The Warsaw Voice » Business » Monthly - September 30, 2015
Business & Economy
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Revenue Inches up for Largest Companies
   
Economic growth in Central Europe is chiefly driven by sectors such as manufactured goods, consumer goods and pharmaceuticals, a survey by consulting firm Deloitte shows.

The firm’s analysis of the largest companies in 18 countries in Central Europe and Ukraine (500 companies, 50 banks and 50 insurance companies)—conducted for the ninth time—shows that in 2014 most CE countries saw an increase in the rate of their economic growth. However, this did not translate directly into increased average revenues of the region’s 500 largest businesses. The 2015 CE Top 500 ranking shows fractional growth in median revenues of 0.3 percent when denominated in euros.

The revenues of the 500 largest companies do not reflect the macroeconomic situation of the region, according to Patryk Darowski, deputy head of Deloitte’s financial advisory services department, who points outs that 2014 was for Central Europe a period of moderate growth.

The changes in GDP were largely the result of growing exports to Western European countries. In addition, the 2014 data suggests that the improvement in the economic situation in the region was equally strongly influenced by growing domestic demand linked to private consumption.

The Deloitte analysis shows that the greatest increase in revenue in 2014 was recorded by the manufactured goods sector, which grew by 3.1 percent (5.6 percent in local currency terms). This was mainly due to the good condition of the automotive sector (up by 6.5 percent in euro terms and 8.5 percent in local currency terms). “The consumer goods and transport sector also noted an improvement over the previous year, with average revenue growing 2.3 percent in euro terms. In this sector, wholesalers and household appliance producers achieved particularly good results,” says Darowski. An increase in revenue was also recorded in the pharmaceuticals and health sector. The construction sector rebounded after poor results in 2013 (with average revenue growth of 4.8 percent). However, this sector had little impact on the overall results of the analysis because it accounts for just 1 percent of the companies surveyed.

At the other end of the spectrum are energy companies, which recorded a 3.4 percent decline in average revenue as a result of lower commodity prices. Sixty percent of these companies reported lower revenues than in 2013.

As a year earlier, among the 500 largest companies in the region, the largest number came from Poland (170). That’s eight more than a year earlier. On the other hand, there is a noticeable fall in the number of companies from Ukraine (about 22 percent less than the previous year), due to both poorer results and data unavailability.

Deloitte also analyzed the banking and insurance sectors. In 2014, banks continued their stable growth, resulting in a 2.3 percent increase in the total assets of the region’s 50 largest banks (compared with 2.8 percent in 2013). Thirty-three of the 50 analyzed banks reported an increase in euro-denominated assets in 2014, with the median at 4.2 percent. Last year insurance companies again reported a decrease in gross written premiums. For the 50 biggest insurers, the gross written premium decreased by 1.7 percent. The gross written premium decreased for 30 of the 50 largest insurers. More than half of the insurers on the list came from Poland and the Czech Republic.

Deloitte says a positive signal is that the number of companies in the 2015 CE Top 500 ranking whose revenues increased (from 49.8 percent in 2013 to 52 percent in 2014) grew for the first time in the last four years. This makes it possible to be moderately optimistic about the further growth of the region’s economies in the next few months, though, on the other hand, the German ZEW indicator of economic sentiment has been falling since March 2015, which puts a question mark over the growth of one of Poland’s largest export markets, according to Darowski. “Back home industrial product sales in Poland grew less than expected in July 2015, at 3.8 percent. It is also necessary to keep in mind the key risks to the region posed by the political situation in Ukraine and the financial condition of Greece,” Darowski added.
A.R.