Industry Sector Analysis Report May 2023, with Prometeia

Intesa Sanpaolo and Prometeia have presented the 103rd Industry Sector Analysis Report, dedicated to Italian industry and the challenges it faces in the medium term, from demographic constraints to competitive strengthening.

The Report examines the manufacturing industry and provides scenario analyses and forecasts of growth and profitability potential for around forty sectors, grouped into fifteen categories.

Highlights from the 103rd Industry Sector Analysis Report are provided below:

• The Italian manufacturing industry is expected to end 2023 with stable turnover at constant prices (+0.4% year-on-year), consolidating the significant progress of the previous two years (+9.1% average annual growth in 2021-22). Turnover at current prices, up 1% year-on-year, could exceed €1170 billion by the end of the year, an increase of €260 billion on 2019.
• The easing of tensions in the domestic and international operating environment, due in part to lower inflation, will allow Italian manufacturing companies grow at a brisker pace than in recent decades (1.3% annual average in 2024-27 at constant prices and 2% at current prices).
• In 2023 exports will exceed the threshold of 50% of total turnover for the first time. The trade surplus will continue to grow towards a new record, exceeding €110 billion in 2027.
• On the domestic front, the NRRP funds will support the investment cycle, offsetting weaker consumption, penalised by the erosion of real incomes due to inflation, especially in 2023, and, in the medium term, to changes in spending habits, owing in part to progressive ageing of the population.
• The most dynamic sectors in 2023 and the medium term include electrical engineering, mechanics, electronics and motor vehicles and motorcycles, which are key to supporting digital and environmental progress. The sectors that will be able to take advantage of growth opportunities in foreign markets more than others are: fashion, pharmaceuticals and FMCG. There will be natural slowing in building products and materials and chemical intermediates, which are sensitive to construction demand, as well as in sectors that produce goods for the home environment, furniture and home appliances.
• The issue of generational transition becomes crucial against the backdrop of an ageing – and potentially shrinking – European population. In 2022 the share of employees under 40 in the Italian manufacturing industry dropped to 34.8%, down from 51.1% in 2008 – the lowest percentage among large European manufacturers.
• From a financial standpoint, lower growth rates and procurement costs that remain punishing will affect unit margins in 2023, but EBITDA will remain at historically high levels.
• Analysis of international financial reports confirms a significant convergence between Italian industry and its European competitors in Germany, France and Spain in terms of increased profitability, capitalisation and financial structure.