In a sea of contradictory macroeconomic information and forecasts from economic analysts for this year, we wanted to clarify, at least to some extent, what the actual business situation ‘on the ground’ is and what signals are emerging for the rest of the year. We asked the leaders of companies that are members of the Lider Exporters Club whether this year is as stressful as last year or if they notice that the market situation is calming down, what recent trends are in their industry and how they are adapting, what their key business challenges are, and what signals they are receiving from their export markets.
Today we publish the responses of Gordan Kolak, CEO of Končar:
This year for the Končar Group started with more than double the amount of newly contracted jobs compared to the same period last year. In the first quarter of 2023, open orders, backlog, reached a record amount of 1.2 billion euros. Particularly good results are recorded in solutions from the segment of transmission and distribution of electricity. The green transition in Europe is in full swing, accompanied by unprecedented demand for transformers. Despite strong revenue growth in all business segments, pressure on profit margins has continued. Although the situation in the raw materials and energy markets is slowly stabilizing, input costs remain significantly higher compared to the time before the last crises. There is considerable uncertainty that largely depends on the further course of the war in Ukraine.
We are a relevant European manufacturer
The global energy crisis has highlighted an important fact – we must ensure conditions to reduce dependence on energy imports by building new capacities for electricity production from renewable sources and ensuring new supply chains such as LNG terminals. In all our business areas, from electricity generation, rail segment to digital solutions and platforms, the emphasis is on solutions and components that contribute to the green energy and mobility transition.
Over the past year, we have built three largest solar power plants in Croatia, developed and installed a battery storage system for electricity on the island of Vis, contracted a 65 million euro worth project for the revitalization of the HE Haditha in Iraq, delivered the first medium voltage transformer with a carbon footprint certificate for a customer in Spain, contracted the development and production of battery and hybrid trains, secured a new certificate for cybersecurity of critical infrastructure, and made numerous other breakthroughs, especially in the EU market which accounts for over 73 percent of our total exports.
This has further positioned us as a relevant European high-tech manufacturer of equipment and solutions for the implementation of the green energy transition at the EU level, which contributes in the long term to national economic power and relevance and the overall international perception of Croatia at the EU level.
It is important to emphasize that Croatia, due to the significant share of electricity from hydropower plants, ranks at the top of the EU in terms of the use of renewable energy sources, but the fact is that in the last decade, an insufficient number of such projects have been developed. For example, in 2022, solar power plants with a capacity of 41.4 GW and wind power plants with a capacity of 16 GW were installed in the EU, or about 0.13 GW per million inhabitants.
In the same year, due to the absence of subordinate legislation, the development of new renewable energy projects in Croatia was almost halted. We are aware of the challenges that the electricity sector of the future will face, but the question is whether we are anticipating its overall development in the right way. Namely, the development of electricity generation has historically always progressed gradually, and today we are talking about dramatic changes that require significantly increased development and production capacities.
