Moody’s Rates Spanish Companies As The Most Profitable In Europe Due To Their Ability To Raise Prices

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The credit rating agency Moody’s has indicated that Spanish companies are the most profitable among the main European countries (United Kingdom, France, Italy and Germany) due to their greater ability to raise prices, according to a report published on Thursday.

“Although the sample is small, on average these [Spanish] companies have higher profitability at all percentiles, which suggets a greater ability to pass on costs to consumers and offset inflationary pressures through higher prices,” the firm said.

Moody’s measures profitability in this case in terms of gross operating profit (Ebitda) margin. In this sense, it points out that at the top end of distribution, Spanish companies also have greater volatility, which is consistent with their ability to raise prices, as it allows them to adjust them more quickly in line with changes in demand.
The agency has also indicated that in addition to the small sample size of Spanish companies, this is also due to the fact that among the companies studied by Moody’s there is a concentration of companies in the real estate sector, which tend to have higher profitability ratios.

The 90th percentile in the distribution of European companies stands out. While in Germany, France, Italy and the United Kingdom the profit margin ranges between 40% and 50%, in Spain it exceeds 70%.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.