Advanced technology into skill companies

Selves to be too important for their own privatisation or acquisition. This was shown by a failed OMV’s takeover of MOL: Hungarian side argued that they were protecting national interest while OMV was criticised for being partly owned by the Austrian state. Countries support concentration of state-owned energy companies into a powerful state holding. This resulted in the establishment of PGE (Polska Grupa Energetyczna) in May 2007, a group consisting of over 200 electric power companies including 11 electricity producers, eight electricity distributors and two coal mines. It was founded under the Government energy sector restructuring programme and represents one of four energy holdings in Poland. PGE plans to float its shares in the second quarter of 2009, which represents the first step towards its privatisation. Polish oil and petrochemical sector is concentrated in PKN Orlen, the largest Central European company. However, despite its size analysts think its efficiency is not sufficient in comparison with its smaller regional competitors. Wojciech Heydel, who was appointed the new CEO in April 2008, has already announced the operational efficiency increase. However, the plan has encountered criticism by the Ministry of Finance which expects PKN to focus on finding new oil reserves. This criticism has resulted in speculations about Heydel’s replacement in mid September although oil industry experts think of his PKN Orlen CEO appointment as a good news for the company.

Apart from oil, last year also recorded a high price rise of other raw materials, foremost metal and agricultural products. Rising energy fuel, raw material and food prices reflected, more or less, into other sectors as well. This was accompanied by the last year world financial market crisis caused by the drop in the US mortgage loan market, which increased the price of borrowing and deflated world stock exchange optimism. Under such conditions nominal revenue growth was recorded in some sectors such as retail or metallurgy.

In 500 Central European greatest companies this year there are 45 metallurgical and 46 retail ones. Despite lower consumer standard and increased costs, automobile industry is still second regional, represented by 51 ranking companies. Automobile and spare part production introduces new technology into production processes. Interestingly, other companies are doing the same while preparing the company for sale. According to the production sector analysis by Bronislav Panek, a partner in Business Consultancy Department of Deloitte Czech Republic, local owners of numerous Central European production companies are currently ready to sell their businesses. Once having decided, they often introduce measures focused on short-term (two to three years) increase of company’s value in order to make the business and its market value more investor appealing. One method for increasing the value is to introduce modern technology for increasing the mid-term company market value. ‘Following the successful acquisition, new owners often purchase cutting edge machinery and additionally increase company level of technology thus introducing advanced technology into small and large companies, all due to investors,’ says Bronislav Panek.

Technological modernization is an example of a good investment; many companies opted for such investments during last year business cycle. High economic growth as well as the rise of raw material and energy costs in 2007 influenced revenue and profit growth. However, figures for 2008 will tell whether additional income was well invested. Changes in 500 greatest companies, especially the top ones, show that the year 2007 was very exciting, bursting with opportunities and dangers, but positive. Next year will show how large Central European company management structures coped with economic growth slowdown, high inflation and cost rise brought on by 2008.