Seeking the solutions for sustainable recovery
Deloitte CE Top 500
According to the fourth edition of the Deloitte CE Top 500 report, indications from the first quarter of 2010 suggest that a gradual economic recovery is already underway, demonstrated by widespread increases in company revenues following a year of steep decline. This appears to be taking place in most countries and sectors, although the market dynamics of industries including Technology, Media and Telecommunications (TMT) and Automotive mean there are exceptions to this rule.
Clearly, several factors are at play in supporting the recovery, including economic stimulus packages from western governments and international organisations, national action to reduce deficits and company programmes to streamline and modernise their operations.
According to Deloitte Central Europe CEO Michael J. Barrington, the region’s companies also need to look to their ‘natural’ advantages to exploit export opportunities: “International trade is highly dependent on the sustainable economic health of trading partners outside Central Europe – the region’s companies cannot influence this, but should take the opportunity to leverage the full value of their lower labour and production costs.”
The report ranks the region’s 500 leading companies and examines trends by country and by sector to graphically illustrate the wider commercial and economic environment to which business leaders are adapting and responding. For example, leading oil company PKN Orlen of Poland radically changed its net income position from a loss in 2008 of euro 324 million to a positive euro 280 million. Similarly, the Polish bank PKO BP was able to increase its asset value by 18 percent in Euros to take the sector’s top position during a year when its rivals saw either modest rises or, in some cases, an actual decline.
Other important elements behind the CE region’s fragile recovery include some clear competitive advantages that the region’s economies hold over their Western European counterparts. These include a relatively low-cost labour force, new production facilities that are more efficient than older plants in the west, and a banking sector that escaped the worst impacts of the financial and economic crises. The overall picture of the region that emerges from the aftermath of a one-in-a-generation crisis, when total Euro revenues of the region’s 500 largest companies fell by close to 21 percent in a single year, is one still embroiled in uncertainty but that faces great opportunities.
The challenge for the region’s companies and countries now is to grasp those opportunities and in so doing to make today’s fragile recovery both strong and sustainable. To do so, they should possibly follow the lead of companies in the Consumer Business and Transportation sector, which has seen its share of Top 500 revenues rise from 20 percent in 2006, to 23 percent in 2008 and 28 percent in 2009, or Real Estate company Skanska, which more than doubled its revenues to Euro 1.7 billion in 2009.
More information about the Ranking and Industry Insights you may find at: www.deloitte.com/cetop500