Top 500 Companies In Central And Eastern Europe
During the boom, large companies were always seeking new investment opportunities. Central and Eastern Europe seemed an appropriate solution at that time given that it offered cheap labor, the economies advanced at a much faster rate than Western economies and Eastern States, not long ago abolished from the communist domination, were also eagerly looking for investments and were willing to grant tax reliefs.
Meanwhile, the economic crisis broke, and things took another turn. Eastern European economies have declined and with them so has the foreign income. A decrease of business can be observed in 2009 compared to the year of 2008, although both years were years of crisis.
This is especially obvious if we were to look at the position of the largest steel manufacturer, ArcelorMittal, whose revenue fell by 45.4% last year compared to the previous one, according to the study regarding the largest Eastern companies, a study developed by the Audit Company Deloitte.
The report is annually conducted by Deloitte in 18 countries. It is now in its fourth edition and takes into account the companies’ reported turnover for the previous calendar year.
According to Deloitte, ArcelorMittal achieved revenues of only 6.933 billion euros on the Eastern markets in 2009 compared to 12.709 billion euros it achieved the previous year. This development led to a change in hierarchy, as ArcelorMittal lost four positions ending up in the eighth place in Deloitte’s report.
Not even the three giants – Volkswagen, E.ON and Metro – aren’t doing much better, each announcing declines of over 20% in income. Still, the top 3 didn’t suffer any changes.
Volkswagen, which owns the Czech group Skoda, remains the most important investor in the region, but the group revenue declined by 24.9% to over 22.5 billion in 2008 to just under 17 billion.
The car manufacturer Renault, the current owner of Dacia, Romania’s car manufacturer, suffered declines too. But this time the decline was less steep at only 1.4%. This development illustrates that the auto market had greatly suffered from the global financial crisis.
The impact of this economic event had a les significant impact on the French car manufacturer Renault due to the fleet renewal programs. Thus, many Westerners have abandoned their old cars and so turned to low-cost models of Dacia, manufactured by Renault.
So, who are the winners in Deloitte’s top?
The financial crisis has said its word in the power sector but for other reasons. Thus, companies like E. ON, OMV and RWE have suffered a decline in sales mainly due to the weakness of local currencies that have depreciated against the euro currency.
Out of the 25 largest foreign investors only four were able to increase their revenues in 2009. Out of these 25, two belong to the IT industry. Samsung, the largest TV manufacturer in the world, ranked sixth in the chart, announced an increase of 4.6% in revenue, up just a little over 7.2 billion euros. LG, the other IT-company that managed to increase revue is one of the largest manufacturers of mobile phones in the world and managed to enter this year the top 25, the second to last, after the company’s revenue rose by 9.5% to almost 2.5 billion euros. This development is mainly due to greenfield investments made by the company.
The other two winners are the German network of discount hypermarkets Kaufland and the Trade German group Rewe, which operates the Penny Market discount stores.
The top 10 largest companies are PKN Orlen in Poland, MOL (Hungary), CEZ, Skoda (Czech Republic), Naftogaz (Ukraine), PGE, Fiat, PGNIG (Poland), Metinvest (Ukraine) and the Ukrainian Railway Company.
This year’s rating concerns the first 500 companies in the region by turnover reported by the end of 2009 and examines the trends in key industries to capture the economic and trade sectors as a whole, but also the way in which business leaders adapt and react to external stimuli.
The total turnover of the largest Central European companies, expressed in euro, declined by almost 21% in 2009 compared to the total amount of 2008, mainly due to the financial crisis, but also due to the depreciation of local currencies.
Deloitte also reveals that Polish Companies dominate the top. Almost 80% of companies have reported declining revenues in 2009 versus the previous year. By comparison, about 70% of companies have seen a revenue growth in the first quarter of 2010, compared to same period last year. Polish companies still dominate the top, with a share of 36%. However, their number decreased from 188 to 180. In return, Ukraine has decreased from having 52 to having 39 companies present in the top, while the number of companies in the top increased in the Czech Republic (from 69 to 73) and in Hungary (from 60 to 63). The biggest jump was recorded in Serbia, which has doubled the number of companies present in the top. It now has 12 companies that made it in Deloitte’s top 500 companies in Central and Eastern Europe.
The largest industry in Central Europe by revenue remains the energy and resource sector (200 billion), this segment also having the largest share of state ownership in the region. The industry with the fastest growth and with the largest number of companies is the consumer goods industry and the transportation sector (147.43 billion euros). The third place was taken by the manufacturing industry (nearly 100 billion), that on the down side, recorded one of the most accelerated rates of decline in the level of representation in the top (from 114 last year to 101 companies).
On the other hand, banks’ figures are still weak. In the financial sector, the quality of credit portfolios owned by banks worsened in the region, and the assets continued to decline, but at a slower pace than in the previous year. The demand for insurance policies declined, including in the life insurance segment with investment components.
All industries recorded decreases in income, but the least affected are the medical and pharmaceutical industry, the real estate and construction sector, the consumer goods and transport industry.
Technology, media and telecommunications have reported further decreases; almost 90% of companies having lower income profiles in 2009 compared to 2008 (the worst performance of any other industry).
The car industry remains the backbone in the manufacturing area, which is in decline. Despite the initial signs of recovery in early 2010, after a year of decreased revenue, there are now fears that the end of the fleet renewal programs on certain export markets could have an economic impact to the end of the year.11
