The net results of two large state-owned enterprises, EPS and JP Pošta Srbije, have shown significant decline in comparison to 2023, as revealed in their recent financial reports.
EPS’s profit in 2024 is nearly five times lower than the previous year, while Pošta’s profit decreased by one billion dinars compared to 2023.
EPS’s financial statement reveals a reduction in total revenue by 55 billion dinars, dropping from 513.5 billion dinars in 2023 to 458.3 billion in 2024. On the other hand, expenses increased by 40 billion dinars compared to 2023. This has led to a drastic drop in EPS’s profit, which fell from 112.4 billion dinars in 2023 to just 24.3 billion dinars in 2024.
On the other hand, Pošta Srbije experienced an increase in total revenue in 2024, which rose to 36.4 billion dinars, up from 35.3 billion dinars the previous year. However, Pošta’s expenses grew at a faster rate, causing its net profit to decrease by one billion dinars, falling from 3.1 billion dinars in 2023 to 2.1 billion dinars in 2024.
Forbes Serbia investigated the reasons behind these declines and examined the financial performance of other state-owned enterprises that have disclosed their 2024 financial results.
EPS’s perspective: An incomparable comparison
EPS has defended its position in its response to Forbes Serbia, explaining that comparing 2023 and 2024 solely based on profit does not present an accurate picture of the company’s progress. According to EPS, these two years are incomparable when considering factors such as investments, market conditions, consumption, and hydrology. EPS claims to have operated profitably for two consecutive years, despite the global energy crisis and the challenges from the inherited situation in 2021 and 2022. In 2024 alone, EPS paid 200 million euros in profit taxes to the Serbian budget and made over 550 million euros in total investments, 93% of which were funded by its own resources. EPS also completed extensive overhauls, including work on units at Kostolac and TENT, as well as the revitalization of a unit at the Bajina Bašta hydroelectric power plant. EPS added new production capacity with the takeover of block B3 in Kostolac after more than 30 years. Investments in the mining sector amounted to 21.1 billion dinars.
However, despite these efforts, EPS’s profitability in 2024 was essentially reduced to the same amount as the profit tax it paid, which reflects a significant drop in profitability. The decline is attributed to lower production than planned, combined with higher consumption due to hot summer temperatures.
Pošta Serbia’s struggles
Pošta Srbije, meanwhile, has not provided answers regarding why their profit decreased by 40% in 2024 compared to 2023. However, their income statement reveals that business revenues were not the issue. In fact, they increased by approximately one billion dinars. Instead, the reason for the drop in net profit lies in the significant increase in expenses. Pošta’s total expenditures increased from 31.5 billion dinars in 2023 to 33.9 billion in 2024, with operational costs growing even more dramatically by almost four billion dinars. The highest increase in expenses was in wages and benefits to employees, as well as materials, energy, and fuel. Moreover, Pošta’s investments decreased from 4.5 billion dinars in 2023 to only 1.9 billion dinars in 2024.
Railways: No improvement in sight
Serbia’s national railway company, Železnice Srbije, saw a drastic increase in losses, with net losses rising by more than 500% in 2024. Their financial report shows a loss of one billion dinars, up from 167.6 million dinars in 2023. Despite an increase in total revenues, from 936.9 million dinars in 2023 to 1.6 billion dinars in 2024, the company’s expenditures surged dramatically, particularly due to a huge increase in exchange rate differences, which went from 125 million dinars to 1.7 billion dinars.
In addition to the parent company, two of the three state-owned enterprises in the railway system also released their financial reports. Serbia Kargo, a major player in the industry, saw its revenues drop by 1.1 billion dinars, from 12.7 billion in 2023 to 11.6 billion in 2024. However, the company’s total expenditures remained relatively stable, with only a slight decrease of about 100 million dinars.
Conclusion
The financial struggles of EPS, Pošta Srbije, and the Serbian Railways point to broader issues in the operations of state-owned enterprises. While these companies have made significant investments and faced various external challenges, their financial results in 2024 suggest that much more needs to be done to address inefficiencies and improve profitability. As Serbia continues to rely heavily on state-owned enterprises, the effectiveness of these businesses will remain crucial to the country’s economic future.
