Netherlands: Non-Financial Companies Experience Lower Profits in 3rd Quarter 2023

In the third quarter of 2023, the pre-tax gross profit of non-financial companies amounted to €91.2 billion, around €0.4 billion less than in the same period of 2022. The decline is primarily attributed to lower profits from foreign subsidiaries in Q3 2023 compared to a year earlier, as reported by CBS based on new (preliminary) data.

The breakdown of pre-tax gross profit includes operational profit, profits from foreign subsidiaries, and other profits. The operational profit in Q3 2023 was €66.4 billion, slightly higher than in Q3 2022. Particularly, the food industry, machinery manufacturing, and construction sectors recorded increased profits. Excluding non-product-related subsidies, operational profit was more than €1.5 billion higher. Non-product-related subsidies received were nearly €1.5 billion lower.

Profits from foreign subsidiaries were €5 billion lower than in Q3 2022 due to the discontinuation of subsidiary companies. Other profits were €4.5 billion higher than the previous year, driven by reduced payments to the government related to gas extraction and the decline in natural gas prices.

Companies paid about €3.2 billion more in taxes on their profits in Q3 2023 than in the same period of 2022. Non-financial companies distributed approximately €2.1 billion more in dividends than in Q3 2022. Investments in fixed assets were €1.3 billion higher.

The profit margin, calculated as operational profit as a percentage of value added, was lower at 45.0% in Q3 2023 than in the same quarter of 2022 (47.2%). This is attributed, in part, to a decrease in received non-product-related subsidies, which contribute to operational profit but not to value added.