Australian firms bank on return to pre-COVID profitability by late 2022: HSBC survey

A majority of Australian businesses expect to return to pre-COVID profitability levels by November 2022 unless a resurgence in COVID-19 and supply chain disruptions derail their plans, according to HSBC’s latest Navigator survey.

In line with international peers, the survey found 65% of Australian businesses are optimistic they can generate growth over the next 12 months as the local economy reopens after extended periods of lockdown. Almost half of Australian businesses (49%) expect to increase revenue by 10% or more over the next year and the vast majority (89%) rank the introduction of ‘new products and services’ as the main driver of their anticipated growth.

HSBC’s Navigator surveyed more than 7,300 business decision makers from firms across 14 global markets with average revenue of USD762.4 million.

Steve Hughes, Head of Commercial Banking for HSBC in Australia, said: “Australian businesses are incredibly resilient, as shown by their optimism for the year ahead. As our borders reopen, we anticipate that local companies will benefit as workforces and supply chains reconnect with international markets.”

Despite this optimism, Australian businesses remain wary that a resurgence in COVID-19 (43%), supply chain disruptions (26%) and decreased consumer demand / spending (25%) could stymie their expectations of a buoyant 2022. An ongoing skills shortage and other HR issues, such as workplace morale, round out the top five threats that local firms are monitoring closely.

As part of contingency plans to protect against these threats, more than a third of local companies (37%) are investing in new technology and digital tools as a primary defence.

Many survey respondents also expressed a desire to increase international trade to mitigate supply chain concerns, with countries in Oceania (48%) and North America (43%) topping the list of potential new trade partners.

Supply chains are likely to be a growing focus of sustainability initiatives too as Australian firms adapt their business models to take ESG factors into account – not just in their own operations, but also in the operations of key partners.

“The survey results support what we are hearing directly from clients – that sustainability is a key focus across the Australian market. It is clear that one key area being prioritised to help drive this change is the sustainability credentials of their supply chains,” Mr Hughes said.

For more information and to view the full survey findings, visit: https://www.business.hsbc.com/en-gb/campaigns/navigator2021