The Italian economy is growing at a very slow pace and businesses are having to contend with major obstacles. High energy costs are squeezing margins (and therefore investment capacity), difficulties in sourcing raw materials are putting supply chains at risk, and blockages on some of the most important trade routes are hampering an industry heavily reliant on exports. In this context, achieving high growth rates is a particular achievement, and it is precisely these ‘growth champions’ that the German Institute for Quality and Finance has focused on in its latest study.
To ensure the survey was meaningful, ITQF analysts examined the companies’ financial performance over a three-year period. A surge in revenue in a single year is not always indicative of sustainable long-term growth: it may, in fact, be the result of a specific event not destined to be repeated in subsequent years. The situation is quite different for those who, year after year, demonstrate a solid business development strategy. “Growth,” the ITQF analysts explained, “means transforming market opportunities into tangible results. For some companies, this means rapidly expanding their commercial presence; for others, it means consolidating an already established business model or developing new activities in evolving markets. Understanding these dynamics is particularly interesting when considering the context of recent years, marked by inflation, rising energy and raw material costs, and profound changes in economic balances.” The study therefore takes into account the so-called compound annual growth rate, known as CAGR.
“This indicator,” ITQF noted, “measures the average annual rate of turnover growth, taking into account the initial and final values for the period analysed. Unlike a simple overall percentage change, the CAGR allows us to express the evolution of revenue on an annual basis, facilitating comparison between companies with very different turnover volumes and sizes. The analysis can thus provide an insight into the various trajectories of business development, through financial data that allow us to observe how very different organisations have evolved.”
“To interpret the data correctly,” Itqf noted in conclusion, “it is important to distinguish between percentage growth and the absolute increase in turnover. A company starting from a relatively low revenue base can record a very high growth rate even whilst achieving volumes that are still limited in absolute terms. Conversely, an established company can generate a revenue increase of several million euros, whilst recording a more moderate percentage rate. These are two complementary perspectives that highlight different aspects of a company’s development.”