An era of digital transformation
Deloitte Ranking: Top 500 Companies in Central and Eastern Europe 2016
Results of the CEE Top 500 Ranking for 2015 show recovery of European economies and slowdown in decline of Ukraine’s economy
Of all the “megatrends” affecting how companies compete and perform in the regional and global economies, digitalization is the most powerful enabler with the greatest potential for driving positive change. None of us can ignore the extent to which the continued success of Central Europe’s economy is interlinked with the digital strategies of its leading companies. So it is highly informative to read in this report about the passionate intensity with which our region’s business leaders are helping to shape their companies’ digital futures. - Alastair Teare, CEO of Deloitte Central Europe
During 2015, 500 of the largest companies in Central and Eastern Europe increased their revenues by 3.5 percent against 2014. Growth across the region was mainly driven by increasing private consumption in the largest economies, up by 3 percent in Poland, Hungary and the Czech Republic and by 5.9 percent in Romania. Revenue growth was achieved by all sectors except for energy and resources, which posted a 8.1 percent decline in revenues compared to 2014 due to falling oil prices. For the second year in a row, Ukraine continues to experience a significant decline in euro-denominated revenues (-17.4 percent) compared to -21.2 percent in 2014.
Ukrainian companies reduced their presence in the Top 500 rating from 32 to 29 enterprises. Only six companies posted an increase in their revenues in euros during 2015: Myronivskyi Khliboproduct (3.2 percent), Naftogaz Ukrainy (6.7 percent), Kernel (13.3 percent), State Food and Grain Company (15.5 percent), Bunge Ukraine (22.5 percent) and MAU (25.4 percent). The energy and resources sector that accounts for 41.6 percent of Ukrainian companies’ revenues traditionally remains one of the largest in terms of revenue volumes. The consumer goods sector achieved a strong position in the Top 500 rating by the number of companies, 14 out of 29.
Specifics of Ukraine’s economy
This year’s edition of the Top 500 rating unveiled a significant difference in ownership structure of the largest Ukrainian company and the region’s companies. In particular, more than 50 percent of Ukrainian companies present in the rating are owned by local investors, while in the overall ranking, this figure stands at only 15.4 percent. This is due to the low investment attractiveness of Ukraine for foreign investors.
Heavy staffing is another specific feature of Ukrainian business. The average number of employees in the Ukrainian companies present in the ranking is around 35.6 thousand, while the average staff employed by the region’s largest companies totals approximately 6.6 thousand people. Ukrzaliznytsia exerted a considerable impact on these statistics: with a total number of about 270 thousand employees, it is the region’s largest company in terms of headcount. The average number of employees working in the Ukrainian companies, except Ukrzaliznytsia, is 23.9 thousand people. DTEK (118 thousand) and Metinvest (91 thousand) hold second and third place in the region in terms of staff number. Therefore, one employee of the largest Ukrainian companies provides revenue EUR 47 thousand per year, whereas across the whole region this figure stands at EUR 207 thousand.
European companies overview
The particularly rapid growth of manufacturing revenues (7.4 percent) was driven most strongly by the automotive sector, which is flourishing in Europe. The consumer goods and transportation sector, which is broadly represented in the ranking, increased its revenues by 4.1 percent. There were encouraging trends in the construction industry (19 percent) as well as the life sciences and healthcare sector (5.7 percent), which have not performed strongly in recent years. Ukraine in not represented in these sectors.
The report also includes a rating of the Top 50 banks that also posted strong performance results. Seventy-six percent of banks reported an increase in asset value, while the total assets of the region’s banking sector grew by 5.8 percent to EUR 734 billion. Ukraine is represented by two of the largest banks: State Savings Bank of Ukraine (Oschadbank) and PrivatBank that have slightly dropped in the rating.
The trends have considerably changed in Q1 2016. Revenue dynamics of the companies in Central and Eastern Europe show a decline of 3.3 percent in euros (a growth of 0.9 percent in local currencies). At the same time, Ukraine has posted an improvement in revenue decline, which totalled 4.3 percent. One of the reasons behind this trend is the stabilisation of its national currency. However, the first quarter results do not always accurately reflect the trends for the entire year, which will depend on the county’s future economic situation.