The number of employees in state-owned companies in Montenegro increased by 2,829 in 2023 compared to the pandemic year of 2020, according to the Financial Performance Analysis of State-Owned Companies conducted by the Directorate for Central Harmonization and Development of Internal Controls at the Ministry of Finance (MF), which was approved by the Government during its latest session.
In 2018, state-owned companies employed 11,332 people, and this number slightly decreased in 2019 to 11,325. However, the number of employees dropped further in 2020, reaching 10,748 due to the impact of the pandemic. From that point, the number of employees has increased: in 2021 it rose to 11,161, in 2022 it reached 12,359, and by the end of last year, the number of employees had climbed to 13,577.
Revenue and expenses
According to the Ministry of Finance, there has been a continuous growth in both revenue and expenses of state-owned companies in nominal terms since 2018, with the exception of 2020, when there was a decline due to the bankruptcy of Montenegro Airlines and the pandemic.
In 2018, the total revenue was €790.7 million, which increased to €831.1 million in 2019. In 2020, the revenue fell to €681.2 million. By 2021, revenue began recovering, reaching approximately €812.5 million, and in 2022, it increased by 40% to €1.14 billion. In 2023, revenue grew more slowly, with an increase of just 1%, amounting to €1.15 billion.
Similarly, expenses have also grown, with the exception of 2020 and 2023. Most companies experienced rising expenses in 2020, particularly due to the bankruptcy of Montenegro Airlines (with losses totaling €85 million by the end of 2019). By the end of 2022, the total expenses of state-owned companies had increased by 35.3%, reaching €1.11 billion. However, in 2023, expenses saw a decrease of 8.3%, or €88.9 million, primarily due to lower costs in the energy sector, while increases in transportation and industry sectors were insufficient to offset these reductions.
Business results
State-owned companies reported a negative net result of €7.4 million at the end of 2021, but in 2022, they achieved a positive net result of €36.4 million. Last year, a significant improvement was noted, with a net result of €115.6 million for majority state-owned enterprises. In 2021, half of the companies were profitable, in 2022 that number increased to 57%, and last year, 68% of state-owned companies achieved positive results.
Despite this progress, the Ministry of Finance notes that one-third of companies are still operating at a loss, requiring detailed individual analysis. Over the past three years, 12 companies have consistently reported negative results.
Moreover, 16 of the 50 state-owned companies are categorized as high or very high risk, accounting for 33% of the analyzed companies. Given that nearly 25% of state-owned enterprises have posted losses for three consecutive years, the analysis indicates that these companies continue to carry a significant risk of future losses.
Sector breakdown
Of the 50 state-owned companies, 70% are in the transportation, energy, tourism, and environmental sectors. In 2023, the total operating income of state-owned companies amounted to over €1 billion, representing 17% of the GDP. The total equity capital of these companies stood at €3.6 billion, or approximately 50% of GDP. Employees in state-owned enterprises at the central level represent 5-6% of total employment in the country, including both public and private sectors.
Although profitability has been gradually recovering since 2021, it has not yet reached pre-pandemic levels. The liquidity ratios of state-owned companies are declining, indicating they have fewer liquid assets to cover short-term obligations compared to before the pandemic.
Risks
The Ministry of Finance’s analysis identifies 17 risks that could potentially threaten the operations of state-owned companies. The most significant risk involves servicing obligations during next year when the Pljevlja thermal power plant is expected to be out of operation for eight months due to ecological reconstruction. However, the ministry expects cost optimization to help mitigate this issue. Other risks include interest rate risks for companies with variable interest loans, delays in the implementation of investments, increased depreciation costs for companies that have reevaluated their assets this year, and potential changes in the value of assets.
The analysis also highlights high uncertainty due to fluctuations in rental prices, foreign currency debt, legal disputes faced by certain companies, and the inability to meet tax obligations under reprogramming agreements. Moreover, some companies lack a strategic approach or clear procedures, and some struggle with insufficient revenue to invest or cover high employee costs. Certain sectors face challenges in recruiting skilled workers, and some companies are paying more to retain talent.
Contributions to the budget
In the past three years, state-owned companies have contributed over €282 million to the national budget, with €110 million collected in taxes last year alone. According to the Tax Administration, state-owned companies owed €26.5 million by the end of 2023. The Customs Administration reported that revenue collections amounted to €14.06 million. Furthermore, state-owned companies have paid €49.1 million in dividends from 2020 to 2023, with the largest payment of €32.6 million made in 2021 for the year 2020.
By the end of last year, the value of state guarantees stood at €577.67 million, with €457.8 million in activated funds. The total debt from guarantees issued to domestic and foreign creditors was €150.57 million, or 2.2% of GDP.
