9th September 2016

More than 70 Czech businesses among 500 largest companies in Central&Eastern Europe | Skanska, JLL, Dentons, ABSL: CEE Investment Report 2016: Mission to Outperform (updated)

The top five places in the Deloitte 2016 CE TOP500 ranking remained unchanged from last year. Despite a considerable decline in revenue (down by 17.2%), PKN Orlen has retained its leadership position, followed by MOL from Hungary (despite a fall in its revenue of 15.6%) and Škoda Auto from the Czech Republic (with a rise of 6.3%). The fourth and fifth places went to Jeronimo Martins Polandand Polskie Górnictwo Naftowe i Gazownictwo (PGNiG) respectively. 74 Czech companies are among 500 largest businesses in Central and Eastern Europe.  Read the report and an interview with Josef Kotrba, Office Managing Partner at Deloitte Czech Republic, on current issues in Czech business environment and the challenges it is facing. 

According to Coface Top 500 of CEE report, 2015 was a good year for Central and Eastern Europe. Average GDP growth was 3.3%, following 2.6% in 2014. Private consumption rose, due to declining unemployment and increasing wages. EU funds supported investments.  The CEE Top 500 companies increased their turnover by 4.2%, to nearly EUR 593 billion, with an enormous rise of +73.7% in net profits, to reach EUR 26.9 billion. The largest companies in CEE remain very important employers for the region. Overall, 4.3% (+0.5%) of the region’s total labour force is employed by companies in the CEE Top 500. This has a positive effect on employment rates. The Czech Republic is the country with the highest growth rate (+4.5%) in CEE. It also has one of the lowest unemployment rates in the entire EU (5.1%).

In the Czech Republic, public investment boosted the economy, as did efficient use of funds from the previous EU budget. 71 Czech businesses, with Skoda (4th) and CEZ (8th) in the TOP10, are present in the Top 500 CEE companies. The 71 businesses generated turnover of 88,133 mil EUR in 2015, 4,945 mil EUR in net profit, and employ 225,821 people. Main countries for the automotive industry are the Czech Republic, Hungary, Poland and Slovakia. Although Czech companies account for only about a fifth of all companies, they generated almost a third of the overall sector turnover. More details (in English).

Also,  Skanska, JLL and Dentons in cooperation with the Association of Business Service Leaders in Poland (ABSL) published CEE Investment Report 2016: Mission to OutperformThis report presents macroeconomic indicators, analyses strengths and highlights challenges, as well as provides an overview of the real estate investment market. 

CEE countries are strengthening their bonds both politically and economically, the report says. Their Fitch rating (Czech Republic A+/Stable, Hungary BBB-/stable, Poland A-/Stable and Slovakia A+/Stable) should not change in the near future. Every year, Poland, the Czech Republic, Slovakia and Ukraine provide the market with 285,000 engineers. Estonia, Poland, Slovenia, the Czech Republic and Latvia are in the top 30 countries with the best math results in the OECD's Pisa rankings.

Given its deep integration with the German and European Union (EU) manufacturing supply chains, lower-than-expected growth in the EU is the main risk for the region. The slowdown in emerging markets could also affect the growth outlook in CEE, although exposure is mostly indirect (for example, the region could be affected through weaker German exports to China). Weaker external demand for cars, for example, linked to the Volkswagen emissions scandal would affect the CEE region given the importance of car manufacturing. The two countries most exposed are Slovakia and the Czech Republic, where car production accounts for 25% and 19% of exports respectively. It is also significant in Hungary (14%), Romania
(14%) and Poland (10%) (Eurostat, 2014), says Arnaud Louis, Director, Sovereign Group, Fitch Ratings. 
Read more details (in English).

In Deloitte's 2016 Global Manufacturing Competitiveness Index,  CEO survey respondents were asked to rank nations in terms of current and future manufacturing competitiveness. The Czech Republic came 23rd and the projected ranking for 2020 is 20th place.

Members of the American Chamber of Commerce in the Czech Republic