Agrokor Tops Adria Top 100

Luka Babić, Dražen Nimčević i Ivica Krešić

Thirty-one companies from Croatia managed to enter Deloitte's Adria Top 100 ranking list. Measured by revenue, the first position on the ranking list belongs to the Agrokor Group, with the T-HT Group being the region’s most profitable business.

For the third year in a row Agrokor tops the list measured by revenue (EUR 3.638 billion). The region's top ten include another two Croatian integrated businesses: INA (2nd, with a revenue of EUR 3.55 billion) and HEP (5th, with a revenue of EUR 1,678 billion).

In terms of geographic segmentation, Slovenia leads by the number of ranked entities (36), the second-ranked Croatia is followed by Serbia (19), Bosnia and Herzegovina (8), Macedonia (4) and Monte Negro (only 2).

Overall, the Adria Top 100 achieved a ten-percent revenue growth, but the revenue of companies from Croatia grew at a lower rate of three percent. Two-thirds of the Top 100 companies reported an increase in both their revenue and profits, which was also the case with 45 percent of those from Croatia. The region’s highest revenue growth of 26 percent was reported by manufacturing companies, hit hard by the crisis in 2009 when their revenue had dropped by 24 percent, so that the current year’s growth portends recovery of the manufacturing industry.

“Domination of Consumer Business in Croatia is even more pronounced since 42 percent of the Croatian firms come from this industry” (Dražen Nimčević, a Director in Tax Financial Advisory Services)

Companies engaged in Consumer Business and Energy & Resources dominate the Adria Top 100 list, each accounting for one-fourth, with the manufacturing industry being represented by 23 percent of the ranked companies. "Domination of Consumer Business in Croatia is even more pronounced since 42 percent of the Croatian firms come from this industry", emphasises Dražen Nimčević, a Director in Tax.

In addition to Agrokor, the following Consumer Business groups entered the list: Podravka (27th, with a revenue of EUR 483 million), Adris (37th, with a revenue of EUR 383 million) and Vindija (38th, with a revenue of 380 million).

Despite the relatively negative macroeconomic environment, a trend occurred in 2010 indicating a recovering performance of the industry as a result of executives being more willing to introduce new products, enter new markets or hire rather than fire. Lower risk aversion among financial institutions, combined with efforts to lower the level of bad debt, created acquisition opportunities in the region resulting in a recent acquisition of Slovenia Droga Kolinska by the Atlantic Group. Relatively large transactions in the consumer business have continued into 2011.

“The trend of high oil prices continued in the first half of 2011 despite the growing concerns of a potential relapse into recession underlying the most recently reported slight drop in the prices” (Ivica Krešić, a Director at Deloitte Financial Advisory Services)

The region's consumer product manufacturers experienced a mild decline in revenue (1 percent) reflecting a steady revenue trend over the past years. Different developments were noted in Energy & Resources. "Those Croatian companies that come from Energy & Resources had the highest revenue growth of 12 percent, followed by manufacturers, with a revenue growth of 5.34 percent. The revenue growth in the Croatian energy industry, although somewhat below the overall growth of the region's Energy and Resources of 16 percent, is mainly a result of increasing energy source prices. The trend of high oil prices continued in the first half of 2011 despite the growing concerns of a potential relapse into recession underlying the most recently reported slight drop in the prices", elaborates Ivica Krešić, a Director at Deloitte Financial Advisory Services.

On the other hand, the construction industry reported, as expected, a significant drop in revenues, both regionally (- 19 percent) and in Croatia (- 35 percent). As a result, only one Croatian construction company managed to enter the list.

Croatian telecom industry players closed the year with a revenue decrease of 2 percent, identical to the one of the telecom operators across the region. Nevertheless, the T-HT Group, the region's largest telecom operator, with a revenue of EUR 1.149 billion, maintained the high 12th place. Another three companies in Croatia from Technology, Media and Telecommunications entered the list: Vipnet (31st, with a revenue of EUR 449 million), the M-San Group (82nd, with a revenue of EUR 248 million) and Hrvatska pošta (88th, with a revenue of EUR 220 million).

The telecom business was marked by an increasing number of customers in fixed and mobile broadband data usage, as well as of mobile services in general. Still, the growth trend did not manage to compensate for a decreased average consumption among the users. For instance, mobile penetration in Croatia increased to 143 percent during 2010 thanks to the increasing presence of smart phones and other data-access devices.

Deloitte has also prepared a list of the Adria Top 10 by net profit which shows a different balance of power by industry. Namely, companies from the Telecommunications industry and those from Energy & Resources dominate the Adria Top 10 ranking list. The T-HT Group is the region's most successful business in terms of net profit, with a bottom line figure of EUR 251 million. As many as five Croatian groups managed to join the top ten by net profit. These include, in addition to T-HT, HEP, INA, Pliva and VipNet.

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Methodology note:

The Adria Top 100 list has been prepared on the basis of consolidated revenue for the fiscal year 2010. The list includes consolidated entities only and no subsidiaries.
The data have been collected from publicly available data bases, other public disclosures and directly from the companies. For intercomparability purposes, all amounts expressed in local currencies have been converted to euros. The industrial classification is based on the Deloitte global industry taxonomy.