Estonian companies' profitability is falling: the same companies' margin has halved in six years
An entity.ee analysis of the reports of nearly 150,000 companies: the median margin of all companies fell from 6.9 to 5.6 percent, but that of the same 76,000 companies from 7.1 to 3.5. The fall is biggest among micro companies.
The profitability of Estonian companies has fallen over the past six years, and the share of loss-making companies has grown. This is shown by an entity.ee analysis based on the annual reports in the business register's open data for 2019–2025. We calculated each company's net margin, meaning profit for the year divided by revenue, and then the median across companies. The median shows the typical company, not the largest ones that would otherwise dominate the totals.
The median net margin of all companies that filed a report was 6.9 percent in 2019, 8.3 percent at the 2021 peak and 5.6 percent in 2025. The share of loss-making companies has grown from 26 percent to 31. The margin calculated from the sum of profit and revenue of all companies was 7.1 percent in 2019, 11.5 percent in 2021 (thanks to a good year for large companies) and 6.1 percent in 2025. Nearly 150,000 companies made it into the 2025 analysis, against about 127,000 in 2019.
The median of all companies nevertheless understates the decline, because the composition changes every year: new companies are added and some close. Looking only at the 76,465 companies that filed a report in all seven years, the picture is different. Their median net margin fell from 7.1 percent to 3.5 percent, by half, and the share of loss-making companies rose from 23 percent to 33. The sample consists of companies that operated throughout the period, so they are older than the market as a whole. This means we cannot say how much of the fall stems from the business environment and how much from companies getting older.
The decline is concentrated among the smallest companies. For micro companies with revenue below €100,000, the median margin fell from 8.8 percent to 6.4 and the share of loss-making companies rose from 29 percent to 33. For small companies (revenue of €0.1–1 million) it fell from 5.6 to 5.1 percent, for medium ones (€1–10 million) from 3.9 to 3.6, and for large ones (over €10 million) it stayed the same at 3.0. In 2022, profitability in every size class except micro was higher than in 2019. The number of micro companies in the analysis grew from 92,000 to 110,000, and they now make up about three quarters of the companies studied.
By industry, the most profitable sector in 2025 is real estate (median 22.6 percent), followed by professional, scientific and technical activities (14.0), information and communication (11.2), education (10.0) and health care (8.5). The real estate figure is high partly because the sector includes many small rental and holding companies whose revenue is small and whose profit may also come from outside their main activity. The lowest margins are in other service activities (1.3), accommodation and catering (1.5), wholesale and retail trade (1.7), transport (2.7), manufacturing (2.9) and construction (3.8).
The biggest fall in six years is in the information and communication sector, whose margin dropped from 17.5 to 11.2 percent. Agriculture's median was 15.2 in 2019 and 17.1 in 2022, but fell to 7.1 percent in 2023 and has stayed at 7–8 percent since. In professional, scientific and technical activities the figure fell from 18.2 to 14.0 percent. Low-margin sectors such as trade, accommodation and manufacturing already had thin profits in 2019 and have moved lower still. Accommodation and catering fell to a median of 0.7 percent in 2020 during the Covid crisis and recovered to 2.4–2.9 percent in 2021–2022, but had slipped to 1.5 by 2025.
At the level of narrower industries, the biggest change is in programming, one of the largest industries by number of companies (9,400 in 2025): the median margin has fallen from 22.5 percent to 13.9. In management consulting and head-office activities the figure fell from 33.0 to 20.6 percent and in crop and animal production from 20.5 to 10.6. More resilient have been architecture and engineering (from 17.5 to 15.5 percent) and accounting and legal services (from 17.0 to 14.8). Among low-margin industries, the median in furniture manufacturing has fallen from 3.1 to 1.0 percent, in retail trade from 2.2 to 1.1, and in personal services, such as hairdressers and beauty salons, from 3.1 to 1.4.
The share of loss-making companies in 2025 is highest in accommodation and catering (37 percent), trade (35), and manufacturing and arts and entertainment (33 in both). It is lowest in health care (24 percent), real estate (27) and professional, scientific and technical activities (28). In retail trade 38 percent of companies are in the red and in programming 30 percent. The results for accommodation and catering also show how the median and the total can differ: the sector's total profit divided by total revenue was minus 6.1 percent in 2020 and minus 3.3 percent in 2025, because a few large loss-making companies outweigh the profits of many small ones, while the median company has stayed slightly in the black.
Comparing counties, the median margin in 2025 is highest in Tartu County (6.8 percent) and Harju County (6.2). It is lowest in Ida-Viru County (2.2), Jõgeva County (3.5), and Põlva (3.7) and Valga (3.8) counties. The figure has fallen in every county compared with 2019: least in Hiiu County (from 6.2 to 5.8) and Tartu County (from 7.6 to 6.8), most in Põlva County (from 6.9 to 3.7) and Valga County (from 6.9 to 3.8). In Harju County the median fell from 7.8 percent to 6.2. The county here is based on the address stated in the report, which for larger companies may not be where they operate.
A few limitations should be kept in mind when interpreting the numbers. Net margin also includes non-operating income and expenses, such as dividends, revaluations and interest, and in small companies it is affected by the owner's mix of salary and dividends. The industry is the one the company has stated in its report, and where it is missing we used the company's latest known industry. The analysis covers only non-consolidated reports of private limited companies, public limited companies, limited partnerships and general partnerships with positive revenue; consolidated group reports are excluded. About 7–8 percent of reports lacked revenue or profit in structured form and were left out. Not all 2025 reports have been filed yet (about 92 percent of the 2024 volume), so the figure may change as late filers arrive. The composition of companies differs from year to year, and the results describe associations, not causes.