The year 2024 brought Polish businesses their lowest profitability in a decade. Falling sales combined with rising operating costs have led to nearly one in four companies in the country posting a loss, warns the Polish Economic Institute (PIE). It’s a painful sign of the deteriorating condition of the Polish economy.
According to data published by PIE, the net profit margin of Polish enterprises shrank in 2024 to just 3.4%, while the share of profitable firms dropped to 77.2%. It’s the weakest performance in ten years, and analysts point out that such low profitability was last recorded during a period of economic slowdown.
The Institute’s report states:
“As a result of declining sales and rising operating costs, in 2024 companies in Poland recorded their lowest profitability in the past 10 years. The net profit margin fell to 3.4%, and the share of companies reporting profit dropped to 77.2%, meaning that nearly one in four businesses ended the year with a loss.”
There are several reasons behind this sharp deterioration in corporate financial results. Entrepreneurs have been grappling for years with the aftermath of the COVID-19 pandemic and the war in Ukraine. These economic shocks, combined with soaring raw material prices and high inflation, have created extremely difficult conditions for doing business.
The impact has been particularly severe in capital- and labor-intensive industries such as manufacturing, construction, trade, and transportation and warehousing. These sectors experienced margin declines which, together with rising labor costs, forced companies to seek savings and fight to maintain liquidity. In the manufacturing sector alone, only about three-quarters of companies reported a profit.
Data from the Central Statistical Office (GUS) confirm that in 2024, revenues of medium and large non-financial enterprises fell by 3% year-on-year, while costs were reduced by only 1.8%.
Low profitability directly translates into reduced investment, which slows the development of both businesses and the entire economy.