By Dr. Vladimir Preveden, Managing Partner of the Zagreb office of Roland Berger Strategy Consultants
Raina Lazarova, Director SeeNews

Which was the largest company in SEE in terms of total revenue in 2008?
Which were the dominant sectors in SEE?
Which countries generated most of the region's wealth?
What has been the impact of the global economic downturn on the SEE economies?
If you fail to find answers to all these questions below, please read further into this volume to find out all you need to know about SEE.

Capital markets around the globe plunged to all-time lows last year, bringing the value of traditionally high-yielding stocks close to zero, which resulted in record losses for investors. Investor confidence slumped and consumer confidence followed suit. Real estate prices plummeted. Some of the world's biggest banks went bankrupt and governments came to rescue with bailout packages worth billions of euro. Crude oil and natural gas prices sky-rocketed in the first half of the year and plummeted on dwindling consumption in the second half. Global economy will never be the same again after 2008, analysts say.

Although the emerging markets of Southeastern Europe (SEE) were somewhat spared the adverse effects of the financial and economic crisis compared to the world's leading economies, the region could not escape its bite. Stock markets in SEE saw most of their value evaporating in 2008: the bourses in Ljubljana and Zagreb lost two-thirds of their market capitalisation, the Bucharest Stock Exchange lost 70%, while the slump was even deeper in Belgrade (76%) and Sofia (80%). Banks in the region, which are mostly owned by Western European peers, tightened their lending policies in response to the economic downturn in 2008, dampening the real estate market that used to be the engine behind the robust growth of the SEE economies in the previous few years. The smaller size of the SEE economies, however, helped them evade the large-scale failures and subsequent bailouts witnessed in the world's leading economies. The SEE countries, most of which are net energy importers, were severely hit by the sharp rise in global prices of oil, gas and metals and the ensuing drop in consumption.

Despite global economic woes, companies in SEE did pretty well in terms of financial performance in 2008 compared to their Western European and U.S. peers. This was due partly to the delayed arrival of the financial crisis to the region, and partly to the region's generally much lower exposure to global turmoil.

The combined total revenues of the companies ranked in the SEE TOP 100 reached a good 95.7 billion euro in 2008. Twenty-three of the 100 companies surveyed had total revenues of more than one billion euro each, while the company occupying the last position in the ranking had a respectful total revenue of 405 million euro.

Romania's oil and gas group Petrom SA, majority-owned by Austria's OMV, was the biggest company in SEE in 2008 with total revenues of 4.85 billion euro, followed by its Croatian peer INA d.d. with 3.65 billion euro.

It comes as no surprise that the seven biggest companies in SEE in terms of total revenue were operating in the oil and gas industry in 2008. Their revenues were fueled by the surge in global oil prices, which hit an all-time high of $147 a barrel on July 3, 2008.

The oil and gas sector was the biggest industry in the region last year with a share of around 39% of total revenues generated by the 100 companies surveyed. However, the sector was the third least profitable, with a net loss equivalent to 0.5% of total revenues due to the slump in oil prices in the second half of 2008.

The second biggest industry in SEE TOP 100 was electricity generation and distribution with a 15% share of total revenues in the ranking. Wholesale and retail was the third largest sector with a share of 11%, followed closely by telecommunications with 10% and metals with 7%.

The most profitable sector in 2008 was telecommunications with a return on revenues of around 19%, followed by the pharmaceuticals sector with 14.6%. This is no surprise as both sectors are characterised by huge initial investments for start-up and research and development (R&D), while variable costs are much lower once the company is up and running. Chemical industry was the least profitable sector in SEE, with profitability of minus 11.6% in 2008.

Looking at the number of companies each country has in the SEE TOP 100 ranking, we see that the region's largest economy in terms of population and GDP, Romania, expectedly leads with 43 representatives in the SEE TOP 100.

Slovenia, which is among the smallest countries in SEE with a population of just over two million, ranked second with 18 companies, followed by Bulgaria with 16, Croatia with 11 and Serbia with eight representatives.

Together, Macedonia, Bosnia and Herzegovina and Moldova have four companies in the ranking, trailing well behind the other countries in the region. Montenegro and Albania have no companies included in the ranking due to the small size of their economies and the lack of reliable corporate financial information.

Croatian companies were the most profitable ones in SEE last year, with a profit margin of 5.4%. Romanian and Slovenian companies achieved profit margins of 4.0% and 3.6%, respectively, while Bulgarian enterprises showed a profitability of just 0.6%.

The ongoing economic crisis will certainly shake up the ranking for the current year, leaving room for companies that combine rigorous efficiency improvements with strategic thinking to stand out and climb the ladder. A result of the current economic downturn will be the separation of stronger companies from weaker ones. Those willing to strive for leadership have good chances of success.

Although the regional oil and gas sector, dominated by Russia's Lukoil and Gazprom, and Austria's OMV, has seen its revenues falling since the second half of 2008, it is expected to continue dominating the ranking of the largest companies in SEE in terms of revenue.

Romania, Slovenia, Bulgaria, Croatia and Serbia will continue vying for regional leadership in terms of companies with largest total revenues, while the other SEE countries will have a much lower presence in the 2010 edition of SEE TOP 100.