88 companies have remained among the best for a full 19 years

Every year, the list of excellence gets shorter, but this is to be expected. The Club of Excellence has decreased this year by another five companies that failed to enter the top 500 companies for the nineteenth consecutive year. This does not mean they are poor performers, but they are no longer excellent enough to be among the best in Croatia according to those business indicators that the public space does not monitor as closely as some other, simpler parameters.

On the list of companies that have continuously achieved newly created value since 2007 to be among the top 500, there are 88 this year. They have been joined by Axians Croatia (ex S&T), Beiersdorf, Centrometal, TMT, and ZOV – Management and Operation. The latter company was marked in last year’s analysis as the first candidate for leaving the club due to a change in the ownership-management arrangement for the Zagreb wastewater treatment plant, which was taken over by the City of Zagreb and VIO, and among the companies that were in a downward trend, we also identified TMT. Beiersdorf and Axians did not have unsuccessful years, but they did not create enough new value to be included on the list. Centrometal narrowly missed entering the top 500, needing an additional 362 thousand euros of newly created value, but its exit is not unexpected as its revenues have halved from 2022 to the present. Axians recorded a loss last year despite other solid business indicators and significant newly created value. The general lesson is that changes in ownership, restructuring, and rebranding can be equally risky for business as external circumstances affecting sales. At least for those who want to continuously maintain excellence and be in the club that achieved a total revenue of 17.7 billion euros last year.

Croatian Forests first in number of employees

The remaining 88 companies that have stayed in the club may best describe what is good in the Croatian economy. In terms of revenue, the three largest among the excellent are…….

Plodine, Hrvatski Telekom, and PBZ. Each of these companies generated more than 900 million euros last year, with Plodine at 992.7 million euros dangerously close to soon crossing the billion mark, as well as HT with 975 million euros, while PBZ remains the only company in the club that recorded more than 900 million euros in revenue. The most employees (7602) are at the champion from the public sector, Croatian Forests, Plodine has 4777, and HT 3367. The fact that Plodine and HT, which have the most employees in the club from the private sector, barely manage to together exceed the number of workers at Croatian Forests only confirms the prevailing stereotype about uncritical employment in the public sector.

Comparison of export achievements

Overall, the companies in the club of excellence generated just over three billion euros in revenue from exports last year, and although this represents just over 17 percent of total revenues, there are very good exporters in this club. As many as 24 companies from it generate more than 50 percent of their revenue from exports. The largest are Končar – DST (382.9 million euros in export revenue) and Končar – Energy Transformers (247.7 million), with exports accounting for more than 90 percent of their revenue. L’Oréal Adria recorded 85.7 percent of total revenue from exports, amounting to 179.9 million in total, but it should be noted that this is re-export, regional distribution of already imported products.

In terms of the share of exports in revenues, excellent results were also achieved last year by Prelog’s LPT, which derives 94.6 percent of its revenue from exports (94.6 percent), Končar – Measuring Transformers with 89.5 percent (47.6 million euros in total), Čakovec’s Tubla with 89.1 percent (66.6 million), and Omco Croatia with 88.4 percent (104.9 million), HS Produkt with 85.3 percent (127.2 million), Požega’s Plamen with 84.9 percent (21.8 million), Knauf Insulation from Novi Marof with 81.5 percent (79.4 million), and JGL with 80.7 percent (130.7 million euros). In light of the unclear situation regarding what the trade regime with the USA will be in the future, it will be interesting to see how this year’s business will look for HS Produkt and Končar – Measuring Transformers.

It is known that the USA is the main market for HS Produkt, and Končar – Measuring Transformers derives about one-fifth of its revenue from that market. Since OMCO Croatia is part of a group that holds more than 20 percent of the global market share in the production of tools for glass packaging production and the USA is one of the larger markets in the glass industry, it will be important to monitor the results of the Croatian branch of OMCO as well.

The structural picture of the club of excellence reveals that it is not as dependent on tourism as the domestic economy in general, but this is mainly due to the COVID-19 pandemic, which in 2020 caused losses in tourism companies, leading to their exit from the list. On our list, only three classified in that activity according to NKD remain, one of which is Global Food, which holds McDonald’s, considering that the breakdown also includes restaurants.

Valalta with 51.9 million euros in revenue and 26.4 million euros in newly created value, and ACI with 19.5 million euros in revenue and 14.8 million in newly created value are the only true tourist companies in the club. Given the slow development of that branch, which has long depended on small renters and hospitality craftsmen, it is not surprising that it is not more represented among the excellent. Construction is currently on the rise, but there are only two representatives on the list of excellence, GP Krk and Kamgrad, as it is a sector that is very sensitive to changes in material prices, which easily affects business results.

The IT sector has four companies among the excellent, telecommunications three, and we can conditionally add the activity of computer and office equipment, in which companies that primarily sell computer equipment dominate. Overall, activities related to IT technology simply have not had enough time to be continuously excellent. Trade is therefore very present. As many as 17 companies are precisely categorized under trade, whether wholesale or retail, and another five trading companies that sell vehicles and automotive equipment have found a place in the club of excellence. However, the most represented among the excellent are manufacturing companies, which shows that manufacturing convincingly guarantees stability more than any other activity. Among the 29 companies from various industrial sectors that made it onto the list, companies from the Končar group dominate together.

Only 36 excellent outside Zagreb

The list of the club of excellence also includes Novi Agrar from the Žito group, which conducted an IPO this year. This is also the only company from the Osijek-Baranja County. Unfortunately, this data shows that the geographical picture of economic excellence in Croatia has not changed compared to last year. Zagreb is clearly the economic center of Croatia with as many as 52 companies among the excellent. Zagreb County has five, as does Primorje-Gorski Kotar, while four are from Varaždin, Krapina-Zagorje, and Istria, three from Split-Dalmatia, Međimurje, and Karlovac, two from Koprivnica-Križevci, and one excellent company comes from Bjelovar-Bilogora and Požega-Slavonia counties.