Eltodo can respond to market developments

Leaders Magazine | June 12, 2011 | 0 Comments

The Eltodo Group is one of the leading companies in the Czech electrical industry. Founded in 1991, it has grown rapidly by expanding the portfolio of its activities through its own development and acquisitions within its field of business. Nowadays the Eltodo Group is a supplier of complete applications for electrical power engineering and light current engineering.

Initially focused on traditional businesses such as power engineering, transport and public lighting, Eltodo has increasingly become engaged in challenging new businesses such as telecommunications, development projects and intelligent building management systems. Eltodo has sufficient financial and human resources for the implementation of complete projects ranging from design, manufacture, installation, and commissioning, right through to follow-up maintenance services.

The Czech Republic and Slovakia are Eltodo Group’s major markets, with an increasing share of contracts and activities located within other European markets. The group has business activities in Bulgaria, Russia, Ukraine and some other countries.

In terms of sales, the year 2010 was a very successful one for Eltodo. One of the reasons for this success was a completion of major state government contracts in transportation, in which the group has participated. We asked Ing. Libor Hájek, the president of the Eltodo group, whether he expects this year and the subsequent years to be equally successful.

You are right that in terms of profits, last year has been the most successful year so far in Eltodo´s twenty year history. A large share of this was realised thanks to the transport contracts that you have mentioned, such as the highway bypass around Prague, in which Eltodo participated. But we have also been successful in other areas. In Prague alone, for example, we have built fifty new crossroads, we have obtained two major contracts in the delegated management of public lighting for the cities Teplice and Český Tešín, and we have also commenced a production of signposts and variable traffic signs in Bystřany. Part of the investment in this production was covered by a grant from the European Union.

And what are the prospects for the group this year?

Last year’s success will not probably happen again in the foreseeable future, as it is expected that the extensive government investment into transport infrastructure will slow down now for at least three to four years. This will reduce the income of Eltodo group in this area. Moreover, even if other construction begins planning this year, construction would not start sooner than three years from now. Therefore, in the long term, I expect that the state will invest less in large construction than it did in the past few years.

Do you expect a decline in demand in other areas of Eltodo´s activity?

The economic crisis hit Eltodo with a certain lag, and is manifested by fewer new contracts in all areas, which is, logically, reflected in a greater competition. An example might be in the area of public lighting. Now not only the state, but also the cities need to save. The concept of delegated management of public lighting, which Eltodo brought to the Czech market, will continue to interest them; however we expect the cities and the state to try to significantly depress the prices for this particular service. This is an opportunity for our competition, but for which, I believe, we are well prepared.

How will Eltodo respond to this development?

We have been operating here for twenty years, so we know how to react to market changes. We have prepared a set of measures. In transport, we will try to win contracts in other territories, such as in Slovakia, where large investments in transport infrastructure are still on schedule, or regionally - for example in northern Moravia.

Will it be enough? Would you not consider extending the group’s activities in other fields?

Focusing on other regions is in itself, of course, not enough. We will also strive to strengthen our position in areas where investment activity should remain high. This mainly concerns energy and industry. We will therefore have to compete more often for contracts from the private sector. The risk that a customer will not, for various reasons, pay you is greater here than it the case of state contracts, however this is a direction in which we have to go. For example, this applies to the administration or supply of public lighting for industrial sites. But to be sure - transport will continue to bring contracts. This year it seems we will get fully started with work and supplies for the Prague Blanka tunnel, and I also expect that we will participate in projects financed by the Transport Operational Programme, and that increasing levels of traffic will necessitate a new, technologically advanced procurement management. And last but not least, we must work on improving ourselves. We cannot afford to reject any order, and so we will also focus on smaller contracts, and we must place even greater emphasis on quality, productivity, timeliness and maintaining good relationships with existing clients.

Were you - or will you be - forced to reduce your staff numbers, like many other large companies in relation to the economic downturn?

There were no major layoffs in Eltodo, and I do not expect any in the future. Rather, we are even more focused on improving the internal functioning of the group, the unification process, which entails cutting costs and minimizing errors and risks in all of our activities. Through effective management, we must seek to utilize our maximum potential. Laying off skilled, experienced people is in my opinion a short sighted recipe.

How soon do you expect these measures to take effect?

We must achieve results this year; some measures will however take effect only on a long term horizon. Personally I am optimistic, since the competitiveness of Eltodo keeps growing. As the quality of our employees grows, our potential and capabilities all grow.

Is there any significance of the year 2011 for Eltodo?

It is the year when Eltodo celebrates twenty years of its existence. I think this is a good opportunity for us to reflect on Eltodo´s long term perspective. Together with my closest colleagues, we have already embarked upon a development strategy for Eltodo´s future. We want to define what types of new services and technologies will be most interesting in the future, and proceed in a manner so that we are ready when demand arises.