From Geopolitics to Financial Statements: Why Even a Southern Italian SME Must Look at the World

Globalisation has changed the way companies need to read their financial statements. Today, a small or medium-sized enterprise is not exposed only to customers, suppliers, banks, local competitors and industry trends. It is also exposed to decisions made in the United States, tensions in the Strait of Hormuz, regional wars, swings in global financial markets, energy costs, interest rates and expectations linked to artificial intelligence.

The year 2026 is clearly showing this interconnection. The International Monetary Fund forecasts global growth of 3.1% in 2026 and 3.2% in 2027, while pointing to downside risks linked to a possible prolongation of conflicts, geopolitical fragmentation, renewed trade tensions and a possible reassessment of expectations around artificial intelligence. For Italy, the European Commission forecasts real GDP growth of 0.5% in 2026 and 0.6% in 2027, with inflation at 3.2% in 2026 and 1.8% in 2027.

For an entrepreneur, these figures may seem distant. In reality, they quickly flow into the Profit & Loss, the Balance Sheet and the company’s financial position. Consider an SME with €10 million in revenues, €1 million in EBITDA, therefore an EBITDA Margin of 10%, €2 million of net financial debt, customers paying on average after 75 days, annual purchases of approximately €5 million and estimated cost of goods sold of approximately €6 million. In this context, average inventory of approximately €1.0 million is equivalent to around 60 days of cost of goods sold: in simpler terms, it means that the company holds stock equal to around two months of materials, semi-finished goods or products required to support its operating activity.

In a stable environment, a company with these characteristics may appear financially balanced. However, an external shock can rapidly change its economic and financial position. A geopolitical tension can create supply issues, increase procurement costs, raise logistics costs and make suppliers more cautious. Similarly, a new tariff measure can affect final prices, demand and contract margins.

Tariffs and international trade: when the selling price no longer depends only on the company

Alongside supply-chain shocks, another transmission channel is international trade. In a globalised economy, tariffs, trade barriers and restrictions on trade do not affect only companies that export directly. They can also affect businesses integrated into broader supply chains, which sell to Italian or European customers exposed to non-EU markets. The risk, therefore, does not relate exclusively to the cost of imported or exported goods, but also to the competitiveness of the final price, customer demand, contract margins and order stability.

The United States represents a particularly relevant example. The 2025 EU-US trade agreement provided for an overall 15% tariff ceiling for several European products exported to the United States, with the stated objective of restoring greater stability and predictability in transatlantic trade relations. In February 2026, the US administration introduced a temporary 10% ad valorem surcharge on numerous imported products for a period of 150 days. 

For an Italian SME, the impact is not theoretical. If a company exports €2 million to the United States and the American customer faces a 15% tariff, the potential additional cost on the imported value is €300,000. Even if the tariff is formally paid by the importer, in practice the customer may ask for a discount, postpone orders, reduce volumes or shift part of its purchases to alternative suppliers. Furthermore, even when the extra cost is correctly passed on to the final customer, the higher price can still compress demand. In other words, the issue is not only “who pays the tariff”, but also how the new price affects the economic attractiveness of the purchase and the competitiveness of the product compared with local alternatives or products from other countries.

If the Italian company absorbs only one third of the impact, it grants around €100,000 in commercial discounts. For a company with €1 million in EBITDA, this means reducing EBITDA by 10%. If, in addition to the discount, volumes to the United States decline by 5%, the company loses another €100,000 in revenues; with a 40% contribution margin, the additional impact on EBITDA is approximately €40,000. Overall, a geopolitical and trade-related event can translate into €140,000 of lower EBITDA, without the company having changed its product, quality or industrial strategy.

The effect also concerns companies that do not export directly. An SME based in Emilia-Romagna, Campania, Apulia, Basilicata, Calabria or Sicily that sells components, packaging, semi-finished goods or processing services to a domestic customer exposed to the United States can indirectly suffer from a reduction in orders. The value chain transfers the shock from the final market to the subcontractor, making even strongly local businesses sensitive to international trade dynamics.

Energy, logistics and raw materials: margins shrink before the full impact becomes visible

A second transmission channel concerns energy, logistics and raw materials. In this case, the link between the geopolitical scenario and the company’s financial statements is often very rapid: tensions in strategic areas, maritime routes or producing countries can be reflected in fuels, transport, insurance, packaging and semi-finished goods. The Strait of Hormuz is one of the most relevant chokepoints for the global economy: according to the International Energy Agency, in 2025 an average of around 20 million barrels per day of oil and oil products passed through it, equal to approximately one quarter of global seaborne oil trade. Tensions in the area have affected energy prices, maritime transport, insurance and global supply chains. UNCTAD has also highlighted the risk of impacts on energy, fertilisers, marine fuels and transport costs across supply chains.

In June 2026, the EIA estimated an average annual Brent price of around $95 per barrel in 2026, the highest annual average since 2022, followed by a subsequent decline towards around $79 per barrel in 2027, assuming a gradual restoration of market conditions. For manufacturing, agri-food, engineering, automotive, fashion or packaging SME, the impact reaches several Profit & Loss items: electricity, gas, fuels, transport, plastic, glass, aluminium, paper, fertilisers, packaging and semi-finished goods.

For an SME with €10 million in revenues, annual spending of €800,000 on energy and logistics exposes the company to an immediate impact on the Profit & Loss. A 15% increase generates €120,000 of additional costs. If the same business also purchases €2 million raw materials directly or indirectly linked to energy prices and faces an average increase of 4%, the additional effect amounts to another €80,000.

Without selling-price adjustments, EBITDA falls from €1,000,000 to €800,000 and the EBITDA Margin declines from 10% to 8%. The difference between a company that withstands the shock and one that enters financial stress often depends on its ability to pass cost increases on to customers. Companies with indexed contracts, high value-added products or stronger bargaining power are better able to defend profitability. Companies with rigid price lists, concentrated customers or annual contracts may instead absorb a large part of the shock.

Working capital: the hidden blind spot of many SMEs

Macroeconomic shocks do not affect only the Profit & Loss. Often, the most dangerous impact emerges on the Balance Sheet, especially through working capital. During periods of uncertainty, customers may pay more slowly, the company may increase inventory to protect itself from logistics delays or future price increases, and suppliers may reduce payment terms.

On €10 million in annual revenues, each day of customer collection is worth approximately €27,400. If average collection days increase by 15 days, the company locks up approximately €410,000 in trade receivables. If, as a precaution, inventory increases by 20 days on cost of goods sold of €6 million, a further €330,000 is absorbed. If suppliers then reduce payment terms by 10 days on €5 million annual purchases, the company loses another €137,000 of financial flexibility.

The combination of these three effects determines a cash absorption of approximately €877,000. This figure is particularly relevant because it is almost equivalent to the initial annual EBITDA. This explains why a company can remain profitable in the Profit & Loss and, at the same time, enter financial stress.

The reading of financial statements should therefore not stop at profit or loss. A company may generate positive EBITDA but consume cash as a result of trade receivables, inventory, investments, collection delays or debt repayment. In periods of volatility, the distinction between profit and cash flow becomes essential.

Interest rates and credit: the cost of capital reaches net income

The third channel is financial. According to the Bank of Italy, in April 2026 interest rates on new loans to non-financial corporations stood at 3.56%; for amounts up to €1 million, the average rate was 4.28%, while for amounts above that threshold it stood at 3.15%.

Here too, the impact on company accounts is immediate. An SME with €2 million of floating-rate debt incurs €20,000 of higher annual financial expenses for every increase of 100 basis points, i.e. 1 percentage point. If the increase is 150 basis points, the additional cost becomes €30,000. For a company with net income of €300,000, this means losing 10% of net profit due only to the cost of money.

Moreover, when volatility increases, banks tend to require greater visibility on cash flows, more reporting, more guarantees and stricter covenants. Corporate finance therefore becomes not only a question of interest rates, but also of access to credit and planning capability.

AI, Wall Street and volatility: why even an unlisted SME should care

Artificial intelligence does not concern only large technology companies listed on Wall Street. It also concerns global trade, investments, financial markets, the cost of capital and company valuations. The WTO reports that world merchandise trade grew by 4.6% in 2025, partly thanks to demand for AI-related goods, and forecasts a slowdown to 1.9% in 2026, followed by a recovery to 2.6% in 2027 in the baseline scenario. The WTO also estimates that high oil prices could subtract 0.5 percentage points from merchandise trade growth in 2026, while strong demand for AI-related goods could add 0.5 percentage points.

The ECB highlighted that, in 2026, financial markets were influenced by two main forces: on the one hand, concerns about the impact of AI on certain business models, which generated pressure on large technology and software companies; on the other, the war in the Middle East, which caused increases in energy prices and greater volatility across several asset classes. The ECB also notes that the concentration of equity portfolios in a few large US issuers, particularly AI-related companies, can amplify market stress in the event of sudden losses in value. The International Monetary Fund also highlights that elevated valuations and concentration in AI-related stocks increase downside risks in equity markets.

For an unlisted SME, the connection may appear indirect, but it is concrete. The link emerges especially when the cost of capital changes or when the market revises valuation multiples. Consider a company evaluating an M&A transaction or the entry of a financial investor. With €1 million in EBITDA and a 6x multiple, Enterprise Value is €6 million. If the company has €2 million net financial debt, Equity Value is €4 million. If, due to volatility, higher rates and lower risk appetite, the multiple falls from 6x to 5x, Enterprise Value becomes €5 million and Equity Value falls to €3 million. The reduction in value for the entrepreneur is 25%, even though EBITDA has not changed.

The same effect emerges in DCF models. A normalised cash flow of €700,000, capitalised at a rate of 9% and with long-term growth of 2%, implies a theoretical value of approximately €10 million. If the discount rate rises to 11%, the value falls to approximately €7.8 million. The change in the cost of capital alone reduces theoretical value by more than €2 million.

Why Southern Italy is fully exposed to global dynamics

The Mezzogiorno is not isolated from global dynamics. According to Istat, in the first quarter of 2026 exports from Southern Italy and the Islands grew by 13.1% quarter-on-quarter, recording the largest increase among Italy’s territorial macro-areas. This confirms that many companies in Southern Italy are integrated, directly or indirectly, into international value chains.

An SME based in Campania, Apulia, Basilicata, Calabria, Sicily or Sardinia may sell to a domestic customer that exports, purchase raw materials priced in dollars, depend on international energy and transport, import components from Asia or Northern Europe, finance inventory through bank facilities and use software, cloud or digital services linked to large global technology platforms.

For an Apulian SME in the agri-food or packaging sector, the effect can be immediate. If the company purchases €3 million of raw materials and packaging and faces an average increase of 5%, it loses €150,000 of margin. If transport costs increase by €50,000, customers delay payments by €300,000 and the bank requires a reduction in the use of short-term credit lines, the issue is no longer only macroeconomic. It becomes a question of cash, covenants, suppliers and business continuity.

Globalisation, therefore, does not concern only large multinationals. It concerns every company that is directly or indirectly integrated into a value chain. Even a company with strong local roots can be exposed to phenomena that originate in distant markets, ports, stock exchanges or political decisions.

What to expect in 2026 and in the coming years

For the rest of 2026, the scenario remains fragile. The OECD notes that the conflict in the Middle East is testing the resilience of the global economy, with effects on energy, raw materials, inflation and financial volatility. The IMF indicates that downside risks remain significant and are mainly linked to longer conflicts, geopolitical fragmentation, renewed trade tensions and possible disappointment around the productivity expectations generated by AI.

In the coming years, companies will have to live with three structural variables. The first is trade fragmentation: tariffs, restrictions, investment controls, industrial policies and reshoring will make trade flows less predictable. UNCTAD notes that global trade enters 2026 under pressure from slower growth, geopolitical fragmentation, the digital and green transition, and tighter regulation.

The second variable is energy volatility. Events concentrated in individual strategic corridors, such as the Strait of Hormuz, can generate global effects on oil, gas, fertilisers, transport and agricultural prices.

The third variable is the financialisation of technological expectations: AI can support investment, productivity and demand for specific goods, but it can also fuel market concentration, volatility and sudden repricing of financial assets. According to the BIS, the investment needs linked to AI will increasingly require financing through debt and private credit, strengthening the link between large technology companies, financial markets and non-bank investors.

A simple stress test for every entrepreneur

Every SME should translate macroeconomic news into company numbers. A useful exercise is to simulate what happens if, in the same financial year, revenues fall by 5%, energy and logistics increase by 15%, raw materials rise by 4-5%, customers pay 15 days later, inventory increases by 20 days and the cost of debt rises by 100 basis points.

For a company with €10 million in revenues and €1 million in EBITDA, a 5% decline in turnover results in €500,000 of lower revenues. With a 40% contribution margin, the impact on EBITDA is approximately €200,000. If €200,000 of higher energy, logistics and raw-material costs are added, EBITDA falls from €1,000,000 to approximately €600,000. The company remains profitable, but the EBITDA Margin falls from 10% to 6%.

If, over the same period, working capital absorbs almost €900,000, the stress does not emerge only in the Profit & Loss, but above all in liquidity. This is the central point: a company may continue to generate margin, but still find itself struggling to pay suppliers, repay debt, finance inventory or support investments.

Conclusions

The lesson of 2026 is clear: what happens in the world does not stay in the world. It enters price lists, contracts, inventories, bank rates, market multiples and liquidity. For this reason, an SME, even one deeply rooted in Southern Italy, must read geopolitics, energy, global trade, artificial intelligence and financial markets as operating variables of its business plan.

The answer is not to predict the future perfectly. It is to build scenarios, measure exposure, protect margins, monitor cash and negotiate with customers, suppliers and banks before the shock becomes an emergency.