New research released by Australia’s leading export credit agency Export Finance and Insurance Corporation (EFIC) indicates higher confidence levels among Australian exporters about overseas sales.
The research is the second in a quarterly series conducted by EFIC, the last being completed in February 2014. The latest survey in June took feedback from 856 exporting SMEs.
According to EFIC, 95 per cent of SME exporters are expecting their overseas sales to remain the same or grow in the next 12 months with this proportion of SMEs having increased by around 10 per cent since February this year.
An expected depreciation in the Australian dollar, which would make Australian exports more competitive, is driving this optimism with over a third of the respondents (34 per cent) naming this as the key reason for their positive expectations for the year ahead. Growth in export sales is also anticipated for reasons such as 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).
There is positive sentiment among Australian SMEs about expected profitability with 31 per cent expecting the profitability of their international operations to increase in the next year, up by 6 per cent from the previous quarter.
SME exporters also report 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. Key export markets named by Australian SMEs include China, Oceania and New Zealand, and India.
However, accessing finance to support overseas growth continues to be a challenge for many SMEs with more than one in four (26.5 per cent) expecting more difficulty in this regard over the next 12 months, up by 4.2 per cent from the last survey. Smaller exporters are at the receiving end of the financial challenge.
Observing the encouraging signs of SME confidence about the export environment over the next 12 months, EFIC Executive Director, SME Andrew Watson commented that the financial challenge can be addressed by SMEs by taking the support of Government and industry bodies, including EFIC and Austrade to tap export growth opportunities.