Oil & gas sector hit the hardest in central and eastern Europe (CEE)
Grzegorz Sielewicz, Coface Economist for CEE.
The CEE’s Top 500 companies generated a turnover of EUR 572 billion in 2014. This exceeded half of the average 2014 nominal GDP of those economies and the biggest companies were able to increase their turnover and workforce. These are the main findings of the seventh Coface annual CEE Top 500 study in which the international credit insurance company covered the biggest 500 companies in Central and Eastern Europe.
• 2014: A year of improvement throughout the region – turnover increased by +2.1%
• Higher turnover of the biggest companies reflected better economic prospects in 2014
• Poland was the biggest player, Hungary had the highest growth rate and the Czech Republic recovered
• Sectors: Automotive industry (+10.6%), oil & gas sector down (-3.9%)
Top 500 players: Increase in growth, declining unemployment rates
After years of recession and ongoing difficulties, Coface says development across the CEE was positive. “There is finally an improvement, not as strong as economists hoped for, but stable. The CEE average GDP growth was 2.5% in 2014, which is nearly double the rate of 2013 (1.3%). The turnover increase of the CEE Top 500 showed a similar development curve. Lower unemployment rates, rising wages, the support of low inflation and falling oil prices contributed positively and made household consumption the main growth-accelerating factor in most CEE economies,” says Coface.
Declining unemployment rates in the region were mirrored by the Top 500 companies as they increased staff by 1.7%. Overall 4.2% of the total workforce in the region is employed by the CEE Top 500 companies.
“The CEE region is traditionally dominated by large oil & gas companies that were confronted with a very tough economic environment in 2014. Oil prices dropped dramatically by more than half, resulting in a decline of refined product prices. Company challenges in 2013 included the significantly lower trade volumes due to the Russian embargo. The agriculture, meat, agro food and wine sector dropped by 13.7%,” said Katarzyna Kompowska, Coface executive manager Central Europe.
Due to clearer signs of a Eurozone recovery closer to the end of 2014, as well as the efforts by CEE companies to look for alternative markets, the impact of these challenges has been softened.
Top 3 countries: Pole position for Poland, Hungary with the highest growth rate and the Czech Republic is recovering
In total, the top three CEE countries represent more than 61% of all companies in the ranking. Poland remains the biggest player in the CEE Top 500 with 176 companies. This represents 40% of the total turnover of the CEE Top 500. The employment rate in Poland increased by +2.5%, which even exceeded the CEE’s increase in employment of +1.7%. This growth was due to positive developments within the retail and wholesale trade sector.
Second place went to Hungary with 73 companies (+3 or +4.3%) which increased their revenues by +5.6%, nearly triple the total growth rate of the CEE Top 500 (+2.1%). The Hungarian economy expanded by +3.6% in 2014, the highest growth rate for the CEE region.
The Czech Republic registered 65 companies, showing an impressive increase of six companies (or +10.2%). Their economy is finally recovering from the recessive effects of fiscal consolidation. The Czech Republic recorded a growth in turnover of +7.8%, the highest of all countries, partly due to its listing as one of the world’s top 20 largest vehicle producers.
Sectors: Construction & Automotive industry top, oil & gas sector down
Nine out of 13 sectors increased their turnover over the previous year. The automotive & transport sector continued its upward trend from 2013. World vehicle production grew 2.6% which led to increased production in the CEE automotive cluster. Revenues of the 86 largest companies grew by +10.6% (EUR 101 billion) and profits grew +76,2% in 2014. This sector also had the highest number of newcomers in the Top 500 (15).
Oil and gas companies struggled with prices that halved in 2014. At the same time, the conflict in Ukraine provided further challenges for the sector. This led to a dramatic decrease in profit from EUR 3.3-billion in 2013 to a loss of EUR 48-million in 2014. For that reason the industry has had the highest decrease in turnover (-3.9%) and reduced staff by -2.1%. Nevertheless, it is the biggest sector in the ranking with 105 companies and almost 30% representing total turnover.
Better prospects for the CEE region in 2015
“The forecast for the CEE region in 2015 is slightly better than for 2014 with an estimated average growth rate of 2.8%. Most economies will benefit from rebounding household consumption and a gradual recovery of the Eurozone as a crucial export destination. Challenges on both domestic and external sides are a constraint for the sustainable improvement of the region,” said Grzegorz Sielewicz, Coface Economist for CEE.
CEE Top 500 study - Background
The international credit insurance company Coface presents its seventh annual study on the biggest 500 companies in Central and Eastern Europe – the Coface CEE Top 500. It ranks the businesses by their turnover and additionally analyses further facts such as number of employees, the framework of the companies, sectors and markets.
For more information and to download the CEE Top 500 study please visit:
