First of all, Mr. Sucha, could you give us a brief historical background about Zapadoceska energetika?
Zapadoceska energetika has been a dominant energy distributor and supplier in West Bohemia for 80 years. It evolved from few private companies that were joined together.
After the World War II, as you know, there was an extensive process of state taking all the properties into its ownership. So we became part of some large companies, e.g. most recently we were part of Ceske energeticke zavody in Prague (the Czech energy company). Right after the changes in the Czech Republic in 1989, there was a division between the distribution and the production parts in the energy field. Now the main producer is CEZ and energy distribution is provided by 8 independent distribution companies. Since January 1994 our company, originally a state enterprise, has became a joint stock company, as well as gradually and partially privatized.
Who are precisely the shareholders?
Our main shareholder at the moment is still the state, which owes through the National Property Fund little over 48%. Other very important shareholders are a German company Bayernwerk AG by about 36%, an Austrian company Energie AG by 11%, and the city of Plzen by 2%.
Our readers are businessmen and they like figures, could you give us a brief overview of your financial results of 1999?
The turnover considering the sales of energy is slightly increasing and has been increasing for past 3 years. There is an increase in turnover considering the financial operations. Our net profit for 1999 is approximately 490 million Czech crowns, which is 33% more compared to the previous year. In our country there is an ongoing rebalancing of prices and as you know, and so there is a certain increase of household prices. Of course there is also a certain stagnation, as may be a decrease in energy demand of household clients in the near future. In our region, there has been an increase in the field of entrepreneurs, which I think is due to the fact that our region is situated at the German border. We could be facing also a beginning of certain livening up of the business environment in the Czech Republic or at least in our region.
Is it caused by a more favorable investment climate in this region?
Yes, it is. On the other hand there was an increase, as I have mentioned, there is a lot of new small enterprises, especially those with German capital. These enterprises are being founded mainly just by the border, which used to be completely closed. The construction of the highway to Germany has its influence as well and also I think that it is the politics of the city of Plzen, which is very successful in attracting new foreign investors to industrial zone Borská pole.
On the other hand, since the joint stock company was established you also implemented a new investment policies in order to improve the operation and to reach new customers with a new marketing strategy, could you elaborate this?
Of course we are trying to make our company the best among the energy companies
in the Czech Republic. We represent 6.5% of all the sales within the Czech Republic. We are the second smallest company among those eight. But I think that the differences are getting smaller and smaller because e. g. the biggest markets around Ostrava or in Northern Bohemia are going down while our potentials are going up.
Our main aim is to be prepared for the changes in the energy industry because we know that the energy market is liberalized within Europe at present. And since the Czech Republic is going to enter EU, we will have to be in compliance with all the conditions and regulations. Talking about all the changes: we spent a lot of time in 1998 and-99 on the restructuralization program with the help of consultancy firm McKinsey. Changes are in the organization with few managerial levels, in support of financial management, as well as we work in controlling programs, measuring every single department and we have standards for development, construction, operation also for our customer services.
What have you implemented in order to be closer to your customers and to reach new clients?
We built up new business offices, we improved our
customer system, we established a call center for
our clients, we have sales agents, which are completely
new positions, we have independent marketing department,
and we also have a person in our management, who
has experience in free energy market. |
What have been the results so far after you have implemented this new strategy?
I can hardly say that I could measure the results on our sales because practically every person that is consuming electricity in this region is our client. Despite all the changes we still more or less own the monopoly. There is a new energy law in Parliament already and this situation should change within next two years. Well, after that actual results could be measured.
Talking about the future and maybe more about the privatization, since the government decided to speed up the privatization process of all those public activities, I would like to know your opinion about the privatization of your company? A time schedule?
I think that in first half of this year the government will make the final decision and a certain schedule for the privatization of the energy companies in the Czech Republic. But the actual process will take certain amount of time. First we will have to choose some company to help. I think that the decision to whom the remaining state owned shares will be sold will not be made until the end of this year.
Do you expect one of your shareholder to increase the participation on the company, and on the other hand, are you open also to new partners?
I can say only what I have heard. The company Bayernwerk has expressed openly the interest to get the majority hold of our company. Depends on the way of the privatization and certain criteria that will be set up for it. Theoretically it might enable somebody completely new to take a part of our shares but also to win the competition.
Since in our opinion all those public activities are very important business opportunities for foreign investors, in which areas of your activities are you interested to attract some investments?
Considering our company, I think that at the moment we have got enough possibilities and contacts to get know-how for ourselves. Also we do not suffer from the lack of capital, we even have less projects than capital. If we wanted to expand to some new fields, we would be interested in a partner, who would come and say: "I want this and that, I know this and that and I need your company because you are a stable and credible company, you are familiar with business environment in the Czech Republic and you know the region very well." Practically this would mean e. g. a construction of another energy plant. But it is not a good example because we do have energy enough. We are looking for new opportunities in other fields, e. g. retail of appliances, finance services, water, we have a sophisticated IT and a well developing telecommunication section.
Then of course there is an other answer for the question, which is whether we are interested in the investors coming into the region, and it is: of course, yes. Every investor that comes to the region will become our client. So I would like to use this opportunity and say that the conditions here are excellent, our distribution network and our supplies are reliable, completely comparable with all the standards of Europe. Our prices for entrepreneurs are convenient, too, and they will not be increasing. Not a long time ago the company "NEMAK" from Mexico decided to build up a factory for engine heads.
We also came to interview you as a businessman, could you give us a brief background about your own professional experience?
I worked in an energy field for almost all of my professional life. I studied at the technical university, and I went through different technical positions in all fields. My last position was the technical director of the company.
What has been the achievement you are most proud of since you have became the chairman of Zapadoceska energetika?
I think I should not speak about the success of being in this position, because I have been in this position for a half of a year. I think that the biggest achievement would become true if the company had such a good name as it has now, even after three years of the complete liberalization of the market.
As a final issue Mr. Sucha, what would be the final message to our readers?
My own personal message to the Forbes Global magazine readers would be that if they still have not been in West Bohemia they should come now. Nowadays it is the right destination for business people, visitors and tourists as well. |
Zapadoceska Energetika, a.s.