Top industries by turnover and profit in 2022

Dienas Bizness | 19.12.2023

Although the total turnover of Latvian companies last year grew by 10.67% compared to 2021, their after-tax profit fell by just under 9%.

Lursoft investigates which industries have seen the fastest growth in turnover and profit, and which experienced a decline in 2022.

Latvian companies turned over a combined 84.26 billion euros last year, according to data from a Lursoft study. These more than 106,000 companies, which submitted their reports for 2022, earned a total of 5.34 billion euros after tax last year. In certain sectors, following the easing of Covid-19 restrictions, turnover even doubled, Lursoft has calculated.

Analysing the data on sector turnover, the Lursoft study reveals that last year the sharpest increase in turnover occurred in those sectors that had suffered most from pandemic-related restrictions and had experienced sharp drops in turnover in previous years.

The leader in terms of total turnover growth is the air transport sector. After reaching a turnover of 697.37 million EUR in 2019, the air transport sector saw a significant drop in 2020, with the figure falling to 187.69 million EUR. A year later, the total turnover of air transport companies increased to 330.24 million EUR, and last year growth continued, exceeding pre-pandemic levels to reach 772.8 million EUR. Last year, the sector ranked first in terms of the rate of turnover growth. It should be noted that the air transport sector also holds first place for average turnover per company. In 2022, this reached 24.93 million EUR, while the average turnover per company in Latvia last year was 793.87 thousand EUR.

A similar picture emerges when analysing data on the performance of travel agencies and tour operators, whose turnover fell sharply with the spread of the Covid-19 pandemic, dropping from 468.84 million EUR in 2019 to 148.30 million EUR a year later. In subsequent years, the sector's turnover increased, growing by 111.09% last year to reach 494.78 million EUR. The sector's total profit in 2022 rose to 14.53 million EUR after tax (in 2020 the sector operated with a loss of 4.82 million EUR, while in 2021 the total profit already amounted to 8.75 million EUR).

Among the sectors with the fastest turnover growth last year compared to 2021 are also water transport (+96.27%), accommodation (+85.14%), and gambling and betting (+80.66%).

It should be noted that gambling and betting also ranks second after air transport among the sectors with the highest turnover per company. Furthermore, gambling and betting showed the highest profit figure per company among all sectors. Lursoft has found that the 21 gambling and betting companies that submitted reports for 2022 generated a total turnover of 323.93 million EUR last year, making a profit of 75.78 million EUR after tax.

Another sector significantly affected by Covid-19 restrictions is the catering sector. Lursoft data shows that in 2020, the sector's turnover fell by nearly a third compared to 2019 and remained unchanged in 2021. However, last year the total turnover of catering companies increased by 53.30%, exceeding the pre-pandemic result. Lursoft data reveals that last year the total turnover of the catering sector increased to 742.55 million EUR; at the same time, it can be seen that the sector's profit, despite the significant increase in turnover, has actually fallen. While in 2021 the sector earned 16.92 million EUR, last year it was only 7.38 million EUR.

The catering sector is not the only one to have experienced a drop in profit in 2022 despite an increase in turnover. For example, the aforementioned accommodation sector, which ranks among the sectors with the highest turnover growth, operated with a loss of 1.22 million EUR in 2022, even though it had made a profit of 695.12 thousand EUR the year before.

Among the sectors that operated with a drop in profit in 2022 is health care (total profit decreased by 48.30%), one of the reasons for which is not only rapidly rising costs, but also less additional state funding as the Covid-19 pandemic subsided.

The sector with the largest losses in 2022 was the manufacture of fabricated metal products. The sector, which brings together more than 1,000 companies, saw its total losses reach 94.43 million EUR last year. Meanwhile, the sector with the largest losses per company, despite a rapid rise in turnover, is air transport. Lursoft study data shows that last year the sector's total losses reached 40.68 million EUR (in 2021 they were 125.32 million EUR, and in 2020 – 317.03 million EUR). The main reason for the sector's large losses is the performance of AS “Air Baltic Corporation”. The annual report available to Lursoft shows that the airline operated with a loss of 53 million EUR last year.

Retail and wholesale trade account for nearly 38% of the total turnover of Latvian companies

The highest turnover in 2022 was achieved by the wholesale and retail sectors, which turned over 20.95 billion euros and 10.76 billion euros respectively last year.

Lursoft has calculated that last year, retail and wholesale trade together accounted for 37.85% of the total turnover of Latvian companies, while the number of companies operating in this sector was 17.4% of the total number of companies that submitted reports for 2022. A year earlier, retail and wholesale trade accounted for 39.48% of the total turnover of Latvian companies, while in 2020 it was 40.09%. It should be noted that retail and wholesale profit last year made up 15.04% of the total profit of Latvian companies.

The second highest number of annual reports in 2022 was registered in the real estate sector – nearly 10 thousand. Lursoft has found that the total turnover of companies in the sector grew by 10.29% in 2022, reaching 2.07 billion euros, while after-tax profit was 400.41 million EUR. Compared to other sectors, the real estate sector showed the fifth largest profit in 2022. At the same time, it should be noted that when calculating average profit per company, many other sectors moved ahead of the real estate sector.

Although most sectors showed turnover growth in 2022, in some cases a decline was registered last year. The largest decline was for companies working in financial service activities, except insurance and pension funding. The total turnover of the sector, in which more than 1,600 annual reports were submitted, fell by 80.81% compared to 2021. While a year earlier the sector turned over 2.19 billion euros, last year it was only 420.70 million EUR. Lursoft study reveals that in 2022, the after-tax profit for financial service activities, except insurance and pension funding, also fell, decreasing from 911.08 million EUR in 2021 to 358.44 million EUR last year.

Compared to the previous year, the turnover of the manufacture of fabricated metal products sector (-37.33%) also fell in 2022, as did the turnover of electrical equipment manufacturers (-19.34%).

TOP 5 industries in 2022 with the largest total turnover growth against 2021:

1. Air transport: +134.01%;

2. Travel agency, tour operator reservation services: +111.09%;

3. Water transport: +96.27%;

4. Accommodation: +85.14%;

5. Gambling and betting: +80.66%.

TOP 5 largest industries by total turnover in 2022:

1. Wholesale, except of motor vehicles and motorcycles: 20.95 billion euros;

2. Retail trade, except of motor vehicles and motorcycles: 10.76 billion euros;

3. Electricity, gas, steam and air conditioning supply: 4.23 billion euros;

4. Manufacture of wood and of products of wood and cork, except furniture: 4.01 billion euros;

5. Land transport and transport via pipelines: 3.07 billion euros.