Central European companies grow their revenues by 3.5% in 2015
Deloitte, an international audit and consulting company, has launched the results of the project „CE TOP 500“. This was the 10th time that Deloitte has conducted an analysis of the largest companies in the Central European region and announced a list of 500 major CE companies.
- Lithuanian Companies amongst CE TOP 500
- Change at Top
- Industry Focus
- Economic Issues
- Digital Transformation
During 2015, the median annual euro-denominated revenue growth rates of Central Europe’s 500 largest companies rose from just 0.3% in 2014 to 3.5%. This exceeds the GDP growth achieved by all but three of the 18 countries in which the companies are based – the Czech Republic (4.6%), Romania (3.8%) and Poland (3.6%). Growth across the region was mainly driven by increasing private consumption in the largest economies, up by around 3% in Poland, Hungary and the Czech Republic and by 5.9% in Romania. Results would have been yet stronger but for the continuing geopolitical tensions in Ukraine, which led to a 9.9% decline in the country’s GDP, and the low oil price which drove a -8.1% decline in oil company revenues.
These were among the key findings of the 2016 edition of the Deloitte CE TOP 500 ranking and report, which finds the region’s business leaders concerned that early economic results for 2016 are not as encouraging as they were during 2015.
This was the 10th time that Deloitte has conducted an analysis of the largest companies in 18 countries across Central Europe and Ukraine (500 companies, 50 banks and 50 insurance companies). The combined revenues of all companies in the Top 500 ranking totaled EUR 685 billion, representing a 1.7% year-on-year increase from the EUR 682 billion recorded a year earlier. In addition, the minimum annual revenue for a company to rank among the region’s top 500 companies rose by 3.0% to EUR 473 million.
Little change at the top
The top five places in the ranking are the same as last year. PKN Orlen retains its leadership position despite a 17.2% decline in revenue. MOL from Hungary is second once more, despite a 15.6% fall in its revenue. Škoda Auto from the Czech Republic is third (with a rise of 6.3%). Fourth and fifth places go to Jeronimo Martins Poland and Polskie Górnictwo Naftowe i Gazownictwo (PGNiG) respectively.
Lithuanian companies amongst 500 major Central European entities
The latest CE TOP 500 report covers 11 Lithuanian companies (last year: 12). 4 Lithuanian companies (VP, AB Achema, Koncernas Achemos grupė, Lietuvos energija), jumped over several positions, while 6 companies (Orlen Lietuva, Maxima LT, Lesto, Palink, Linas Agro, MG Baltic). fell down. 1 company, Sanitex, came back to the list after 1 year’s break.
11 major Lithuanian companies (Source: Deloitte CE TOP 500 | 2016)
Last Year Rank
|149||Koncernas Achemos grupė||161|
An industry focus
The current picture remains somewhat affected by the ongoing weak performance of companies in the Energy and Resources (E&R) sector, which continue to suffer from falling oil and coal prices. However, improved efficiencies at the region’s energy companies meant that the sector as whole experienced stagnancy rather than outline decline.
By way of contrast, companies in sectors such as Manufacturing and Consumer Goods & Transportation (CG&T) delivered strong revenue growth, up by 7.4% and 4.1% per cent respectively. The particularly rapid growth of Manufacturing revenues was driven most powerfully by the Automotive sector, in which companies saw a 12.9% average rise in revenues.
There were encouraging signs in two industries that have not performed strongly in recent years. The Construction industry, represented in the ranking by eight Polish and Czech companies, recorded the highest revenue growth of all (up by 19%). This follows double-digit declines for the industry in both 2012 and 2013. Life Sciences and Healthcare likewise experienced an increase in revenue, with a 5.7% median growth in 2015 following three years when growth ranged between 0 and 2.6%.
In the Banking sector, the total assets of the region’s leading banks grew to EUR 734 billion, an increase of 5.8%. In fact, 76% of banks reported an increase in asset value. The two largest banks, as last year, were PKO Bank Polski and Bank Pekao, followed by Česká Spořitelna and ČSOB which rose from last year’s fifth and seventh places. Hungary’s OTP Bank slipped from third in 2014 to fifth this time.
Following a decline in Gross Written Premium in 2014, the region’s leading Insurance companies delivered a 4.5% increase in 2015. PZU was again the leading insurer, followed again by ERGO Hestia with Warta rising to take third place.
Data for the first quarter of 2016 suggest that the broadly positive trends observed in 2015 may be reversing, with companies reporting an average deterioration in their euro-denominated revenues of 3.3% during the first quarter of 2016. “Considering the overall view emerging from an analysis of this year’s ranking, one may conclude that 2015 was a good year for the largest Central European companies,” says Marius Stalenis, Assistant Director at Deloitte verslo konsultacijos UAB. “This enthusiasm is slightly tempered, though, by the quarterly performance and macro-economic data. However, it should be emphasised that the first quarter is not always an accurate predictor for the entire year,” added Mr. Stalenis.
According to Alastair Teare, CEO of Deloitte Central Europe, the long-term outlook for the regional CE economy remains positive. “A full 66.6% of businesses reported revenue growth in 2015, against 52% in 2014. But even if we are entering a slightly softer period, there is no doubt that GDP growth in our region is set to be significantly faster than almost anywhere else in the world, with the exception of Asia,” he says. “That will continue to position Central Europe as a key destination for foreign direct investment. When you also take into account the availability of EU funding and slackening austerity programmes, the picture looks healthy overall.”
When compiling the CE Top 500 report for 2016, Deloitte asked many of the region’s business leaders about their views on and experience with digitalization.
According to Alastair Teare, the response was universally encouraging. “One of our interviewees called digital transformation the most important trend in the history of business. Another said: ‘It would hardly be possible now to continue the development of an organisation without resorting to digital technologies and the benefits they offer.’ They were both right: going digital is not an end in itself. It is a route towards achieving closer and more productive relationships with customers at the same time as driving major efficiency benefits and systemic improvements. In short, the economic future of the Central European region is inextricably intertwined with the digital strategies of our leading companies.”
The CE TOP 500 report also covers Liudas Liutkevičius’, ESO general director’s, insights on digital transformation importance, benefits, key challenges and succesful results.