The first half of 2024 is favorable for state-owned enterprises in the transportation and energy sectors

In the first half of 2024, compared to the same period last year, the most noticeable growth among state-owned enterprises (SOEs) was in the transportation sector. The net profit of SOEs operating in this sector increased by a quarter, reaching €46.2 million, comparing the first halves of 2023 and 2024. Growth, albeit less intense but still above 4%, was also recorded in SOEs operating in the energy sector, whose net profit accounted for 67% of the entire SOE portfolio’s half-year net result.

When calculating the net profit earned by all SOEs in the first half of 2024, it slightly decreased compared to the same period last year. It fell by 5.6% to €297 million.

The net profit of SOEs operating in the transportation sector in the first six months of 2024 amounted to 65% of the net profit earned by SOEs in this sector for the entire year of 2023, which is the highest result in the past five years. The profit of the AB “Lietuvos geležinkeliai” group of companies more than doubled, increasing to €20.4 million in the first half of 2024 compared to the same period last year.

The SOE portfolio’s sales revenue in the first half of 2024 totaled €2.1 billion, which was 9.8% lower than in the first half of 2023.

The largest influence on the somewhat lower turnover of the SOE portfolio in the first half of this year was the change in the revenue of companies in the energy sector. The revenue in this sector dropped by 15.5% compared to the first half of last year, reaching €1.4 billion.

Despite a 20% decrease, more than half of the entire SOE portfolio’s revenue came from the energy sector’s AB “Ignitis group,” whose revenue reached €1.1 billion. However, the company’s turnover was negatively affected by reduced revenues from natural gas sales and electricity sales.

The turnover of the State Forest Enterprise also changed noticeably, decreasing by 16.5% to €131.8 million. The main reason for the decrease in turnover was the 28.1% drop in the price of raw timber sales.

The Director of the Governance Coordination Center, Vidas Danielius, notes that despite the slightly lower turnover of SOEs in the first half of 2024 compared to last year, the overall results show that companies are operating more efficiently.

“A less profitable half-year was mainly driven by less effective financial and investment activities of companies. On the other hand, SOE expenses are decreasing faster than revenues, meaning that the profitability of core activities is increasing. For example, in the first half of 2024, the operating profit of SOEs in Lithuania was the highest in the past five years, reaching €325.9 million – 6.3% more than in the first half of 2023.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 7.1% in the first half of this year compared to the same period last year, reaching €547.3 million,” said V. Danielius.

Additionally, according to V. Danielius, the final tasks of the SOE restructuring plan must be completed by the end of this year. Through active collaboration between SOEs, ministries, and other interested institutions, ambitious goals necessary for optimizing and further centralizing the SOE portfolio have been achieved.

It is worth noting that a new phase of key performance indicators set by the Government for the period of 2025–2027 will begin in 2025. This is the second such period following the introduction of the key performance indicators concept in 2022.

More details on the 2024 first-half SOE portfolio performance report, prepared by the Governance Coordination Center, will be available in mid-October.

As of the end of June 2023, a total of 33 state-owned enterprises were operating in Lithuania, employing 26,672 people – 133 more than at the beginning of the year.