More than half of the 69 industrial companies listed on the Bulgarian Stock Exchange have reported year-on-year declines in net profit...

More than half of the 69 industrial companies listed on the Bulgarian Stock Exchange have reported year-on-year declines in net profit for the first quarter of 2008, investor.bg reported on May 7.

A total of 40 companies reported lower profit, although 42 said their sales revenue went up, pointing out a trend for expenditures growing at a faster pace than revenues.

This trend confirms our own observations of the Bulgarian market, working for leading companies. Indeed most companies are confronted not only with increasing raw material and energy costs, but also with increasing human resource costs. The labor market is quite tense and it has become more and more difficult to find qualified employees for the salary level that used to be paid.

The solution is not only in increasing the salary level to retain the best employees. It is in increasing the productivity of the human resources. Indeed the productivity level in Bulgaria is still much lower than in Western Europe. It is not uncommon to find average productivity levels of 50% or less, which means that the employees are working productively only 4 hours per day. By increasing its productivity level to 75% in a first step, a company can quickly decrease its production costs and generate positive earnings again.

The reason for the low productivity level is not only that the production assets are old, but foremost that the management systems in place do not support a high productivity level. Key performance indicators, planning know-how and management expertise is all but missing.

We would be happy to support your company on its road to success. Do not hesitate to contact us.