Companies in the Balearic Islands have resumed the pace of capitalizing on their activities and have doubled their profitability within a year, reaching pre-pandemic levels, according to the latest issue of i|negocios from the Economic Intelligence Unit of the Impulsa Foundation. Specifically, the latest available data, corresponding to the year 2022, show that economic profitability (or ROA) stands at an average of 6.1%, which doubles that of the previous year (3%) and closely resembles that of 2019 (6.2%). In this context, financial profitability (ROE) has rebounded to 11%, a rate that far exceeds that of the previous year (4.6%) and surpasses the pre-pandemic threshold (10.9%).

Antoni Riera, in one of the working sessions of the Impulsa Strategy Unit. Photo: Impulsa Foundation.

Debt under control

Additionally, the average debt of Balearic companies remains under control and does not compromise financial responsiveness. In particular, the financial autonomy of Balearic companies keeps the contribution of net worth at 46.6% of total liabilities, one-tenth below the previous year (46.7%) and 3.5 points lower than the pre-pandemic ratio (50.1%). Thus, the business fabric of the islands has maintained control over both its liquidity (1.43 vs 1.49, 2021) and its solvency (1.87, both years).

Integration of sustainability into corporate strategies

In this regard, the technical director of Impulsa, Antoni Riera, states that “Balearic companies are in a position to undertake ambitious strategies, which require intensive investment efforts starting today and over the next ten years, to create long-term value and ensure the ability to respond to global challenges and opportunities such as climate change, decarbonization, the technological revolution, etc.”

Currently, long-term value creation is situated within a business framework that integrates sustainability at the core of corporate strategy, which for companies means setting and pursuing a purpose, particularly of positive impact. In this line, Riera points out that “the incorporation of strategic priorities in environmental (E), social (S), and good governance (G) matters in Balearic companies – through the so-called ESG criteria – allows gaining resilience and resulting in higher revenues and profitability, while also positively impacting the competitive priorities that the archipelago currently has to regain its position in the European regional framework.”