Poland’s PKN and Hungary’s MOL retained their top spots in the annual ranking of Central and Eastern Europe’s 500 biggest companies, compiled by consultancy firm Deloitte, based on financial results for the year ended in 2008.

The energy sector dominates the rankings, with six companies in the top 10 and 44 in the top 100. Overall, 156 firms listed in Deloitte’s rankings were in what the consultancy called the "raw materials and energy" sector.

But nowhere else in the region is the domination of the energy sector as evident as in Bulgaria’s case. Out of 14 firms that were included in the rankings, 10 were in the energy sector, including the top three – Russian energy giant Lukoil’s refinery Neftochim in Bourgas on the Black Sea (ranked 32nd overall), its fuels retail arm (60) and the Bulgarian Energy Holding (53), the company set up to manage most of the state-owned assets in the energy sector.

The other energy firms in the list are state-owned power grid operator NEK (114), OMV’s Bulgarian subsidiary (258), state-owned gas distribution firm Bulgargaz (291), privately-owned fuel retailer Petrol (314), private gas distribution firm Overgas (363), electricity distribution firms CEZ Electro Bulgaria (415) and EVN Bulgaria (442).

Bulgaria’s four non-energy companies in the rankings came from the manufacturing sector – copper producer Aurubis (138) and steelmaker Stomana Industry (396) – and the telecommunications sector – mobile operator Mobiltel (328) and former fixed-line monopolist Bulgarian Telecommunications Company (455).

Three companies dropped out of the rankings: mobile operator Globul, Kremikovtzi steel mill and retailer Metro Cash&Carry Bulgaria.

In its brief country description on Bulgaria, Deloitte said that the risks to Bulgaria’s growth prospects were mounting "due to the global downturn and volatile global food and energy prices".

The report struck familiar chords, identifying the large current account deficit – 25 per cent of gross domestic product (GDP) in 2008 – and high private sector debt as the main threats to Bulgaria’s economy.

The silver lining is that "Bulgaria is relatively well positioned to face the current slowdown with its foreign exchange reserves accumulated in the fiscal reserve account and the banking sector." Reserves in Bulgaria’s banking system stood at about 35.6 billion euro at the end of 2008, due to strong banking supervision and stricter regulations than in other European Union countries.

Region at crossroads
In its 2008 rankings, Deloitte described Central and Eastern Europe as "one of the world’s fastest-growing regions" and said that "high growth rates are helping to counter the effects of the economic slowdown in the eurozone".

A year later, the momentum accumulated during two decades of mostly uninterrupted economic growth is all but gone.

"The impact of the global economic and financial crisis reached the region late, leading some economists initially to predict that it would be spared the worst of its impact. To date, Poland has been the only local economy to be spared recession. The region’s other 17 have all shrunk between the end of 2008 and mid-2009, immediately following an era between 2005 and 2007 when GDP growth averaged 7.2 per cent," Deloitte said.

About three quarters of the 200 top executives polled by Deloitte said that the economy in the next year was either going to get worse or remain the same. More than a third expected to make employees redundant.

But the negative trend was "tempered by the fact that on the whole, business leaders are optimistic about prospects for their individual enterprises, with only about 15 per cent having negative views about the future," the report said.

Ten of the 18 countries covered by the report are EU members, but only two of them – Slovakia and Slovenia – have adopted the euro. The rest have either gone for fixed-rate exchange mechanisms, among them Bulgaria, or floating exchange rates, as was the case with the bigger economies in the region.

While the report forecast that the Baltic states already in the euro waiting room will focus on fulfilling the eurozone criteria once their economies have stabilised, Bulgaria is yet to join the exchange rate mechanism and the report made no estimate concerning Bulgaria’s accession to the eurozone.