An era of digital transformation Central and Eastern Europe TOP 500 2016 Brochure / report title goes here | Section title goes here Brochure / report title goes here | Section title goes here Contents General Ranking Overview 07 Industry Overview 17 Ranking 41 Methodology 53 Contacts 57 2 3 Central and Eastern Europe 2016 | General Ranking Overview Central and Eastern Europe 2016 | General Ranking Overview Strategies for the Future Today, market leaders are determined Ukraine has the unique opportunity of whole of society. Only those that are more not by a long history of success, value of completing this evolutionary path in record agile at making mistakes, that experiment their assets, number of patents or access time. By relying on the experience of and learn, will view the exponential to capital, but rather by their ability to other countries, we can pass over several development of technologies as an change their business models in the wake stages of technological development opportunity rather than a challenge. of the technological revolution. Digital and proudly represent the country on technologies are developing at exponential the global market. Thanks to cutting- Innovations are a unique strategic tool at speed, fundamentally changing the nature edge technologies, simple ideas are the intersection of unconscious human of business: they are dematerializing, transformed into successful businesses needs, new business models and efficient demonetizing and democratizing across in Ukraine, such as Augmented Pixels technologies. It is a tool that can help make industries. (well-known for developing augmented the vision of every company a reality. We reality technologies and applications); believe in the success of the innovative The emergence of Amazon, Netflix, Paymentwall (offering over 120 payment future of Ukraine and view our mission Google and Apple has destroyed a whole methods all over the world); and Kwambio as offering support to Ukrainian business range of industries and opened up new (online shop of designer 3D objects). and the Ukrainian economy in their markets. And this is only the beginning. The Large corporations with well-established transformation and growth for the well- challenges of tomorrow are globalization business processes face other challenges: being of each one of us. and competition with free goods by means they must rethink the role of technology in of creating new products and constantly their businesses and their role in the world reassessing the customers’ needs. This is of technology. What is the role of banks in scaling the concept of “customer” to the the blockchain technology era? What niche category of “mankind”, which will contribute do telecommunication companies occupy to the birth of new ambitious goals and in a world of universal Internet access? business models based on partnership and What is the future created by artificial Andriy Bulakh, synergy. intelligence for classical universities and Managing Partner, audit companies? Seeking answers to Deloitte Ukraine these questions gives rise to extensive and complex processes of transformation for corporations, the economy and the 02 03 Key figures Ukraine < Energy & Resources account for 41.6% of total revenue/> -17.4% < The minimum < decline in Ukrainian revenue for a company companies’ revenue to qualify for the in euros in 2015 /> CE Top 500 ranking /> < Median revenue change EUR 473 million < Consumer Business & in 1st quarter of 2016 /> Transportation showed growth in Q1 2016 /> -3.3% 1.2% < The average number of 14 employees in the largest < Ukrainian Consumer Ukrainian companies/> Business & Transportation companies/> 35,582 333 6 (vs. the region’s < companies moving up /> < Ukrainian companies average of 6,616) showed revenue growth /> < Top country by number of companies: Poland /> 182 < Median revenue change of Ukrainian companies in euros in Q1 2016/> -4.3% < Median ROE for the region’s top 50 banks /> 29 < Ukrainian companies 3.5% 8.5% and 2 banks < Median (8.9% in 2014) joined the ranking /> revenue growth /> < Consolidated revenue /> < increase in Ukrainian companies’ revenue in hryvna /> 50% EUR 685 billion 25.9% < of Ukrainian companies represented in the ranking are owned by local investors /> (15.4% in the overall ranking) 04 05 General Ranking Overview 06 07 Central and Eastern Europe 2016 | General Ranking Overview Median revenue change of companies ranked in the TOP 500 In 2015, the median Markets overview in Central and The economic revival in the CEE region Eastern Europe (CEE) was, to a large extent, a result of the revenues of the 500 It looks like the crisis is a thing of the past increasing purchasing capacity of for the majority of CEE countries and a Europeans and, accordingly, the level of Estonia: 4 largest companies in the 4 in 2015 period of economic recovery is underway. domestic demand in the largest economies CEE region grew by 3.5 per The first signs of economic recovery in (up by 3 per cent in Poland, Hungary and Latvia: 5 cent (5.2 per cent in local CEE countries, recorded in our last year’s the Czech Republic, and by 5.9 per cent 7 in 2015 TOP 500 ranking at a level of 0.3 per cent, in Romania). Another factor which has currencies). The revenues has been replaced with fast and steady been facilitating economic growth in the Lithuania: 11 of 332 companies, i.e. 66.6 growth. In 2015, the median revenues region for the second year in a row lies in 12 in 2015 of the 500 largest companies in the CEE expanding exports (up by 5.4-8.4 per cent per cent of all companies region grew by 3.5 per cent (5.2 per cent for these four economies), supported by in the ranking, increased. in local currencies). The revenues of a gradual improvement of the economic 332 companies, i.e. 66.6 per cent of all conditions in the Eurozone. companies in the ranking, increased. Poland: 182 The aggregate revenue reported by the 170 in 2015 The countries excelling in the region in top 500 CEE companies totalled EUR 685 terms of their growth were the Czech billion, i.e. grew by 1.7% year-on-year. Republic (up by 4.6 per cent), Romania The minimum revenue of the company (3.8 per cent), Poland (3.6 per cent) and to qualify for the TOP 500 ranking was Hungary (2.9 per cent). They have exerted EUR 473 million, i.e. 3% higher than in the a significant and positive impact on this previous ranking. Czech Republic: 74 year’s ranking by constituting the largest 79 in 2015 share (74 per cent) in the total number of companies included in the ranking. The economic growth in Lithuania and Croatia Slovakia: 32 was slightly slower (1.6 per cent each). 33 in 2015 Despite the recovery witnessed across the whole region, Ukraine was the only country Ukraine: 29 whose economy declined in the previous 32 in 2015 year. Slovenia: 17 20 in 2015 Median revenue change of companies ranked in the TOP 500 Romania: 46 46 in 2015 Hungary: 67 5.8% 66 in 2015 2015 2015 Q1 2015 Q1 2016 Bosnia & Herzegovina: 2 27.4% 4 in 2015 Croatia: 13 12 in 2015 69% Bulgaria: 10 79.3% 81% 8 in 2015 Serbia: 7 6 in 2015 66.8% 20.7% 19% 31% Europe Ukraine Republic of Macedonia: 1 1 in 2015 Increase Decrease No changes 08 09 Central and Eastern Europe 2016 | General Ranking Overview Median revenue change by country Currency fluctuations and their impact Forecasts by the International Monetary Increases in the four countries of the 6.9% Czech Republic 6.0% Croatia 6.1% Hungary 5.7% Croatia Compared to last year’s ranking, in Fund were also released predicting a region most numerously represented in the 5.1% Slovakia 3.5% Serbia 3.3% Poland 2.1% Latvia 2.0% Lithuania which the financial indicators of ranked lower GDP growth in seven countries ranking were largely attributable to revenue 0.4% Bulgaria companies were very low due to currency represented in the ranking, including the increases in the consumer business and fluctuations, the results of this year’s largest economies in the region (Czech transportation industry, in addition to ranking have not been impacted by Republic, Hungary and Poland). the manufacturing industry, a key factor currency fluctuations. CEE currencies being the recovery of the automotive -1.6% remained relatively stable in 2015, which Data for the first quarter of 2016 in sector. Thus, in the Czech Republic, the Slovenia -4.9% had a positive impact on the indicators Ukraine differ from the overall trend in the automotive sector, representing 18 per Estonia of this raking’s companies. The only region: we observe a slowdown in revenue cent of the country’s companies in the exception was the Ukrainian hryvnia that decrease in Ukrainian companies down to ranking, played a key role with a rise in considerably depreciated against the -4.3 per cent in euros, facilitated chiefly by revenue of 19.2 per cent. Hungary also -17.4% euro, hence a noticeable discrepancy was the stabilisation of the hryvnia exchange managed to take advantage of the good Ukraine observed between the growth in revenues rate. A positive revenue growth rate was automotive market conditions. The revenue denominated in the local currency (up observed in a number of companies in the generated by companies operating on by 25.9 per cent) and the decrease in consumer business. According to the IMF’s that market experienced a 13.3 per cent revenues in euros (down by 17.4 per cent). forecasts, Ukraine is expected to report a growth. The overall performance of Polish GDP growth of 1.5 per cent. companies was considerably influenced Median revenue change by industry In the first quarter of 2016, other local by the automotive sector (a rise by 8.5 per currencies (for instance, in Poland, Hungary Industry overview cent) and the consumer goods sector (4.3 and Romania) also depreciated against the The increase in revenue for the largest per cent).