Business News

Return on state equity at 6.9% in 2019

Ljubljana, 23 October (STA) - The return on capital owned by the state and controlled by Slovenian Sovereign Holding (SSH) stood at 6.9% in 2019, 0.7 percentage points above the target. The goal was exceeded despite significant changes in the SSH portfolio.

"After the sale of banks, the SSH portfolio has seen a significant decrease in the share of the finance pillar and of important portfolio investments in favour of higher shares of strategic investments that usually generate lower returns due to the pursuit of the state's strategic goals," the SHH wrote in its report for 2019, which was sent to parliament on Friday.

According to the state asset custodian, the amount of dividends for 2019 will be clear at the end of the year, after decisions on dividends have been made by the insurance companies in the SSH's portfolio.

Companies managed by the SSH remained a very important employer, with the total workforce exceeding 71,000 last year.

The economic consequences of the crisis are meanwhile already starting to show with many companies in the second half of this year, which will lead to lower dividends in 2021 and lower return on equity this year.

"The sectors affected the most are industry, transport, logistics and tourism, as well others but to a lesser degree," the SSH wrote.

It however stressed that the effectiveness of these companies, managing key infrastructure and public services, has been demonstrated in this period, as undisrupted operations were secured consistently.

The crisis is affecting certain strategic companies that are facing additional investment in pursuit of sustainable development goals. While dividend policy adjustments have been made for energy companies, this will not be enough for meeting Slovenia's development needs, the SSH said, while adding high investment pursuing a green transformation would also be needed in the transport sector.

It argued that "the dividend proceeds from strategic companies in these sectors, due to the reasons listed as well as because of their basic goals, will no be able to solve Slovenia's demographic challenge".

According to the SSH, these companies will contribute the most to general prosperity by successfully and effectively transforming their operations in the direction of sustainability, by increasing productivity and added value through a strengthening of innovation and by effectively executing their role.

The SSH said that more than 10 major capital investments had been sold since 2013. The total value of the proceeds, including smaller sales, amounted to EUR 1.657 billion. No major privatisation has been scheduled for this year.

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