Performance of Slovenian State-owned enterprises

compared to regional peers

Peter PontuchDG Economic and Financial Affairs

European Commission

International Conference, 17 March 2015, Ljubljana

Background

2

The objective is to study the association between company ownership and performance.

Focus on around 2,900 State-controlled companies from eight CEE countries (>25% ownership).

Describe differences in financial indicators of SOEs against regional peers' SOEs in the same industry.

SOEs represent a relatively larger share of the corporate sector in Slovenia

3

Share of State-owned firms in sector value added, 2013 (%, based on available ORBIS data)

Con

sum

er s

tapl

es

Che

mic

al a

nd p

harm

a

Met

al p

roce

ssin

g in

dust

ry

Oth

er m

anuf

actu

ring

& r

epai

r Ene

rgy

Pub

lic u

tiliti

es

Con

stru

ctio

n

Tran

spor

t &

sto

rage

Tour

ism

Pos

tal s

ervi

ces

& I

CT

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

SI RO HR

Slovenian SOEs are among the less profitable ones

4

Return on equity (ROE) of State-owned firms in selected industries, 2013 (%)

BG CZ HR HU PL RO SI SK

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Durables

Materials

Tourism

BG CZ HR HU PL RO SI SK

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Energy Consumer staples

Trade

BG CZ HR HU PL RO SI SK

-20x

-15x

-10x

-5x

0x

5x

10x

15x

Transport

Energy

Consumer staples

BG CZ HR HU PL RO SI SK

-20x

-15x

-10x

-5x

0x

5x

10x

15x

Durables

Materials

Tourism

Their generally high indebtedness…

5

Debt to EBITDA ratio of State-owned firms in selected industries, 2013 (multiple)

BG CZ HR HU PL RO SI SK

0

1

2

3

Transport

Energy

Consumer staples

BG CZ HR HU PL RO SI SK

0

1

2

3

4

5

6

Durables

Materials

Tourism

… is in some industries accompanied by low liquidity

6

Current assets to current liabilities ratio of State-owned firms in selected industries, 2013 (pp.)

BG CZ HR HU PL RO SI SK

0

5

10

15

20

25

30

35

Transport

Energy

Consumer staples

BG CZ HR HU PL RO SI SK

0

2

4

6

8

10

12

Durables

Materials

Tourism

While investment into non-core assets particularly affects Slovenian SOEs

7

Other fixed assets as a share of total assets of State-owned firms in selected industries, 2013 (%)

Conclusion

8

Slovenian SOEs show generally weaker financial performance in a regional comparison.

These results are also confirmed if one compares Slovenian SOEs against their domestic private peers.

Possible causes and factors Governance, financing, skills, technology transfers…

Thank you!