Australian exporters are feeling positive, with 95 per cent of SME exporters expecting their overseas sales to remain the same or grow in the next 12 months, according to new research released by EFIC (Export Finance and Insurance Corporation).
The proportion of SME that expect their overseas sales to grow in the 12 months has increased by around 10 per cent since February.
The research is the second in a quarterly series conducted by EFIC, the last being completed in February 2014, with 856 exporting SME being surveyed in June.
This growing optimism is driven by an expected depreciation in the Australian dollar, which makes Australian exports more competitive. Just over a third of respondents (34 per cent) named this as the key reason for their positive expectations for the year ahead.
Other reasons cited for an anticipated growth in export sales included better business conditions and improved demand in existing markets (24 per cent), introduction of new products and services (16 per cent) and an improved sales strategy (13 per cent).
SME also continue to be upbeat when it comes to expected profitability. In line with their confidence in increasing export sales, 31 per cent expect the profitability of their international operations to increase in the next year. This is an increase of 6 per cent from the previous quarter.
With conditions expected to be favourable, exports are becoming an increasingly important revenue stream for SME. SME exporters reported that export revenue is making up a larger proportion of their overall turnover, which is at 14 per cent in June, compared to 12.7 per cent in February.
Exporters with a turnover of between $20m and $100m expect their overseas revenue to make up 20 per cent of their turnover by this time next year.
In terms of where this revenue is coming from, China, Oceania & New Zealand, and India were named as the most important export markets by Australian SME, reflecting no change from the survey in February.
Accessing finance to support overseas growth continues to be a challenge for many SME. More than one in four (26.5 per cent) expect access to finance to become more difficult over the next 12 months, an increase of 4.2 percentage points from the last survey.
The smaller the exporter, the bigger the challenge, it seems, with 62 per cent of SME with a turnover of less than $1m expecting an increasing finance challenge, compared to 6 per cent of exporters with a turnover of more than $20m.
EFIC executive director, SME, Andrew Watson commented: “It’s extremely encouraging that so many SME are feeling confident about the export environment over the next 12 months, and that they are responding to this with an upturn in anticipated sales and profitability.
"Whilst it’s clear that access to finance continues to be a challenge for many SME, there are a number of government and industry bodies, including EFIC and Austrade, on hand to help those SME wanting to take advantage of export growth opportunities.”
