four out of five companies expect to have to raise their prices.
(Photo: dpa)
Dusseldorf Russia’s war against Ukraine is hitting German medium-sized companies hard. This is the result of a representative survey by DZ Bank, which was previously available to the Handelsblatt. For this purpose, more than 1000 managing directors and decision-makers of medium-sized companies were surveyed from the end of February to the end of March. This makes it the first survey to show the effects of the war.
According to the survey, four out of five companies will have to increase their prices. This applies in particular to the electronics industry and the food industry. There, almost 90 percent of those surveyed stated that they had to correct their own prices upwards. In trade, in the metal, automotive and mechanical engineering sector as well as in the chemical industry, the overwhelming majority of medium-sized companies, each at 85 percent, have to pass on higher costs to their customers.
87 percent of companies with sales of more than 50 million euros are planning higher prices, and 78 percent of smaller companies with sales of less than 25 million. DZ Bank therefore expects that an increased inflation rate will “probably continue for the time being”. The inflation rate is currently 7.3 percent.
It is surprising that the burden of the increased gas prices was felt by just under a third of those surveyed in March, while the high costs of fuel and primary products weighed on more than half. “In contrast to the cost of fuel, the price increase for which is immediately noticeable for companies, the increase in the cost of gas and oil only has a delayed effect on many people – namely when the oil tanks have to be refilled or the gas contracts have to be extended,” explains Claus Niegsch, economist at the DZ Bank.
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As the Handelsblatt reported, however, those companies that have not entered into long-term contracts because of the significant rise in energy prices in the autumn are already at a disadvantage. In addition, energy suppliers and companies check whether they are in a situation of force majeure (“force majeure”) as a result of the war.
Escalation of supply shortages feared
Even more companies are affected by delivery bottlenecks. According to the survey, an average of 77 percent of the managers surveyed said so. In retail, in the chemical industry and in the electrical industry, the level of concern is significantly higher at 88 and 86 percent, respectively.
“Many of them have been struggling with delivery bottlenecks since the corona pandemic and have been lagging behind in processing orders ever since,” analyzes Stephan Ortolf, Head of Corporate Customers at DZ Bank. “The fact that production is also becoming more and more expensive is a threat to the existence of some companies.” If they do not increase sales prices accordingly, the engine of the German economy will come to a standstill.
>> Read here: Many companies are afraid that they will no longer be able to produce without Russian gas
If the conflict escalates further, Ortolf sees the risk of a shortage of oil and gas supplies. “Companies are dependent on politicians finding and sustainably securing solutions for alternative energy supply – and that better today than tomorrow. Otherwise, the consequences of the war are more dramatic for many medium-sized companies than those of the corona pandemic.”
More: “Doing nothing is not an option in this situation” – Federal government agrees on aid package for companies