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The TOP 500
 While macroeconomic indicators and various country comparisons and rankings put Slovenia at the top of the list of the countries in so-called New Europe, in fact studies like the World Bank's Doing Business and the World Economic Forum's Global Competitiveness index clearly show that there's room for improvement. This room encompasses areas like taxes, bureaucratic procedures and the business environment in general. But in the end these studies only emphasize the main drivers behind Slovenia’s success: its dynamic and entrepreneurial companies.

This year's edition of SBR’s traditional Top 500 confirms the vitality of Slovenia's largest companies. To begin with, their revenues soared. On average they went up by 16 percent – making in total a jump from 35.5 billion to more than 41 billion euros. The vast majority of these companies increased their revenues by 10 percent or more. Only 73 recorded unchanged or diminished revenues. The total profits of the Top 500 grew by almost 40 percent, from 1.4 to 2 billion euros. Of course not everybody profited to the same degree: while most increased or even multiplied their profits, 206 companies recorded worse results in 2007 in comparison with the year before. Yet only 38 of the Top 500 companies ended last year with a loss.

The names on top remain more or less unchanged. Fuel trader Petrol again tops the list of the largest individual companies, with almost 2 billion euros in revenues. The largest Slovenian group remains Mercator, the Slovenian retailer with a growing network of shopping malls spread throughout the Balkans. The Mercator group's revenues exceed 2.4 billion euros, putting the group at 40th place on the Deloitte's list of the 500 largest companies in Central Europe.


Among the newcomers to watch on the Top 500 list is Seaway, one of Slovenia’s homegrown entrepreneurship champions. This top world yacht designer can boast numerous international awards for their products. It recorded a stunning 78 percent growth of revenues in 2007. This 36 million euros company shot to 271st place on the list.

Meanwhile the Esotech engineering company (ranked at 436) replaced Zofija Mazej Kukovič, its successful CEO (and one of its largest shareholders) last spring. The reason: her views on company strategy. Kukovič became the minister of health in the last government – and many think she was one of the best ministers in Prime Minister Janez Janša's team. The internal turmoil in Esotech brought about by her ouster, however, didn't affect sales, which almost doubled in 2007 and reached 21.6 million euros.

Among companies recording the highest growth rates on the Top 500 list are a large number of mid-sized construction companies that have profited from the boom in the sector. Maribor-based Konstruktor Invest (ranked at 373) multiplied its revenues eleven times, shooting from 2.2 to 25 million euros. Riko (ranked at 118), an engineering company that also produces prefabricated wooden houses, almost tripled its revenues from 27 to 73 million euros.  

Yet it wasn’t just newcomers that grew fast. Some established companies with a long tradition recorded growth rates more typical of start-ups. Take Radenska (ranked at 136). This company that bottles Slovenia's premium mineral water increased its sales by 52 percent, to 64 million euros. Terme Maribor spas (ranked at 298) grew by 66 percent, and Sava Hoteli from Bled (ranked at 413), which also operates a number of spas, by 105 percent. The Mechatronic company Iskra Mehanizmi (ranked at 178) is a supplier to the automotive and electrotechnical industries. The firm started its operations back in 1956 – last year's sales went up by 64 percent and surpassed the 50 million euros mark. Another example of a fast growing established industrial company is Lesonit (ranked at 277), a fiberboard producer from Ilirska Bistrica, which is based in Southwestern Slovenia. The company goes back to 1930's. Last year Lesonit's sales increased by 60 percent.

It’s one thing to score fast growth in a couple of seasons, of course, but maintaining growth year after year is much more difficult. To find clear proof of this take the example of roulette maker Elektronček. This innovative company from Mengeš, a small town on the outskirts of the Slovenian capital Ljubljana, was awarded the 2007 Golden Gazelle prize as the best fast-growing company. Yet 2007 was a tough year for Elektronček: its revenues went from 42.5 to 36 million euros. The company fell by almost a hundred in the Top 500 list, dropping from 165 to 263.  

A downturn in the gaming industry? Not necessarily: Gold Club from Sežana (ranked at 409), a town near the Italian border, is another world-class roulette maker. Its revenues are smaller than Elektronček’s, yet continued to grow – from 18 to 23 million euros in 2007.


Meanwhile the profits of another gambling outfit, hotel and casino the Gold Club, quadrupled, reaching 4.2 million euros. A respectable result for a small company. Of course, by comparison with the profit made by those from the top of the list it’s small change. The most profits were made by Krka (ranked at 8), the largest pharmaceutical company in Southeastern Europe. Its net profits reached 126.5 million euros – almost 12 percent more than in 2006. Krka also created the most valued added: 340 million euros, followed by Mercator at 322 million and the Novartis-owned pharmaceutical company Lek, at 281 million.  

Companies that raised their net profits significantly include financial firms, a number of mid-size construction companies, traders of pharmaceutical products, and firms trading energy. Some bread-and-butter industrial companies are also among the winners. Take steel maker Acroni (ranked at 13) – a member of the Russian-owned SIJ, or Slovenian Steel Group, which increased its net profits by 140 percent to 32 million euros. Another successful metal producer is Metal Ravne (ranked at 46). Its profits went up by 61 percent to 12.8 million euros.
Energy remains hot stuff. Two power plant operators are among the Top 500 firms with the fastest profits growth. Termoelektrarna Šoštanj (ranked at 29) multiplied its net profits five times. Dravske elektrarne (ranked at 100) increased its net profits by 137 percent, to almost 50 million euros. Paired with a total revenues of 91 million euros, that income makes a terrific profitability of 54 percent.


While there was a growth of sales and improved profitability and productivity on the one hand, there was also an explosion in the values of the Top 500 firms on Ljubljana’s stock exchange (LJSE) on the other. 2007 was a record year for practically all the Top 500 companies listed on the LJSE, yet it’s year that won’t be repeated very soon.

Most of the blue chips reached historic highs in the early fall last year. After that a downturn with a number of heavy drops came in 2008 – with the latest one in the last week of September when stocks on the LJSE followed the major drops occurring in stock exchanges around the globe.

Experts agree that Slovenian stocks were in general overvalued in 2007 and that the present value in many cases better reflects the true worth of these companies.

Company performance already began to suffer in late 2007 to some extent. At that time producers started to feel pressure from high raw materials and energy prices. Some of industries were particularly hard-hit – especially if their sales also dropped in 2008. One typical case is the automotive industry. One of Slovenia’s major industries, it had already been hit by a recession in its major markets in Western Europe. According to some estimates, car sales in Europe will drop by 6 percent.

Kolektor, an electrotechnical parts producer with 18 factories spread all over the world, has been a strong supplier of the automotive industry. The company recently reported that its orders are down by 15 percent in 2008. The management expects much the same for next year, and is warily preparing measures to deal with the situation, including shorter working shifts. Meanwhile the daily production of Renault cars at Revoz, Slovenia’s largest exporter will go down from 900 to 750 cars in November. Yet while many companies already started cutting costs and making organizational changes, the crisis is also a chance to explore unused opportunities on new markets. The Slovenian automotive cluster, for example, is trying to help companies enter the Japanese market. A joint conference of Japanese and Slovenian automotive firms is planned for next June.

Many Slovenian managers still remember the early nineties, a time when local companies had to rapidly replace the vanished markets of ex-Yugoslavia, which were lost almost literally overnight. The know-how acquired during this period may well come handy in the stormy times ahead.  Still, Slovenia’s large home appliances maker Gorenje recently reported that they expect good results in 2008 in spite of the market downturn. This is because the sales it lost in western markets were successfully replaced by growth in the East, especially in Russia, Ukraine and the Balkans.

Most of local companies expect to reach their 2008 goals. Fast-growing retailer Engrotuš, for example, expects to grow by 16 percent in 2008 and still hopes to expand by 15 percent in 2009. Companies like Petrol and Mercator don’t yet feel pressures from the recession. According to Žiga Debeljak, the president of Mercator, the effects of the recession won’t be felt on Slovenia’s market until the second half of 2009. “I’m a bit pessimistic, though,” he was quoted as saying in late September. The vast majority of managers would probably agree. While 2008’s figures will likely still be Ok, they are very cautious when making predictions for 2009. One thing is for sure, though: the 2007 boom won’t be repeated for many years.

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