Analytics - 2020

TOP101 of the year 2020 is the fifteenth top of the most valuable companies in Latvia, created jointly by Prudentia and Nasdaq. This year, the publication of the most valuable companies of Latvia TOP101 takes place during a very turbulent time in the world. Covid-19 pandemic and its containment measures have caused hitherto unprecedented uncertainty about the future. This pandemic and the subsequent fallout caused by it has affected Latvia as well, not only the society in general, but also it has had its effect on companies and the economy as a whole.

It should be emphasized, that during the process of analyzing the most valuable companies in Latvia, the influence of Covid-19 pandemic has impact on these analyses in two ways. Firstly, the impact of Covid-19 is already directly included in the calculations of the value of the companies included in the TOP101, because the newest  industry data is used, obtained from publicly available sources, at the end of June 2020.

Secondly, since the latest available audited financial annual reports are used in the making of the TOP101 and currently they are from financial year ending in 2019, the full broad spectrum impact of Covid-19 won’t be known until next year – when during the process of creating the TOP101 of the year 2021 we will be using the financial reports from 2020.

TOP101 Total value and GDP

Latvia’s GDP continued to grow in 2019, although its growth rate slowed down.

Despite the economic growth, however, the total value of TOP101 has decreased from, 16.9 billion EUR a year ago to 16.4 billion EUR in 2020. Partially, this is due to the fact that some large companies who have historically been ranked at the very top in the TOP101, were unable to publish financial statements in an timely manner and there simply wasn’t any data to analyze during the work of the valuation project. Accordingly, the sheer absence of these valuable companies in the TOP101 of the year 2020 has had a negative effect on the overall value of the TOP101.

By comparison, the total value of the TOP101 for the most valuable companies in Estonia is 20.7 Billion EUR, which is by 26% more when compared to the total value of TOP101 consisting of the most valuable companies in Latvia. 

TOP101 industries

In terms of industry trends, within the Latvian TOP101, there are no signs of dominance by a single, specific industry, but rather the opposite, as the most valuable companies in Latvia demonstrate a quite well diversified and balanced structure consisting from many different  industries. In terms of leading industries present in TOP101, the industry Trade: consumer goods continue to display solid results and accordingly, continues to be one of the largest and the most represented industries in the TOP101 of the most valuable companies.

Also mention worthy regarding the total value of TOP101 is the contribution, both in value and industry, from the many newcomers in the list, from such industries as health care and transmission and storage.

Distribution of the value of TOP101 companies, based on capital structure

Looking at all companies present in the TOP101 and analyzing their capital structure and funding, in can be concluded that the total share of private equity in the TOP101 remains quite high – 69%. However, it has somewhat decreased as opposed to 75% a year ago.

In light of the slight decrease of the total value of TOP101, it shows firstly and foremost, that state owned and state equity funded companies experienced a lower value change than the private sector companies and they were more stable and the state investment in those state owned companies is creating added value.

However, private equity in the long term remains in the dominant position for the companies present in the TOP101 of the year 2020, once again confirming that private equity companies are able to adapt faster to rapid market changes and downturns, they are also able to make decision more quickly and efficiently, providing stable profits for the private business owners and at the same time, continue to increase in value.

So, we can only guess what changes we might see in the next years TOP101 due to the mixed market caused by the Covid-19 pandemic. However, there is a belief to say with confidence, that private equity companies will be able to move back on track faster and continue to grow the total value of TOP101 for next year.

TOP101 Threshold

The entry barrier for TOP101 of the most valuable companies in Latvia continues to grow. Looking back at data, dating back fifteen years, we can see that the total value has significantly grown over that time and so has the entrance threshold for companies, which has risen from approximately 13 million EUR in 2006 up to 50 million EUR in 2020.