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Six Months After

2008wasstill a fine year for most of the SBR's TOP 500 companies. The firsthalf yearresults for 2009 show typical recession patterns: less sales,less profits and– often – less employees. Yet some companies manage toresist the deepesteconomic crisis since the independence of Slovenia




Itcame asa shock when workers of Gorenje (Rank 8) started a riot andspontaneous strikein mid September. Gorenje is not only one ofcompanies on the very top of SBR'sTOP 500 list every year. It is one ofthe most developed Slovenian basedinternational groups with an ownbrand and a significant market share in Europe. Its sleekly designed home appliances are aSlovenian national pride.

Theriotswere sparkled by some relatively trivial administrative errors incalculatingof the Augusts’ wages. Some of the monthly wages are indeedvery low (in somecases as low as 400 Euros). Yet most of all the strikein Gorenje showed howhardly is Sloveniahit by the economic crisis and recession.


Itallstarted in October 2008. Soon after a near meltdown of globalfinancial marketsthe orders dramatically fell and in some cases almoststopped. The result werediminished exports and a decline of industrialproduction. Last November theproduction went down by 12 percent and theexports by 14.2%. The industrialproduction in 2009 fell to levelscomparable to those in the beginning of thedecade: it was 22.2 percentdown in comparison with the first seven months of2008. The exports showsimilar pattern: they fell by 23 percent.


THE DECLINEOF THE CHAMPIONS. Gorenjewas hit asmost of the Slovenian companies, in particular those muchdependent on exportsand thus on the global economy. In 2008 Gorenjebought Dutch home appliancesmaker Atag. Atag owns two other brands,Pelgrim and Etna, and has a significantmarket share in Benelux markets:over 30 percent in Netherlandsand 10 percent in Belgium.It was an important add-on to the group's portfolio which consisted of 83 companies– 59 outside Slovenia.

SinceOctoberthe results went down. In the first half of 2009 Gorenje Group lost8percent of the revenues – yet if we take out the increase due to thetake overof Atag, the sales dropped by 20 percent. The markets whichsuffered heaviestblows were those where the group recorded the highestgrowth in the past:Eastern Europe and Russia.The sales practically halved in Russiaand Ukraine.On the other hand Gorenje managed to increase revenues in Western Europe – yet due to the sales of lower priced products. Theprofitability achieved on these saturated markets is also lower.


Thesalesof the parent company of the group , Slovenian based homeappliances producer,shrinked by one third. The solid profits of 2008are also gone as the companymade 17 million Euros of losses in thefirst half of 2009. Gorenje had todecrease the work time to 36 hoursper week – a move which additionallyaffected the already low wages ofthe employees.


Otherindustrial champions fared no better. The sales of automotive companies dived.Companies likeIskra Avtoelektrika (AE) (Rank34), Cimos (Rank 19) or Hidria (Rank 46 –Groups) face much lower revenuesafter years of fast growth. Iskra AEGroup, a producer of automotiveelectromechanical components withproduction facilities all over the globe,lost a hefty 37 percent ofsales revenues in the first half of the year. Thesales of Cimos,another automotive company with significant market success inthe lastyears, went down by one third. Even the national Telekomlost 1.6 percent of their revenues on homemarket this year. The samegoes for logistics companies like the port operatorLuka Koper (Rank68), Aerodrom Ljubljana (Rank 248) airport or generallogistics companyIntereuropa (Rank 56): less traffic, less revenues.


Thetradeunions warn that strikes in other companies could follow as thedissent of theworkers with the low wages grow. Paradoxically the strikein Gorenje eruptedwhen the orders begin to show a slight upward moveand when the managementannounced the switch back to full work time inOctober. Yet the growing mistrustof the workers directed both tomanagement and to trade unions is a clear signthat the present crisisis far from being limited to the economy.


ALOOK ATTHE BRIGHT SIDE. Not everybody suffers, though. The largesttrade and retailcompanies are still doing relatively well. The growthrates are obviously incomparablewith those in the last decade or more –yet the growth is still there. Thelargest fuel trader Petrol (Rank 1)grew by 0.9 percent in the first half of2009. The same rate wasrecorded by the largest retailer Mercator Group (Rank2). Company'sprofits were halved in comparison with the first half of 2008 –yet theretailer still managed to earn 11 million Euros.


Amongthebest 2009 results recorded by the largest Slovenian companies arethose ofpharmacy maker Krka (Rank 7) . The group sales increased by 2percent. A meagergrowth in normal circumstances makes an excellentresult in the present conditions,especially since Krka managed toincrease also the profits by the same margin.


Theordersslowly begin to rise also in the automotive industry. Companieslike TCGUnitech (Rank 71) or MLM (Rank 111) even managed to get newbusinesses from topbrands like Daimler Benz, Audi or Volkswagen. That Germanyand other large Europeaneconomies show the first sign of recovery isdefinitely a good sign. Both themanagers and the economists remainhowever cautious and point out that fullrecovery will be most probablypainfully slow. It is not very likely that verymany of the names fromthis edition of SBR's TOP500 will disappear from the listsin the nextyears. One thing, though, is almost for sure. It will takesome time before formost of the companies to reach again or evensurpass the 2008 figures publishedin this issue.
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