CE Top 500 press release
Decline in company revenue growth rates in Central Europe continues into 2013
New Deloitte report charts the impact of economic slowdown on company performance
Growth was an elusive target throughout 2012 and into early 2013 for Central Europe's 500 biggest companies. Not only did their average rate of revenue growth decline to 3.3% in 2012 from the previous year's healthy 9.8%, but average revenues actually fell by 0.5% in the first quarter of 2013.
These are key findings of the seventh Deloitte CE Top 500 ranking and report, which suggests that economic slowdown is a stark current reality across the region.
The report also reveals a steep decline in the rate at which the combined revenues of the region's leading 500 companies grew in 2012. This fell from the 12.9% recorded in 2011 to just 3.8% as combined revenues rose to EUR 724 billion.
According to Deloitte Central Europe CEO Alastair Teare, "The business environment remains uncertain and full of challenges, making it difficult for the region's companies to deliver the sustainable growth in revenues and earnings that's needed to generate the wealth that investors and other stakeholders want to see."
"However, it came through loud and clear from the companies we spoke to in compiling the report that there is an increasingly intensive focus on business strategy and quality of execution. As one of our interviewees put it, companies are paying more attention to long-term plans, the quality of their products or services, the expertise and morale of their staff, mutually beneficial and long-term relationships with partners, enhanced business transparency and, most of all, business risk management.
"This maturity means to me that once sustainable economic recovery takes a grip, CE's largest companies will lead the way in realising the region's potential."
With some signs on the horizon that better economic times lie ahead, including the eurozone's recent exit from recession and positive surveys of Polish purchasing managers and German investors and analysts, confidence appears to be returning in key regional and export markets. This is particularly good news for the 202 companies whose revenues declined during 2012, up from 115 in 2011.
However, many of the region's companies did perform strongly during the year. These included the one new entry to the top ten, Ukrainian energy company DTEK, which rose from 32nd to seventh place in the ranking. By displacing retailer Jeronimo Martins, which slid to 12th, DTEK ensured that eight of the top ten were energy companies. Other big movers were the Slovenian GEN-I Group (up 92 places to 112th), the Czech Republic's Energetický a průmyslový holding, a.s. (up by 71 to 126th place) and Ukrainian retailer ATB-Market LLC (up 61 to 73rd). As in previous years, the three companies confirmed as the region's largest businesses were PKN Orlen, MOL and Skoda.
In terms of industries, Real Estate saw the biggest fall in revenues (by 11.7% in euros), while Consumer Business and Transportation showed the biggest growth (4.8%). While Poland had the most companies in the Top 500 (166) followed by the Czech Republic (87), Ukraine showed the biggest rise in this respect (up from 48 to 51).
This Ukrainian success was despite a very small growth in GDP in 2012, down to 0.2% from the 5.2% recorded the previous year. Countries including the Czech Republic, Hungary, Serbia, Slovenia and Croatia all recorded an actual fall in GDP, while the 2% growth delivered by both Poland and Slovakia was down from 4.5% and 3.2% respectively the previous year.
According to Alastair Teare, "Once again the CE Top 500 ranking and analysis provides unique insights into the true relationship between the performance of the largest companies and national economies across the region. In doing so, it confirms how dependent a long-term recovery will be upon how our most dynamic and powerful businesses perform over the months and years to come."