You thought 2020 was bad, didn't you? Many businesses would agree. But consider this. The top 50 most profitable firms in the annual ranking of Capital - K100, generated 11.5 billion levs (5.9 billion euro) in revenue in 2020 - an increase of 7.5% compared to 2019. The volume of turnover corresponds to about 9.7% of Bulgaria's GDP. Net profit reached 2.8 billion levs, up 12% year-on year.
That was a hell of a year for some corporate majors. Despite the pandemic, the top 50 most profitable companies among the largest 100 by revenue in the country increased their average profit margin by 1 percentage point to 24% for every 1 lev in revenue - the highest profitability rate ever reported in the 14-year history of the K100 ranking by Capital.
The increase was driven by the continued entry of more and more technology firms in the ranking. Tech, along with gambling, has traditionally been a very lucrative industry. While a number of firms would do anything to avoid a repeat of pandemic-marred 2020, companies in technology, gambling, chemicals, metal mining seem to have had a great year.
Papazki vs. Bozhkov
The most profitable industries in 2020 were gambling and tech - the average profit margin surpassed 50%.
One gambling tycoon replaced another in the number one spot. After dominating the charts for years, disgruntled lottery oligarch Vassil Bozhkov's betting business lost its license and consequently the leadership spot to Euro Games Technology (EGT) - a group specialized in providing gambling equipment and gaming software. EGT is owned by three individuals linked to gambling boss Valter Papazki who has served a prison term for murder.
The group's online betting and gaming software division - EGT Interactive, tops the ranking of the 50 most profitable firms in 2020 with a profit margin of 73%. Overall, EGT generated over 420 million levs in revenue in 2020 and close to 190 million levs in profits.
Papazki's gambling empire also includes Win Bet Online - a company that saw business skyrocket in 2020. Revenue tripled to 77 million levs, and profit reached 19 million levs - about 18 times the volume reported for 2019. As a whole, online gambling and the businesses that support it were booming last year and were among those most actively hiring new employees.
Technology, innovation, and grown-up startups
Gambling and its affiliated industries usually aren't associated with significant benefits to the economy's value-added. On the other hand, the technology industry's increase in size in both k100 and the economy is a good indicator of long-term benefits for the economic future of the country.
As an example of the trend, hosting provider Siteground Hosting, founded by Bulgarian entrepreneurs Ivo Tsenov and Tenko Nikolov in 2004, comes in second place among the most profitable firms in the country in 2020. The firm reports a solid profit margin of over 50% in 2020 with 142 million levs in revenue and 73 million in profit. In recent years, it has become one of the most desirable employees to work for in Bulgaria with offices in Sofia, Plovdiv and Stara Zagora serving an international market that spans the USA, Europe, and Asia.
Luxury shoes and bags manufacturer Solmate made an impressive debut among Bulgaria's corporate majors with its brand By far. Founded in 2016, the company is one of the very few representatives of the textile industry in K100 in 2020 following the disastrous consequences of Covid-19 on the sector. Last year, Solmate doubled its revenue to 65 million levs while profit increased by 67% to 15 million levs - a profit margin of 23% for every lev of revenue from the sale of shoes and bags.
Metals and chemicals
Mining also had an exceptional year in 2020 as evidenced by the financial results of the Canadian group Dundee Precious Metals' gold mines in Chelopech and Krumovgrad. The two enterprises doubled their profit margin in 2020 to over 40% as a result of an increase in both extracted and sold gold concentrates and higher metal prices. In addition, the Ada Tepe mine in Krumovgrad produced three times more gold and silver concentrate last year against the background of lower costs for metal processing. In total, the two mines located in Krumovgrad and Chelopech generated over 360 million levs in profit in 2020.
Copper producer Asarel Medet located near Panagyurishte increased his profit margin by 6 percentage points, generating 439 million levs in revenue and 38% more profit (up to 120 million levs) in 2020.
The most profitable companies also include some firms from the chemical industry such as manufacturers and retailers in cosmetics, essential oils, fragrances, food additives, and medical products. For example, Naturpharma Bulgaria reports a 30% increase in revenue and profit and a profit margin of 25%. Essential oil producer Essetere Bulgaria trebled its 2019 profit last year, increasing its profitability in the process.
The state is also in the ranking
One cannot ignore the glaring presence of companies involved in the construction in Bulgaria of an extension of TurkStream, the natural gas pipeline running from Russia to Turkey.
For example, Turkish-owned firm Vemak Bulgaria which laid the pipes stretching from the border with Turkey to the border with Serbia made it into the group of 10 most profitable firms in the country in 2020 with 90 million levs in revenue and 37 million levs in profit. The same applies to Max Stretcher Bulgaria which is also a subcontractor for TurkStream's extension through Bulgaria - the firm generated 76 million levs in revenue and 25 million in profit in 2020.
Another major beneficiary of public resources, this time through the Electricity System Operator (ESO), is electricity infrastructure construction firm EMU, ranked 18th in terms of profitability in the K100 ranking for 2020. Over the past three years, EMU and its affiliate Impulse Co. have won over 120 contracts from ESO worth a total of 400 million levs. ESO's executive director Angelin Tsachev, is a former EMU employee. In 2020 alone, EMU's profitability doubled to a margin of over 26% funded primarily by taxpayer money.