133 2005ss elisagaleotti2

Information about 133 2005ss elisagaleotti2

Published on January 11, 2008

Author: Maurizio

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Slide1:  2.6 An economical analysis of the Glass Companies by Privatization Method Now I will compare the companies privatized with different methods to the sectoral data of sector 26.1. The sectoral data provided from the CSO concern only the 1997-2003 period. In this comparison I modify some indeces so that all company indexes that are economically better than the sectorial average appear outside from the sectoral average circle in the spider-plot. Profitability indexes A1 ROE (%) (Return on equity = Net income (after interest and taxes) / Average shareholders’ equity) A2 ROS (%) (Return on sales = net income (before interest and tax) / total sales) A3 Nett ROA (%) (Net return on assets = Net operating income (after tax) / Average total assets) A4 Net profit margin (%) (Net profit margin = Net operating income (after tax) / sales Financial leverage indexes B1 Equity-debt ratio (instead of using the Debt-equity ratio (calculated as Total liabilities/Total equity), I use a index that stresses the role of equity, i.e. the Equity-debt ratio (calculated as Total equity /Total liabilities). B2 Assets-Debt ratio (instead of using the Debt ratio I use an index that stress the amount of assets compared to the total debts. Asset-Debt ratio = Total assets (liabilities + total equity) / Total debts (current +long term debts) This ratio indicates what proportion of assets a company has relative to its debt B3 Corrected equity multiplier The index I use to evaluate the proportion of equity and assets is Corrected Equity multiplier = Total equity / Total assets The higher the ratio is, the less the company is relying on debt to finance its asset base. B4 Equity turnover (capital turnover) Capital turnover = Total operating revenues (sales) / Average shareholders’ equity   Capital turnover is used to calculate the rate of return on common equity, and is a measure of how well a company uses its stockholders' equity to generate revenue. The higher the ratio is, the more efficiently a company is using its capital. Activity C1 Total asset turnover Total asset turnover = total operating revenues / average total assets This is a measure of how well assets are being used to produce revenue. Asset turnover is a crude measure because it is maximized by using older assets because their accounting value is lower than newer assets. C2 Average receivables turnover Receivables turnover = total operating revenues / net outstanding average accounts receivables This number indicates how quickly customers are paying the company. The greater the number of times receivables turn over during the year, the shorter the time between sales and cash collection. C3 Inventory turnover Inventory turnover = Total sales / Inventory A low turnover implies poor sales and, therefore, excess inventory. 1. Crystalex a.s.:  1. Crystalex a.s. Crystalex a.s. Events: 1.1.1994: the company was converted to Crystalex a.s. 1996 Coupon privatization: 20% of shares in hands of IFs 21.5.1997: the government sold 73% of the shares (still in the hands of NPF) to a Czech company Companies privatized with voucher method Slide3:  Comments on the figures for Crystalex a.s.: Negative profitability indeces in 1997 and privatization in the same year After privatization better economic performance but again crisis since 2000 In comparison with sectoral data: Lower profitability indeces, similar results for financial indeces 2. Saint-Gobain Vertex, a.s. :  2. Saint-Gobain Vertex, a.s. Saint-Gobain Vertex a.s. Events: March 1992: coupon privatization 31.10.1998: sale to foreign investor Slide5:  Comments on the figures for Saint-Gobain Vertex a.s. : Decreasing profitability indeces but still positive after 1996 and strong increase after the privatization; small decline in profitability after 2001 but recover and again increasing trend in 2003. In comparison with sectoral data: Higher profitability indeces, similar or above the average results for financial indeces and activity indeces Slide6:  3. Sklárny Kavalier a.s. Sklárny Kavalier a.s. Events: 1.12.1990: the glassworks become a joint-stock company 1992: Coupon privatization 1 wave (IFs had 67.84% of ownership in 1993) 31.12.1995 Investment funds owned 73.34% of shares 9.9.1998: A Czech company buys a share of 23.38% and increases it quickly 31.12.98: Bohemia Crystalex Trading a.s. a.s. has 68.83%, in 2000 has 73.55%, in 2002 has 75.85% Slide7:  Comments on the figures for Sklárny Kavalier a.s. : Decreasing profitability indeces since 1995 (when Ifs owned 73.34% of the capital) with the negative peak in 1998 (year when a company bought a high share and increased it quickly); positive but low profitability indeces since 2000. In comparison with sectoral data: Lower results for profitability, similar results for financial indeces Slide8:  4. Sklo Bohemia a.s. Sklo Bohemia a.s. Events: 1.1.1994: Sklo Bohemia becomes joint-stock company Coupon privatization (2nd wave): on 31.12.1995 IFs had 51.5% of shares, the Municipality of Světlá nad Sázavou 5.1%, RIF ČR 3% Since 18.11.98 Bohemia Crystalex Trading a.s. a.s. has a share of more than 50% Slide9:  Comments on the figures for Sklo Bohemia a.s.: Strong decline of profitability indeces since 1994 with a negative peak in 1997 and since then (when a Czech company acquired a majority share in the company) positive but low profitability indeces. In comparison with sectoral data: Lower profitability indeces (only in 1999 company’s results were similar), similar results for financial indeces and activity indeces Companies privatized with direct sale to domestic companies 1. Sklárny Moravia a.s. :  Companies privatized with direct sale to domestic companies 1. Sklárny Moravia a.s. Sklarný Moravia a.s. Events: 1991 Moravia Úsobrno a.s. is a daughter company of the holding Moravia Glass 26.8.1996: Moravia Glass a.s.sold the company to individual persons and to a limited partnership (komanditní společnost Palírna u Zeleného stromu - Starorežná Prostějov) : the company changed name and becomes Sklarny Moravia a.s. 30.9.1998: an individual shareholder sold his share (33%) to another shareholder, Palírna u Zeleného stromu - Starorežná Prostějov that has since then 67% of shares Slide11:  Comments on the figures for Sklarny Moravia a.s.: Decreasing profitability indeces since 1997 with negative peak in 1999 and since then recover with positive profitability indeces Employment with irregular trend but this is quite a small company compared to other companies privatized In comparison with sectoral data: Higher profitability indeces in 1997,but in successive years lower than the sectoral average; similar results for financial indeces and activities indeces Slide12:  2. Skleněná Bižuterie, a.s., Skleněná bižuterie, a.s. Events: 31.8.1994 Transformation in joint-stock company FNM has 100% of shares until 29.3.2002 when the company is privatized with direct sale to the company Coralex s.r.o. Slide13:  Comments on the figures for Skleněná bižuterie, a.s.: Negative profitability indeces in 1995 and 1996, since then increasing zigzag trend (with negative indeces again in 1998 and since then positive profitability indeces) In comparison with sectoral data: Higher profitability indeces in 1997, lower in 1998, after slightly lower, higher in 2002 and 2003 i.e. since privatization Higher results for financial indeces and similar or higher results for activities indeces Slide14:  3. Union Lesní Brána, a.s Union Lesní Brána, a.s. Events: 20.12.1990: Founded as daughter company of Sklo Union a.s. Sklo Union a.s. had 74.12% of shares until 14.5.1997 Harvardský průmyslový holding, a. s. - v likvidaci had 74.12% of shares since 14.5.1997 11.10.2002: The court ordered execution of company's property 17.3.2003: DAVENTREE RESOURCES LIMITED organizational branch in Czech Rep. founded by Harvardský průmyslový holding, a. s. 13.5.2004: the only shareholder is DAVENTREE RESOURCES LIMITED Belize City (Central America) ROS % is negative in 1997 but close to zero because the company had very high turnover (sales) and a low (in absolute value) net operating result before taxes. The same happened in 2001. Slide15:  Comments on the figures for Union Lesní Brána, a.s.: Extremely negative profitability indeces with peaks in 1997 and 2001; in 2003 the company has still negative profitability indeces In comparison with sectoral data: Lower profitability indeces, financial indeces - with an aggravation trend – are worse than the sectoral average since 1999; activities indeces similar to the average 1. Estrela a.s. :  1. Estrela a.s. Estrela a.s. Events: 31.12.1990 - Foundation of Estrela a.s. 1992 - Privatization with direct sale to management and workers 11.6.1999 - The company declares bankrupt Note to the figure Equity becomes negative in 1997 (and exactly equity is = - 13251 th. CZK) and this explains why debt-equity ratio and equity multiplier index are negative in this year Companies privatized with direct sale to individuals Comments on the figures for Estrela a.s.: Profitability indeces experienced strong worsening since 1995: the company is not able to overcome the sectoral crisis in 1997 In comparison with sectoral data: Last data are available for 1997: this year Nett ROA% was –19.20, ROS% –109.14, ROE% -203.74, Nett Profit Margin –153.49 2. Jihlavské sklárny Bohemia a.s :  2. Jihlavské sklárny Bohemia a.s Jihlavské Sklárny Bohemia a.s. Events: 1.12.1993: transformation in joint-stock company and privatization with direct sale to management and workers, through the company Bohemia Crystal Jihlava a.s. 7.9.1999: Limited partnership of the Charles Investment Partners L.P. (owned by Winslow Partners investment fund, Washington) 22.7.2002: The company declares bankrupt 1.2.2003: Burson Properties a.s. buys the company Comments on the figures for J. S. B. a.s.: Worsening of profitability and of financial indeces after 1997 In comparison with sectoral data: Higher profitability indeces in 1997 but rapid deterioration; lower results for financial indeces (except B4). 3. Vitrum, spol. s.r.o. :  3. Vitrum, spol. s.r.o. Vitrum spol. s.r.o. Events: 10.6.1992 - Foundation of VITRUM spol. s.r.o. by Bedřich Bláha, Ing. Martin Sopr, PRECIS spol. s.r.o. and Ing. Petr Kratký 1.9.1993 - Privatization of Glassworks Janov with direct sale to the company VITRUM 20.9.1994 - Owners are Mr. Sopr, Mr. Mikšíček Ivan, Mr. Kratký, Mr. Hlubůček, CAPELLA spol. s r.o., JUDr. Mikšíček 8.6.1995 - Mr. Sopr had 32.5% of the capital, Mr. Mikšíček Ivan 25%, Mr. Kratký 17.5%, Mr. Hlubůček 12.5%, Ing. Holejšovský 12.5% Since 19.8.1996 owners are Mr. Sopr (45%), Mr. Kratký (30%), Mr. Hlubůček (12.5%), Mr. Holejšovský (12.5%) Note to the figure 1: Equity is negative in 1994, 1995 and 1996. This is why I didn't calculate the ROE %. In 1998 ROE% is extremely high because average equity in the year is lower than profit. Note to the figure 2: ROA % in 1996 is negative because Net operating income after tax is negative, ROS % is positive because Net income before interest and tax is positive Notes to the figure: Equity is negative in 1994, 1995 and 1996. This is why debt equity and equity multiplier are negative in these years. Debt ratio is greater than 1 in 1994, 1995 and 1996. This shows that the company relied more on debt than assets. In 1997 equity multiplier has a value of 47,95 because total equity, that was negative in the previous years, has still a very low value compared to total assets (in 1997 total assets = 24600 th. CZK and total equity = 513 th. CZK) In 1998 and in the following years the equity muliplier index slowly decreases and the company equity increases (while the asset base remains more or less stable): this shows that, over time, the company relies less on debt to finance its asset base. The debt-equity ratio has a trend similar to the equity multiplier and it confirms the fact that over time the company tries to finance its operation less with borrowed money and more with own capital; still a debt-equity ratio always greater than 1 shows that the firm always relies more on debt than on own capital. Comments on the figures for Vitrum spol. s.r.o.: Difficult financial condition after privatization : higher debts than assets, a negative equity until 1996. The financial situation of the company improves after 1998, with a higher concentration of the property. ROS always positive, Nett ROA% negative in 1996 and in 2002 In comparison with sectoral data: Higher profitability indeces from 1997 to 1999, lower after 1999; B4 is higher than the sectoral average because the company’s equity is very low; other results for financial indeces are lower; higher results for activities indeces Slide20:  Companies privatized with joint venture with foreign investors 1. Avirunion, a.s Avirunion a.s. Events: 1.1.1991: OBALUNION a.s. founded as subsidiary of SKLO UNION a.s. 1.9.1992 Avirunion a.s. established by the joint-venture of OBALUNION and a foreign investor, an Italian company AVIR Finanziaria S.p.A., Asti 27.9.1996: The foreign investor buys all shares At the end of 1996 Avirunion becomes member of OWENS-ILLINOIS Group, Toledo, Ohio (USA). Note: Nett ROA and ROE are negative in 1994, in 1997 and in 1998 while ROS is positive because ROA and ROE are calculated using “Net profit after tax and extraordinary items”, while ROS is calculated using “Net profit before taxes”. Slide21:  Comments on the figures for Avirunion a.s.: Profitability indeces have a zigzag path: they are always positive except in 2000 and slightly below the zero in 2002. Employment reduction is drastic: the company had 1370 employees in 1993 and 607 in 1997; after 1997 the reduction is minimal. In comparison with sectoral data: Profitability indeces are much higher than the sectoral average in 1997 and 1998 but they deteriorate drasticly since 1998, especially around 2000 and 2002. Financial and activity indeces are similar to the sectoral data, except C2. Slide22:  2. Vetropack Moravia Glass a.s. VETROPACK MORAVIA GLASS a.s.  Events: 1.12.1990 - The national corporation transformed into a joint-stock company MORAVIA GLASS a.s. 22.10.1991 - Joint-venture with foreign investor: Swiss Vetropack has 51% of shares, Moravia Glass 49%. VETROPACK MORAVIA GLASS a.s. is founded 31.7.1997 – Vetropack Holding AG bought from Moravia Glass a.s. all the shares. Since than foreign investor has 100% of the shares Slide23:  Comments on the figures for Vetropack Moravia Glass a.s.: Profitability indeces have two negative peaks: one in 1994 (previous data are not available) and one in 1998; since 1999 profitability indeces are positive and increasing In comparison with sectoral data: Profitability indeces are lower from 1997 to 1999, similar in 2000, lower in 2001 and finally better in 2002 and 2003 Results for financial indeces are lower until 2000 (except B4), activities indeces are similar or better 3. Glaverbel Czech, a.s. :  3. Glaverbel Czech, a.s. Glaverbel Czech a.s. Events: 1.10.1990 – The state enterprise Sklo Union became a joint-stock company. Glaverbel Czech was before the Flat Glass division of the state company Sklo Union. 28.12.1990 – Glavunion, a.s. was established with plants in Řetenice, Chudeřice, Kryry, Duchcov, Poyorka, Sokolov, Oloví, Chodov and Hranice as a subsidiary of Sklo Union a.s. 22.3.1991- Joint-venture with Belgian company Glaverbel S.A.: Glaverbel bought a stake of 40% in Glavunion's capital. In June 1991 the Belgian Glaverbel Group increased its share in Glavunion's capital to 51% and in April 1992 to 67%. In June 1991 the remaining share were held by Sklo Union (29%) and by the company Personnel (4%). April 1992 -The foreign investor had 67% of shares 20.12.2001 – the foreign investor bought all the shares (announcement by Asahi Glass Co., Ltd, owner of Glaverbel S.A., of a stock buyout and the company’s subsequent withdrawal from the Euronext Brussels stock exchange: Asahi Glass Co., Ltd. bought up all the shares in Glaverbel and became the 100% owner of the group) Slide25:  Comments on the figures for Glaverbel Czech a.s.: Profitability indeces were negative in 1993, positive and increasing since 1994; after 2001 they started a decreasing trend, even if they remain positive The reduction in employment is drastic: from 3354 employees in 1992, the company had 2515 employees in 1996, 1469 in 1997 and 1194 in 2003. More than one thousand employees were laid off in 1997. In comparison with sectoral data: Profitability indeces always higher, except in2003, financial indeces around the average until 1998, then slightly worse; activities indeces better except in 2003 Companies privatized with restitution with payment :  Companies privatized with restitution with payment 1. BERANEK, spol. s r. o Beránek spol. s.r.o. Events: 1992 - Privatization of the glasswork with restitution to the owner with payment Slide27:  Comments on the figures for Beránek spol. s.r.o.: Only data since 1995 available: profitability indeces always positive from 1995 to 2000, except in 1996, when they were slightly negative. Since the sectoral crisis in 2001 they are negative and strongly decreasing In comparison with sectoral data: Profitability indeces were higher than the average from 1997 to 1998, similar in 1999 and in 2002 and lower in the successive years Financial indeces were better than the average (except B4); activities indeces always better or similar Slide28:  2. Rückl Crystal a.s, Rückl Crystal a.s. Events: 1.6.1992: direct sale of the glassworks Nižbor to the ex owner Rückl: Antonín Rückl a synové s.r.o. is founded 30.9.1998: Antonín Rückl a synové s.r.o. transformed into Rückl Crystal a.s. Slide29:  Comments on the figures for Rückl Crystal a.s.: Only data after 1998 available: profitability indeces positive until 2001, when they start a strong decrease and become extremely negative in the last two years. In comparison with sectoral data: Profitability indeces lower than the average from 1999 to 2003, financial indeces similar or worse than the average Slide30:  3.CONCLUSIONS Most of the companies analyzed in my sample (in this presentation only half of them are presented) have experienced two strong crises: one in 1997, one since 2001. These sectoral crises have had negative effects on the economic performance of many glass companies as the profitability indeces show. Companies privatized with a foreign investor or bought successively by a foreign investor have shown better economic results in the long run, but have also had difficulties and negative profitability results in some periods. Better economic results can be explained also by the focus of foreign investors on companies in the industrial glass sectors. Companies privatized with restitution for which data are available show mixed results: one company, not shown here, J. Blažek Sklo Poděbrady s.r.o. went bankrupt and overcame it; other companies showed positive economic results after the privatization but negative in the long run. Companies privatized with sale to a domestic companies showed a good performance in the long-run if the owner was interested in the management of the company Companies privatized with voucher privatization experienced a concentration of ownership that allowed most of them to survive the economic crisis in 1997, even with very modest results. Some glass companies were bought or merged by the same company. The association or merging of glass companies could be seen as a effort to combine managerial skills and resources in order to face the sectoral difficulties. Companies privatized with sale to individuals had the worst performance: most of them are in bankrupt or in liquidation A comparison with sectoral data shows that most of the privatized glass companies, even with a foreign owner, have a poorer economic performance than the sectoral average. Since the sector 26.1 includes also new companies, this suggest that new companies have a better economic performance, since they do not have to restructure their companies as privatized companies do. Slide31:  4. LITERATURE Aspekt 1996 - “Sektorové analýzy ASPEKT – SKLO A KERAMIKA – LISTOPAD 1996“ Aspekt 1998 “Sektorové analýzy ASPEKT – SKLO A KERAMIKA – BŘEZEN 1998" Dahlquist, Magnus and Robertsson, Göran (2001), "Direct foreign ownership, institutional investors, and firm characteristics" in Journal of Financial Economics, Vol. 59, N. 3, pag. 413-440 Djankov Simeon and Hoekman, Bernard (1999), “Foreign Investments and Productivity Growth in Czech Enterprises”, Washington: The World Bank Development Research Group Trade – Policy Research Working Paper n. 2115 Frydman Roman, Cheryl Gray, Marek Hessel and Rapaczynski, Andrzej (1999) "When Does Privatization Works? The Impact of Private Ownership on Corporate Governance in the Transition Economies" in The Quarterly Journal of Economics, 114 (4): page 1154-1191 Hashi, Iraj (1998), "Mass privatization and Corporate Governance in Czech Governance" in Economic Analysis, Vol. 1, N. 2, pag. 163-187 Konings, Josef (2001) "The Effects of Direct Foreign Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies" in Economics of Transition, Vol. 9 (3), pp.619-633 Kornai, Janos (1980), Economics of shortage, North-Holland, Amsterdam Lízal Lubomír and Švejnar, Jan (2002) "Privatization Revisited: the Effects of Foreign and Domestic Owners on Corporate Performance", CERGE-EI Discussion Paper 89, Prague Mejstřík, Michal (1999), "The Restructuring after privatization in the Czech Republic" in Prague Economic Papers, n.3, pag. 233-260 Nellis, John (1999), "Time to Rethink Privatization in Transition Economies?", Washington, D.C.:,The World Bank – Discussion Paper n. 38 Pavlínek, Petr (2004) "Regional Development Implications of Foreign Direct Investment in Central Europe" in European Urban and Regional Studies, Vol. 11, Issue 1, pp. 47-70 Pohl Gerhard, Robert E. Anderson, Stijn Claessens and Djankov, Simeon (1997), "Privatization and Restructuring in Central and Eastern Europe", Washington, D.C., The World Bank – World Bank Technical Paper n. 368 Shleifer, Andrei and Robert W.,Vishny (1997), "A Survey of Corporate Governance" in The Journal of Finance, Vol. 52, Issue 2, pag. 737-783 Weiss Andrew and Nikitin, Georgiy (2004), "Foreign Portfolio Investment Improves Performance: Evidence from Czech Republic" in Topics in Economic Analysis & Policy, Vol. 4, Issue 1, Article 15 Worrall, D., Donnelly, T. and Morris, D. (2003) "Industrial restructuring: The role of FDI, Joint Ventures, acquisitions and technological transfer in Central Europe's automotive industry", in Kehal, H. (ed.) Foreign Direct Investment in Emerging Economies. Basingstoke: Palgrave Macmillan. Zingales Luigi (1997), "Corporate governance", NBER, Working paper n. 6309, Cambridge

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