The profitability of the most dynamic small and midsize businesses (SMB) in Bulgaria has marked a new record in 2018. After the 2017 record high of 45.04%, the best performers in the new ranking have reported 45.4%. In other words, for every euro of revenue, these companies have earned a profit of 45.4 Eurocents. The achievement was not a surprise. In spite of lagging slightly behind preliminary estimates, the Bulgarian economy maintained growth at above 3%, fueled by increased investment and consumer spending. The favourable environment helped the profits of big business as well. The Top 50 companies in the country reported a record result for the last decade - a 25.1% increase in profits. However, SMB again repeated a result that is twice as good, which demonstrates that a smaller scale contributed to more dynamic development in 2018 once again. Simultaneously, SMB did not remain immune to the first effects of the EU economy's slowdown. Most charts, even in the profitability ranking, show a slight decrease when compared to the 2017 ranking, while the increasingly palpable cool-down in Europe is likely to bring more modest results in the present year. Small ebb At least for now, the Top 50 SMB have also performed enviably well in absolute terms, recording a double increase in profitability - up to 107.53%, or 247.4 million levs. The sum is a lot more modest than the one recorded by last year's Top 50, which together earned 312.8 million levs or a 200% increase on a yearly basis. The average profits in 2018 Top 50 stood at 4.95 million levs, as compared to 6.26 million levs in 2017. The threshold required to enter the Top 50 group has also remained almost unchanged, shrinking by a minimal amount. In order to be part of this particular elite club in 2018, a company needed to report a profit of at least 33.62%, with 33.95% needed in 2017.
This decrease can also be seen when comparing the average profitability of all the companies in the ranking. In this year's edition, there are nearly 2300 companies, which reported an average profit margin of 6.17%. A year earlier, the 1800 most dynamic companies reported 7.07% for the same indicator. The Top 50 of 2018 fall behind their peers of 2017 in one more respect - the total volume of business. The total revenue of the Top 50 for 2018 is 527.5 million levs. In 2017, the Top 50 earned 694.7 million levs. The average revenue growth has also decreased. In 2018, the volume of the most profitable SMB rose by an average of 50.15%. The same indicator was 68.74% in 2017. Nevertheless, their achievement still stands out against the average of the 2280 companies in the extended ranking, which increased their revenue by 30% in 2018. The small dominate It has become traditional for the top of the profitability ranking to be dominated by companies more modest in size. This year Top 50 includes only one company with a revenue of over 50 million levs. This is the Sofia- based software company EGT Interactive, part of the Euro Games Technology Group, which specializes in software for the online casino industry. The smaller company serves the online casino industry as well. In 2018, its revenue rose by a spectacular 156.5%, or 52 million levs. Its profitability stood at 66.65%. All other companies in the Top 50 had smaller revenues. The earnings of the runner-up, the Varna-based restaurant franchise Happy, were lower at 37.7 million levs. iGaming, another Varna-based company, also crossed the 30 million thresholds with a revenue of 32.9 million levs. The company is part of the Germany-based group iGaming.com, which provides web marketing services.
A further three companies earned more than 20 million levs, while a total of 14 in the Top 50 had earnings in the range of 10 to 20 million levs - the same as last year. Nonetheless, the lion's share of the ranking continues to be composed of companies that earned less than 10 million levs in the last fiscal year. The data from the new issue of GEPARD shows another decrease - in the number of companies with three-digit revenue growth for the past year. In 2018, there are 10 such companies in the Top 50, versus 11 in 2017. The most outstanding performance was achieved by the Haskovo-registered, Sofia-based company Dekor, which specializes in production and sales of rock construction materials. In the past year, the company increased its revenue by 206.3% to 4.5 million levs, while its profitability stood at 39.75%
For yet another year in a row, the leader of the highest earners, Donev Investment Holding, is based in Sofia. In 2018, the investment company of the managing director of leading drug maker Sopharma, Ognyan Donev, reported a revenue of 7.6 million levs (44.22% growth) and a profit of 6.3 million levs, up 82.65%. This is the main holding company through which Mr Donev participates in different Sopharma companies and his earnings come chiefly from the dividends received. The company has improved on last year´s performance when it reported profitability of 71.01% for 2017 and occupied 3rd place in the ranking. The Burgas-based software company Suera.com comes in second. According to data from its website, the company designs and develops apps for the adult entertainment industry. It earned 10.4 million levs in 2018, which is 67.8% more than in 2017. Their reported profits were 7.2 million levs and profitability stood at 69.24%.
The Top 3 is completed by another Sofia-based company. Miks-PS is part of one of the construction leaders in the country Miks Construction, which has grown at a three-digit rate in the last few years and in 2018 entered the Top 10 of the largest construction companies in Bulgaria. The smaller company reported three-digit growth as well - 136.7% to 14.4 million levs, while profits soared to an impressive 9.9 million levs, which is a jump of no less than 358.2%, or profitability of 68.82%. The company's financial report makes clear that the boom is owed mostly to the 10 million levs of financial revenue from connected companies.
A boost for software and the north
Traditionally, the capital city has dominated not just the Top 3, but the entire ranking as well. For the third year in a row, the number of Sofia-based companies in the Top 50 is 18, while the representatives from the Sofia region shrink to one (from two in 2017). The surprise comes from the geographical distribution of the other companies, where after a four-year absence the companies from the northern part of the country are once again more numerous. The number 18 in 2018 against 13 from southern Bulgaria. Varna is the chief contributor, since the city now has 10 companies in the Top 50, as opposed to 6 in 2017. Plovdiv also has an increased presence with 8 companies, up from 7 in 2018, but still remains 3rd in the city ranking.
After three years of domination in the revenue ranking, construction companies have yielded the position. The most numerous in the 2018 ranking are companies from the IT sector with a total of 6 in the Top 50. The representatives of the construction and real estate sectors number 6 and the Top 3 of the most profitable SMB sectors is completed by tourism with 5 companies in the Top 50.