Top 500 companies in CEE: Low profits hampered Bulgarian businesses

The shrinking profits of Bulgarian businesses have led to a diminished presence in global credit insurer Coface's annual ranking of the 500 largest companies from Central and Eastern Europe (CEE).

In the ranking, which reflects the results for 2023, there are 25 Bulgarian companies, which is 6 less than in the previous edition.

In response to a question from Economic.bg, Coface explained the decline with lower turnover and profits.

The turnover of Bulgarian companies is 22% lower compared to the previous year. The enterprises are still solid and large, but their turnover is decreasing, whereas for the top 500 overall there is a growth of 2.5%", said Matei Mihailescu, Regional Business Information Director at Coface.

And while overall there is a 17% drop in profit among the companies in the ranking, for Bulgarian companies this percentage is 55.

This gives us an understanding of why some companies fall off the list," Mihailescu added.

Another factor for the performance was highlighted by Grzegorz Sielewicz, the company's regional economist for CEE.

Political instability has become the new normal for businesses given the backdrop of constant premature elections," Sielewicz said in response to a question from Economic.bg.

According to him, the Bulgarian companies presented in the analysis operate in different sectors and for some of them there was a better environment for profit growth last year.

According to the data, the total turnover of Bulgarian companies reached 40.1 billion euros, decreasing by 22.6% for the year, while their net profit was slightly over 2 billion euros, but it shrank significantly - by 55.3 percent. These results place Bulgaria in 6th position among a total of 12 countries in the CEE region.

On the other hand, there are many positives - the binding of the lev to the euro gives stability to the monetary policy and is a strong factor", added Sielewicz.

Mihailescu also highlighted the country's good monetary stability as a positive, along with low government debt and low production costs.

This is the first shrinking of Bulgarian company numbers in the ranking in the last few years. In 2022, they were over 30, and in previous years, even during the pandemic, this number stayed in the 20s.

For the first time in three consecutive years, we have seen a decrease in the number of local companies included in the ranking. This does not necessarily mean that there is a negative trend in the local market, but it is not positive either," commented Plamen Dimitrov, manager of Coface for Bulgaria.

"At the beginning of 2022, there was a huge increase in energy prices for businesses as well as for end users in Bulgaria. This led to a drastic increase in turnover for public and private companies operating in the energy market, which helped them make the ranking. In 2023, however, we see these companies disappearing and being replaced by others," added Dimitrov.

In the first 50 places of the ranking, Bulgaria has only two companies - Bulgarian Energy Holding (BEH), which fell 9 places down, and Lukoil Neftochim Burgas, which moved up by as many as 290 positions compared to 2022. Further in the ranking are Aurubis, Lukoil Bulgaria, Astro Bioplant, National Electric Company, Eurohold Bulgaria and others.

In addition, in the 16th consecutive edition of the company ranking, Coface points out that 2023 has been challenging for the region's economies as their previous resilience has disappeared and some have even entered into recession.

It was a really challenging year for CEE, with a challenging economic environment. Some countries – especially Estonia, Hungary and the Czech Republic saw negative economic growth,” commented Sielewicz.

Business results confirm the presence of difficulties - the total turnover of all 500 companies has grown by 2.5 percent to 1.1 trillion. euros, while profits decreased by 17.4 percent for the year to 44.9 billion euros.

The total workforce in these companies - from which representatives of the insurance and banking sectors are excluded – consisted of 2.4 million people, which is slightly more (1%) compared to 2022.

Otherwise, in yet another year, Poland is "home to the largest businesses in the region with an average turnover of 2.8 billion euros". In second position, despite its largest drop in the total number of companies in the ranking, is the Czech Republic, while Hungary is third.

Marking a change from previous years, not all sectors recorded an increase in turnover in 2023. Utilities and public services, as well as energy-intensive industries such as metallurgy, and paper and wood manufacturing, are among the sectors experiencing difficulties.

The automotive and transportation sector managed to reach the top spot with a 16.8% increase in turnover and a 40.8% increase in net profits, supported by sales growth. EU car sales have risen for the first time since 2019. Facing challenges, households and businesses have limited their spending on durable goods but not on vehicles in 2023.

Traditionally the largest sector - chemical and pharmaceutical industry - fell to second place this year. Despite the huge growth in turnover, the sector recorded a 42.8% drop in net profits faced by CEE oil and gas companies. Non-specialized trade makes the top three, supported by recovering consumer demand thanks to low unemployment and rising wages.

Translated by Tzvetozar Vincent Iolov