The state-owned enterprises have generated double-digit returns for the state for the first time

Despite changes in market conditions and the surrounding environment, the contribution of state-owned enterprises (SOEs) to the state budget remained at a record high last year. The amount of dividends and profit contributions allocated for the 2023 results amounted to 185.8 million euros. Including the atypical taxes paid by SOEs, the state budget was supplemented by 231.3 million euros in 2023. The return on capital indicator significantly increased, reaching a double-digit figure of 10.8% for the first time during the observation period.

According to the Minister of Economy and Innovation, Aušrinė Armonaitė, state-owned enterprises play a crucial role in our economy. They not only create added value and ensure the provision of essential services but also contribute to national security.

“Over more than three years, the number of state-owned enterprises has been optimized from 49 to 34, and the net profit of these companies last year was 40% higher than in 2022. It is clear that skilled, transparent, and competent management of these enterprises leads to a fuller state budget, which means the well-being of all citizens,” says Minister of Economy and Innovation Aušrinė Armonaitė.

The Governance Coordination Center, an analytical and good governance implementation body established by the Government, annually evaluates the achievements of state-owned enterprises and provides recommendations.

According to the head of the center, Vidas Danielius, last year, 95% of SOEs were profitable, and all SOEs, considering the impact of atypical taxes, earned a total net profit of 610.1 million euros.

“The successful implementation of SOE reforms and the application of the highest governance standards result in consistently improving company performance each year. SOEs use the capital provided by the state, which is the property of all of us, so society should be interested in maximizing this capital’s return and its efficient use,” explains V. Danielius.

The energy sector had a significant impact on the overall results of state-owned enterprises. The sales revenues of AB “Ignitis Group” accounted for 56.5% of all SOE turnover. However, the energy sector also relies heavily on borrowed capital – at the end of 2023, the financial liabilities of this sector amounted to 80.5% of equity.

The transport sector’s recovery is also noticeable. Since 2020, the transport sector has been most negatively affected by the COVID-19 pandemic, the war in Ukraine, and related sanctions. In 2023, the ten transport sector companies included in the SOE portfolio, considering the impact of atypical taxes, earned 89.9% more net profit – 71.1 million euros. The amount of dividends and profit contributions allocated to the state budget for 2023, which amounted to 45.3 million euros, increased significantly compared to the previous reporting period.

“Over nearly a decade, the dividends, profit contributions, and atypical taxes paid by SOEs to the state have more than doubled. This has been facilitated by the transparent selection and activities of independent boards, ambitious goals, and the implementation of good governance practices. Annual monitoring, evaluation, and ranking of companies help them grow and benchmark against each other,” assures V. Danielius.

In recent years, the number of independent members in the collegial management or supervisory bodies of state-owned enterprises has exceeded 60%. Companies are also actively pursuing social responsibility, with the share of women in management bodies exceeding 30% for the past three years. However, only two of the 34 state-owned enterprises are led by women.

Last year, state-owned enterprises employed just over 26.5 thousand employees and managed 12.8 billion euros of assets.

Two institutions representing the state – the Ministry of Finance and the Ministry of Transport – manage the majority of the SOE portfolio. The decisions made by these ministries, as institutions representing the state, have a significant impact on the performance of these companies.