Smaller companies in Germany cope well with energy price fluctuations - survey

Germany’s famed “Mittelstand” sector of small and medium-sized companies (SMEs) has coped well with turbulent prices on the energy markets caused by the Ukraine war, according to state development bank KfW. “The current situation of small and medium-sized enterprises with regard to the burden of energy costs is largely relaxed – also because companies have done their homework and reduced their costs through energy-conscious behaviour, for example," KfW chief economist Fritzi Köhler-Geib said. By spring this year, 72 percent of SMEs had already reduced their energy consumption using behavioural changes, such as lowering room temperatures or fuel-efficient driving, and a further 9 percent planned to do so, surveys conducted by KfW Research revealed. “More elaborate measures, such as investments in energy efficiency or in the generation of electricity/heat from renewable energies, have already been implemented by 19 percent and 15 percent, respectively (planned: 16% and 20%),” KfW said.

SMEs employ a large part of Germany’s workforce and have a higher share in economic productivity than in many other high-income economies. That these companies’ “massive” savings efforts paid off is also revealed by a declining share of energy costs among SMEs, KfW said. While 34 percent of companies said that energy costs accounted for a maximum of 2 percent of total sales before the war, this group grew to 42 percent by spring this year - corresponding to around 1.6 million companies. For a further 31 percent, energy costs are between 2 and 5 percent of sales, and for one in five SMEs energy costs represent between 5 and 10 percent of sales. At the same time, the share of SMEs with energy costs exceeding 10 percent of sales halved from 16 to 7 percent, KfW said.