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SMEs cautiously confident about export markets: report

Australian SME exporter confidence is gradually building and is indicative of cautious optimism, with 40% of exporting SMEs expecting increased sales over the next 12 months, according to research released today by Efic, Australia’s export credit agency.

The majority of SME exporters expect profitability of their international operations to remain at current levels, however, a significant proportion (32%) expects profitability to improve in the year ahead.

The research, which surveyed 859 SME exporters, is the third of a quarterly series conducted by Efic to provide key insights into Australian SME exporters.

It appears that this confidence is being driven by a general positive outlook of exporting SMEs, many of whom believe their exports will become cheaper due to the falling Australian dollar.

Other factors driving this optimism include perceived better business conditions and improved demand in export markets (22%) as well as plans by exporters to introduce new products or services (16%).

Interestingly, despite this optimism, exporting SMEs do not expect to be hiring more staff, with only 11% believing their headcount will increase in the next 12 months and 78% expecting their headcount to remain at existing levels.

In line with this positive sentiment, SME exporters have now seen export revenue make up a larger proportion of their overall turnover. This has increased from 13% in February to 15% now, and is expected to rise further over the next year.

The importance of export revenue is particularly noticeable among the larger SME exporters with a turnover of $10m-$20m. For these exporters, the average percentage of revenue drawn from overseas exports increased since June to 18%.

Despite preferences shifting towards the US market, the industries served by SMEs have remained constant since June, with wholesale, retail, manufacturing and mining being the most important.

Efic Executive Director, SME, Andrew Watson commented: “Exporting SMEs are cautiously confident for the year ahead, a sentiment that appears to be driven by the falling Australian dollar as well as better business conditions and improved demand in export markets.

“Access to finance continues to be a challenge for SMEs however, it’s positive to note there are a number of organisations, including Efic, available to assist SMEs with overcoming these challenges in order that they can achieve success overseas.”

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