Exchange rates biting much harder than for other sectors
New research by New Zealand’s largest accounting software provider, MYOB, reveals that despite exporters and importers struggling through the sluggish economic recovery, business is now gathering momentum.
The MYOB Business Monitor, a national survey of 1,000+ small and medium business operators (SMEs) commissioned to independent market research firm Colmar Brunton, has run since 2009. It explores business performance, attitudes, plans, and more over time.
Business performance: last 12 months
The March 2013 report found SMEs who described themselves as exporters or importers of goods and services were more likely to have seen a revenue fall in the prior year than in the last survey, June 2012.
37% of exporters and 37% of importers stated their revenue figures fell over the past year. The average across all survey respondents was 27%. This highlights the volatility of this sector - one more exposed than many others to the many variables of the international economic and business environments.
The percentage of exporters and importers who experienced a revenue increase over the last year was not only less than the overall survey average but was also less than those who experienced it in the prior survey. In March 2013, 24% of exporters and 28% of importers said their revenue was up on the previous year, compared to an overall total of 32%. In June 2012 these figures were 29%, 33% and 31% respectively.
|AT THE PRESENT TIME, IS YOUR BUSINESS REVENUE (OR GROSS TURNOVER OR SALES) UP OR DOWN ON A YEAR AGO, OR ABOUT THE SAME?||JUN-12||MAR-13|
|OVERALL SURVEY||EXPORTER||IMPORTER||OVERALL SURVEY||EXPORTER||IMPORTER|
|Revenue about the same||36%||32%||31%||38%||39%||35%|
Business performance: next 12 months
Despite the past year’s performance, exporters and importers were more confident in a domestic economic recovery in the next 12 months than they were mid last year. This now sits at 22% and 23% respectively, compared to 14% and 18% in the prior survey.
Business confidence is increasing too, with 38% of exporters and 42% of importers projecting a revenue increase for the year ahead. Although the exporter figure is lower than the overall average of 41%, it represents a considerable increase on the 23% who projected a revenue increase in June 2012.
This confidence is likely to also stem from the pipeline outlook for the next three months, where the proportion of importers and exporters experiencing more work the usual has seen a marked increase. 32% of exporters and 39% of importers say this is the case, compared to 23% and 36% respectively in June 2012.
|HOW DO YOU EXPECT YOUR BUSINESS REVENUE (OR GROSS TURNOVER OR SALES) IN 12 MONTHS’ TIME TO COMPARE WITH YOUR BUSINESS REVENUE AT THE PRESENT TIME?||JUN-12||MAR-13|
|NATIONAL AVERAGE||EXPORTER||IMPORTER||NATIONAL AVERAGE||EXPORTER||IMPORTER|
|Revenue will be up||36%||23%||44%||41%||38%||42%|
|Revenue will be down||14%||28%||15%||12%||13%||9%|
|Revenue will be about the same||43%||38%||32%||42%||41%||42%|
The top five pressures importers and exporters expected to face this year were:
- Price margins and profitability – an average of 73% of these respondents
- Fuel prices – 68%
- Exchange rates – 64%
- Cash flow – 63%
- Competitive activity – 61%
Price margins and profitability (63%), fuel prices (61%), cash flow (63%) and competitive activity (58%) were all in the top five pressures for all MYOB Business Monitor respondents overall. The main point of difference for exporters and importers was the pressure felt from exchange rates. Nationally, this ranked as the lowest of the 13 pressure points provided for respondents to vote on. Only 33% of SMEs overall said rates were likely to place pressure on their business in the year to come.
Customer reigns supreme
Again looking specifically at the import/export sector, the business elements where respondents were most likely to be planning an increase in investment of time and/or money over the next year were:
- Number or variety of products/services offered – 39%
- Customer retention strategies – 39%%
- Customer acquisition strategies – 39%
- The amount paid to employees – 30%
- Sales of products/services online – 29%
The top three investment areas for 2013 mirrored those overall. However, considerably more exporters and importers planned to invest more into their staff this year. 35% of importers and 25% of exporters said they would increase the amount they paid employees in 2013, compared to only 18% nationally.
A recent analysis of past MYOB Business Monitor studies showed business builders – those who invest more in areas such as business systems, human capital and online technologies – are more likely to experience financial success than those who simply batten down the hatches. Given this finding, things are boding well for the import/export sector’s future.
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About MYOB New Zealand
Established in 1991, MYOB is New Zealand's largest business management solutions provider. It makes life easier for approx. 1.2 million businesses across New Zealand and Australia, by simplifying accounting, payroll, tax, practice management, CRM, websites, job costing, inventory and more. MYOB provides ongoing support via many client service channels including a network of over 40,000 accountants, bookkeepers and other consultants. It is committed to ongoing innovation, particularly in cloud computing solutions, and now spends more than NZ$35 million annually on research and development. In 2013, MYOB expanded its offerings with the acquisition of accounting solutions provider BankLink. For more information, visit myob.co.nz.