Turnover grows by 3 per cent and profit falls: that is what happens when the margin loses two points
26 September 2026, 09:53
Unioncamere, the association of Italian chambers of commerce, and its research centre, the Centro Studi Tagliacarne, asked around 4,500 manufacturing and service businesses, with between 5 and 499 employees, how they see the next two years. The results came out on Friday 25 September. Of the businesses surveyed, 27.5 per cent expect turnover to grow by at least 3 per cent in 2026. More than 70 per cent fear a rise in their energy bills, and among these businesses 43.4 per cent expect lower profit margins.
Andrea Prete, president of Unioncamere, reads the figures this way: businesses “seem to have learnt to live with the permanent uncertainty of the international situation”.
Placed side by side, the two forecasts say something that rarely makes the headlines: a year can close with more revenue and less profit.
Turnover counts what is sold, not what is left
Turnover is the sum of what has been sold. It is the easiest number to know, the first one people look at and the one talked about with the most satisfaction. But on its own it does not say whether the business is doing better or worse than a year ago.
What matters is how much is left of every euro sold after paying the costs that grow along with sales: raw materials, goods for resale, packaging, commissions. That part is called the contribution margin, because it is what contributes to paying the fixed costs (overhead staff, rent, energy, depreciation, interest) and, after that, to making a profit.
If turnover rises but the contribution margin, as a percentage, falls, the two forces pull in opposite directions. Which one wins depends on the numbers, and turnover does not always win.
3 per cent more revenue can leave less margin
An example. A company making wooden components for the furniture industry has a turnover of €8 million. Its contribution margin is 40 per cent: €3.2 million a year to pay the fixed costs, which come to €2.4 million. That leaves €800,000.
In 2026 sales grow by 3 per cent and reach €8.24 million. But wood costs more, the price list cannot be raised enough, and the margin falls to 38 per cent. The contribution margin becomes €3.13 million: around €69,000 less than before, on €240,000 more turnover. Fixed costs have not changed, so that €69,000 comes straight out of profit.
The company has sold more, worked more and earned less. And the financial statements, on the first line, will tell the story of a year of growth.
Where a company's strength is measured
There is a way to see this coming before it reaches the year end, and it is the break-even point: the minimum turnover that covers all costs. It is calculated by dividing fixed costs by the contribution margin percentage.
In the example, with the margin at 40 per cent, break-even sits at €6 million: above that threshold every euro sold leaves a profit. With the margin at 38 per cent, break-even rises to around €6.32 million. Sales have grown by €240,000, but the threshold below which the company makes a loss has risen by about €316,000. The gap between what the company sells and what it needs to avoid a loss has narrowed.
It is that gap, not turnover, that shows how solid a company is: how far sales can fall before it goes into loss. A business that grows while watching break-even draw closer is becoming more fragile, even if it ships more every month.
And the energy bill, which worries more than two in three of the businesses surveyed, does not enter the contribution margin: energy belongs among the fixed or semi-fixed costs, those that do not follow sales. That is why it shifts break-even: with the margin at 38 per cent, every extra euro of fixed costs raises the threshold by about €2.63 of turnover. An extra €50,000 on the energy bill in a year means about €132,000 more in sales just to stay where the company was.
A growth forecast has to be read together with the margin
Read this way, the Unioncamere forecast is neither good nor bad: it is incomplete. Three per cent more revenue is worth a lot if the margin holds, little if the margin loses a point, and can be worth less than nothing if it loses two.
That is why the number to set beside forecast turnover is the forecast contribution margin, product by product where possible, because the average hides the lines that make money and those that lose it. Anyone who forecasts selling more and earning less has already written, without noticing, that break-even is drawing closer.
This article was prompted by a news item published in Unioncamere.