Earnings of enterprises and other operating entities in the Icelandic business economy (excluding financial and insurance activities) declined by 5.3% in 2024. This was primarily due to diminished turnover growth as total revenue increased by only 137 billion ISK or approximately 2.0%. This was considerably less than in 2023 when revenue grew by 8.2% when the tourism industry, vehicle sales and construction industry grew significantly despite contraction in export industries and rising financing costs.
In 2024 this turned around as profit in tourism contracted and vehicle sales diminished while earnings in metals manufacturing and technology improved considerably, although results in fisheries worsened. In general, financial costs improved but increased operating expenses beyond turnover growth dragged down overall earnings.
In most industries revenue growth was lower than the year’s inflation (5.8%).
Minimal revenue growth
Despite revenues increasing in most industries in 2024 the growth was small and only 2.0% for the business economy in total. Of the country’s main industries, revenue increased most in real estate (14.7%) and construction (11.0%) where 14% growth was in construction of buildings. In technology there was 6.7% growth where revenue increased most notably by 10.3% in computer programming, consultancy and related activities along with significant growth in pharmaceutical production.
In other industries revenue growth was minimal or negative, with 19.6% contraction in wholesale and retail trade and repair of motor vehicles. In fishing, aquaculture and fish processing revenue fell by 8.7% (10.5% in fisheries) and by 1.6% in manufacture of base metals.
Revenues in the tourism industry grew by only 2.5% in 2024. Passenger transport by air grew by 4.5% and travel agencies by 3.7% but in accommodation, food and beverages revenues fell by 2.1% with 4.0% drop at restaurants, specifically.
Rising operating expenses but lower financing costs
Overall, operating expenses rose by more than revenues. Costs rose most in real estate or by 32.9% where goods and raw material costs roughly doubled. In construction there was also 11.7% increase but that was in line with revenue growth. In the tourism industry operating expenses grew by 5.7% compared with revenue growth of 2.5% as depreciation increased by 13%. Overall, operating expenses in the business economy rose by 2.8% where goods and raw material costs increased by 2.5%, labour costs by 3.3%, depreciation by 1.2% and other expenses by 3.7%.
Financing costs (financial items) fell and amounted to 155 billion ISK in 2024 compared with 206 billion in 2023. Financial items improved most in the technology sector from being negative by 21 billion ISK in 2023 to being positive by 7 billion in 2024. Similar trend was in metals manufacturing as results from financial items went from minus 9 billion ISK in 2023 to 6 billion in 2024. Positive changes were also in retail and wholesale trade, real estate and utilities. However, financing costs increased in construction, fisheries and wholesale and retail trade and repair of motor vehicles.
Lower income in most industries
Net profit declined in most areas of the economy in 2024. Despite earnings being positive in most industries the net profit for the total business economy decreased by 5.3%. Of the 10 largest industries earnings grew in only four: Utilities, wholesale trade, technology and manufacture of base metals. Like in previous years the real estate industry was most profitable. However, in 2024 the net profit declined modestly or by 1.0%.
In other industries earnings declined. Most notable was nearly 50% drop in both fisheries and tourism along with an even greater fall in trade and repair of motor vehicles (-70%). The tourism industry was considerably affected by nearly 13 billion ISK loss in passenger transport by air which was an increased loss of nearly 9 billion ISK compared with 2023. At travel agencies and in the accommodation, food and beverage industry there was also over 30% decline in profits.
Other structural business statistics
Along with publication of new income and balance sheets for industries in the business economy Statistics Iceland publishes now simultaneously updated statistics on structural business statistics (number of enterprises and operational information). The data consists of specific variables (e.g. turnover, production value, value added, social security costs, and more) for the years 2008-2023 (with preliminary data for 2024) that are comparable other countries and in accordance with Eurostat standards. The data can be accessed on Statistics Iceland’s website in the tables: Enterprises and operational information 2008-2024 and Number of enterprises and operational information by industry and size 2008-2024.
About the data
The income statement and balance sheet are compiled from nearly 38,000 corporate tax returns of companies that have roughly 147 thousand employees in 2024. Figures for 2024 are preliminary and will be updated at the next release.
All numbers are nominal unless otherwise noted. Inflation in 2024 was 5.8% according to the annual average consumer price index.
1 Operating expenses include goods and raw material costs, labour costs, depreciation and other operating costs.
2 In real estate goods and raw material costs are primarily building costs (of sold assets). In 2024 there were also significant effects of real estate transactions in the town of Grindavik which was severely affected by volcanic activity in Reykjanes.
3 Financial items can include interest expenses and interest income along with gains (losses) on the sale of securities, dividends and mark-to-market changes in security prices. Changes in financial items in few industries can thus significantly impact the results of the total business economy.
4 The real estate industry includes buying/selling of property, commercial and residential leasing, renting of land and land rights, brokerage and property management. Most of the industry’s revenue comes from commercial leasing. Change in assessment values and market prices of properties can significantly influence revenue and profit (loss) of operating entities in the industry.