The new Česká elita ranking ranks the largest Czech companies according to how much they could be bought or sold for. Only enterprises of domestic owners, either living Czechs or the state, advanced to the finals.
The resulting list between the lines also shows several new findings about the local economy and society. Or at least it confirms some earlier hypotheses. Here are seven key findings.
1. Energy (so far) scores
Ten companies out of the first hundred operate in the energy sector. They generate electricity, mine coal, trade gas or supply heat. The valuation was based primarily on the economic results for last year, when energy prices – as is well known – skyrocketed everywhere in Europe. Cost growth for conventional domestic producers was not as strong, resulting in a dramatic increase in margins.
According to ČEZ head Daniel Beneš, it was an exceptional situation, given the development in open Europe, which every healthy company must take advantage of. “The rise in electricity prices is caused by several factors, and not a single one of them is influenced by a company like ČEZ. In the European market, where we operate, our production has a share of only around two to three percent. With that, we don’t have the slightest chance to influence the price. The price is simply created in a different way than someone here at ČEZ rubs their ears and decides,” says Beneš about the record results that secured him first place.
ČEZ increased its net profit eightfold last year, EPH threefold, Moravské naftové doly elevenfold. Pavel Tykač’s Sev.en Group preferred to stop consolidating its domestic results, so the year-on-year change cannot be calculated with certainty.
Thanks for cooperation
The main partner is the Prague Stock Exchange, the project partners are ČSOB, Galileo Corporation, Orlen Unipetrol, Deloitte and Kunsthalle.
But nothing lasts forever, in a few years the fabulous coal business is going to turn into losses and the owners are already asking for help.
“As far as existing investments are concerned, I mean mainly coal mines and power plants, so at the moment we are looking for a model of how to function best. On the one hand, price predictions for the coming years are not very favorable and there is a risk that electricity production will be loss-making, on the other hand, there is nothing to replace the performance of coal-fired power plants and there is still a need to invest in their renewal. That’s why we are trying to find a common language with the state,” says Tykač regarding the future perspective.
2. You can get rich even in a crisis
The profits of energy companies have their downside in the form of higher costs for other companies. However, they are still not very visible in the results of the most successful Czech companies. When ranking them, we were primarily based on public accounting statements, which are most recently available for the year 2022. And they confirm the well-known thesis that the local corporate sphere has gone through the period of inflation and economic depression surprisingly well, across almost all fields from the food industry to telecommunications.
Finding a company in the top 100 whose profit fell last year is almost a detective activity – the first such company is only in 48th place (developer Finep), all before it either saw an increase in earnings, or last year’s figures have not yet been published. Margin growth fits with macroeconomic data. Last year’s national accounts statistics clearly showed a shift in the distribution of wealth from employees to businesses, and the 40 percent growth in corporate tax collection also reflects the same.
“The reason is simple – higher profitability of companies than expected. In the end, it turned out that the economy is fortunately more resilient,” said Finance Minister Zbyněk Stanjura (ODS) about the state of the business sector two weeks ago, when he defended why the government considers it reasonable to reduce energy subsidies.
3. You can grow up quickly
Complaints about the sleepiness of the local economy, little added value and lack of innovation are all the rage these days. But they are not always in place, as shown by the companies FTMO or CDN77, for example.
It is possible to build an original technology startup and turn it into a multibillion-dollar company in the Czech Republic, and it only takes a few years.
Other stories prove that a quick start can be made even without an idea of global parameters, if there is enough capital and organizational skills to grow. Within a decade, the Brno assisted reproduction clinic Reprofit grew into the European FutureLife chain with a turnover of six billion crowns and branches in ten countries. It is backed by the Hartneberg investment fund managing Andrej Babiš’s free money.
An even bigger leap was made by the company Vafo, once a local producer of pet food. His Brit brand is one of the biggest Czech bestsellers in the world today.
4. Parade of veterans
The glass can be half-empty or half-full – and the age of the companies in our ranking can be viewed in a similar way. The first hundred can be divided roughly in half according to whether it is a new business built on a green field in a free society after November 1989, or whether it is a continuation of something that already worked in Czechoslovakia under communism. Or even earlier.
Half of the companies grown from scratch is not a small number at all. But neither do half the veterans. If the official date of establishment is measured (which is misleading, since many post-socialist factories and brands continue to operate under new names), companies from the 1990s dominate the ranking. Out of a hundred participants, 85 of them date back to the last century or even further, the oldest is the Bernard brewery, which claims its historical roots from the reign of Rudolph II.
So it is true that there are not so many modern and progressive startups in the Czech business elite.
5. Giants cannot fit in the Czech Republic
Of course, the largest private groups, backed by well-known faces such as Daniel Křetínský, Karel Komárek, Pavel Tykač or the Kellner family, are no longer just playing in the domestic league in business.
Czech capital flows abroad through them, from Australia to North Carolina. Andrej Babiš’s Agrofert, perceived in the Czech Republic mainly as a food producer and consumer of agricultural subsidies, is today primarily one of the largest European fertilizer producers from a business point of view, especially after last year’s foray towards the west and the acquisition of the Borealis factories in Germany, Austria and France.
Global brands can also be found at the lower levels of the ranking, for example the well-known manufacturer of hospital beds Linet or the lesser-known exporter of medical devices BTL.
6. The next EPH winner?
Mapping Daniel Křetínský’s business is like shooting at a constantly moving target. He took full advantage of the decade of cheap money to make purchases all over Europe, his EPH holding company is adding something every moment. It is already far ahead of ČEZ in terms of sales, and we may not be far from the moment when in some parameters it will outgrow even the PPF group of its former teacher and sponsor Petr Kellner. In the volume of managed assets, the score of EPH versus PPF is already tight (30:40, in billions of euros).
Křetínský himself and his people already perceive EPH as a bigger company than ČEZ, but sales and assets are different quantities than market value – and in this regard, according to our cautious view, ČEZ still leads. The fact that it owns profitable nuclear power plants and, above all, that its value is objectively determined by the stock exchange, plays into its hands.
EPH can only be estimated, based on the statements, which include things that do not belong to the holding at all (Slovak natural gas network half owned by the Slovak state), and others, on the contrary, are missing (minority stake in Slovenské elektrárny).
7. Czechs make everything
The myth that Czech companies can produce almost everything, but can only sell a little, is no longer completely true in practice. Respectively – the first half of the statement is fully confirmed according to the varied industry structure in the ranking, the second is somewhat faltering due to the commercial and financial success of the manufacturers.