Serbian companies concluded 2010 with total losses of 900m euros, according to Business Registers Agency. The biggest losers were Railways of Serbia, US Steel, VIP Mobile and Velefarm, the biggest pharmaceutical and medical products company in Serbia.
Railways began losing money several years ago, but it came as a surprise that US Steel, one of the country’s largest exporters, also fell into the red.
Ruzica Stamenkovic, registrar of the Agency for Business Registers, said that behind the losses are high inflation, a weakening dinar, lower foreign investment and growth in industrial production, exports and revenues. Additionally, companies are heavily indebted and are constantly forced to take out short-term loan obligations at high interest rates.
Editor of the www.ekonomija.org, Miroslav Zdravkovic, an expert on macroeconomic trends, says the main reason for such losses is in the exchange rate difference between the dinar and euro.
“By my calculation, if the exchange rate against the euro jumped from 99 to 105 dinars, as it was up until a few months ago, financial profit would have amounted to about 100 billion dinars,” Zdravkovic told SETimes.
He is, however, surprised by the losses of US Steel, a company with no debt, but a positive operations balance. “The US Steel losses could be explained by the fact that the company broke production last year. It should be kept in mind that US Steel purchased Sartid which, due to its enormous size, was profitable for 20 years before privatisation,” explains Zdravkovic.
According to him, it is no surprise that VIP Mobile and Velefarm have suffered losses.
“The strategy of VIP Mobile is based on how to invest more money in order to have a larger market share. They are deliberately taking losses in order to bring in new customers to the mobile network. It has led them into the losses they are experiencing, but also to their current market value, between 400m and 500m euros,” Zdravkovic says.
Velefarm, as one of the biggest losers, has been indebted for years to drug manufacturers such as Galenika and Hemofarm.
“In general, the Serbian economy is in constant stagnation after the big drop. Specifically, US Steel and VIP Mobile are successful companies and likely to have a big investment, so next year, record earnings are expected,” economics expert Goran Nikolic, a member of the Institute for European Studies, told SETimes.
In 2010, Railways lost 170m euros, US Steel 150m euros, Velefarm 120m euros and VIP Mobile 110m euros.
Source setimes.com
