Bulgaria’s heavy industry stays stable in pandemic-marred 2020

Aurubis

Bulgaria’s heavy industry stays stable in pandemic-marred 2020

Most sectors improved their results in 2020 but a surge in energy prices poses a risk to 2021 results

Aurubis

© Надежда Чипева


Bulgaria's heavy industry remained stable in the pandemic-hit 2020, companies' latest available full-year results show. Three of four sectors managed to increase their sales and book profit on the average. The only loser was the chemical industry, which was hit by a decrease in oil prices due to shrunken demand.

Nevertheless, the picture was uneven. The strongest performance in both mining and metallurgy came from companies dealing in copper and gold, as those metals appreciated. The lower prices of zinc and lead, on the other hand, dented producers' revenues. The plants for glass and building materials also had a good year but their results were somewhat distorted by extraneous factors.

In 2021, the big challenge for all companies in the heavy industry was the surge in energy prices, which will heavily impact their full-year results. The companies' carbon-neutrality commitments will exert an additional pressure, as they require substantial investments.

Mining

The biggest companies in the sector increased their turnover by an average of 9%, with copper miners posting steady results. Elatsite - Med topped the list for a second consecutive year after state-owned lignite producer Mini Martisa Iztok lost the leading position in 2019 - and continued losing ground in 2020. Asarel Medet saw a slight rise in revenue, mainly due to higher copper prices on international markets.

Gold mining companies were the big winners in 2020. With a 28% jump in revenue, Dundee Precious Metals Chelopech crossed the 500-million-lev barrier. Even a more impressive hike was registered by Dundee Precious Metals Krumovgrad, which was the only company to post a three-digit rise in turnover. However, the result was not surprising, as 2020 was the company's first full year of operation. The high gold prices also contributed to the significant increase in the two companies' profit, as well as to their record-high profitability. Bulgaria's third gold miner, Gorubso - Kardjali, also booked a 9% rise in revenue.

Lead-and-zinc miners Varba - Batantsi and Gorubso - Madan, however, saw their sales fall. The main factors for the decline were the prices of lead and zinc on the global market.

Metallurgy

Unlike the previous year, in 2020 the top 10 metallurgical companies posted a slight increase in revenue; their average profit also went up. The growing prices of some metals helped the rise, despite the unexpected difficulties in the first year of the pandemic.

Copper producer Aurubis Bulgaria remained the unrivalled leader in the sector, increasing its turnover by 12%. What is more, that made it the largest company in Bulgaria. The strong growth was due to rising copper prices, as demand from fast developing new industries like renewables and electric mobility increased.

Strong demand was the reason for the jump in the profit of copper product manufacturer Sofia Med, despite the slight drop in turnover. On the whole, the company reported a rise in sales volumes to 82,300 tonnes.

Lower lead and zinc prices dragged the turnover of Plovdiv-based KCM down in 2020 but its operating profit edged up, while the five-fold jump in net profit was mainly due to exchange rate differences. The surge in electricity prices in 2021, however, forced the plant to temporarily halt production to avoid losses.

The power price hike was the main reason for the considerably lower results of steel makers in 2020, with Stomana Industry reporting a drop in revenue by 24%. Promet Steel's sales were 2% down.

Glass and building materials

The sector of glass and building materials production saw the biggest growth in revenue in 2020. That was mainly due to the leader BA Glass Bulgaria, which owns the glass plants in Plovdiv and Sofia. The company booked a nearly 60% surge in turnover after a three-digit jump the year before. The main reason was the change in accounting policy requiring all sales of Portuguese BA Glass Group to be reported through the Bulgarian company. Nevertheless, the group's report also showed a 1% rise in sales and production in Bulgaria in terms of volume, though no value data are available.

Following the strong increase, BA Glass Bulgaria took the lead of Turkish Sisecam, whose three plants in Targovishte booked total sales of 530 million levs (271 million euro). The largest of the three is flat glass producer Trakia Glass Bulgaria, which increased its revenue in 2020. Glassware maker Pasabahce Bulgaria was the only to report lower sales, while automotive glass producer Sisecam Automotive Bulgaria boosted its turnover in 2020 and managed to turn to profit.

All three cement plants operating in Bulgaria - Devnya Cement, Holcim Bulgaria and Zlatna Panega Cement, saw a slight drop in sales but booked profit in 2020. The companies' reports show that strong cement imports from Turkey, additionally boosted by the cheapening lira, affected their sales.

Chemical industry

The chemical industry was the worst performer in 2020, as companies booked a revenue slump of over 35% on the average. The decrease however was mainly due to Lukoil Neftochim Bulgaria, which - being the largest company - strongly affected the sectoral result. The refinery's sales plummeted 53%, which was the reason why it lost its position of the largest company in Bulgaria. Weaker demand for petrochemicals in the first year of the pandemic was also reflected in the lower sales of fuel trader Insa Oil.

Fertilizer maker Agropolychim also reported a drop in revenue, as the pandemic delayed customers' decision-making process and reduced fertilizer consumption. Profit shrank as the prices of phosphorous products declined globally, while the prices of raw materials remained steady. Dimitrovgrad-based Neochim saw its sales slump 12% but the company managed to swing to profit.

Devnya-based soda ash producer Solvay Sodi also reported a drop in turnover, as production was strongly affected by the pandemic. Nevertheless, the company booked the highest profitability rate among the top 10 enterprises in the chemical industry.

Bulgaria's heavy industry remained stable in the pandemic-hit 2020, companies' latest available full-year results show. Three of four sectors managed to increase their sales and book profit on the average. The only loser was the chemical industry, which was hit by a decrease in oil prices due to shrunken demand.

Nevertheless, the picture was uneven. The strongest performance in both mining and metallurgy came from companies dealing in copper and gold, as those metals appreciated. The lower prices of zinc and lead, on the other hand, dented producers' revenues. The plants for glass and building materials also had a good year but their results were somewhat distorted by extraneous factors.

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