Energy prices will remain at this historically high level ‘until at least’ the spring of 2023. Companies will have to see consistently high energy purchasing costs to be passed on to customers, or at the expense of their margins.
This dark sector forecast, which ABN Amro Economic Bureau will publish on Thursday, follows warnings from the energy agency IEA and the IMF. More companies run into financial difficulties as soon as their fixed energy contract ends. In the market, consultants who guide companies complain that suppliers no longer offer energy contracts, they too are struggling with sky-high purchase prices.
Still growing
On the other hand, the Dutch economy as a whole could take a knock, conclude the economists. Despite the inflation of high energy prices, the economy is growing by 3.1% this year.
The bank comes to €22 billion in additional costs, because it assumes that the business community uses variable rates for half of its energy consumption. In addition, ABN Amro already foresees that energy rates will be more than five times higher this year than in 2019. The bank expects that the rates will remain high until at least the spring of 2023 due to the war in Ukraine.
“For some companies, this means completely negating the profits they would normally make,” the economists said. Passing on these costs is ‘not self-evident’, says the bank after consultation with companies. The problems are concentrated. Construction companies, for example, which often work with fixed contract prices, are unable to pass on the cost increase in more than half, according to the bank.
Data centers
In addition to greenhouse horticulturists and construction companies, data centers are vulnerable as large consumers of electricity. “What makes many companies extra sensitive are the thin margins,” the bank overlooks. A fivefold increase in energy costs can lead to red figures, because it is often difficult for companies to fully pass on higher costs.”
That cost effect quickly reaches the consumer. “Inflation continues to rise due to higher energy costs. This is at the expense of consumer confidence and purchasing power. As a result, sectors such as catering and retail are recovering less quickly than expected,” said Franka Rolvink Couzy, head of sector research at ABN Amro.
The economy could grow by 3.1% because demand is “reasonably strong,” she says, and customers are still willing to pay higher prices. “At the same time, we see that consumers are making their appearance in sectors that have been closed for a long time. For example, the catering industry will first benefit from this catch-up demand, but we expect fewer restaurant and café visits in the second half of this year,” says ABN Amro.