To BALFIN Group – one of the largest groups in the country – 2020 marked a relatively satisfactory performance, considering an environment plagued by the pandemic.
Edlira Muka – the CEO of BALFIN Group – notes that the main contributors to the positive performance of the Group in 2020 were in the retail sectors in Albania, Kosovo, Bosnia and Herzegovina, North Macedonia and Montenegro, the real estate sector in Albania and Austria, as well as the performance of the banking sector.
She adds that, in 2021, BALFIN Group companies will realize approximately 115 million euros of investments.
How was the performance of the group companies in 2020? Which sectors did the Covid-19 pandemic affect more and which less (if you can provide real figures broken down by different sectors where you operate)?
2020 represented an unprecedented situation for all social, economic, political activities and especially for the health-care sector. Unlike previous crises, this one in particular was spread globally, and in a very short time affected each and every country.
Considering the pandemic, we can say that during 2020, BALFIN Group had a satisfactory performance. In 2020, the total turnover of the Group decreased by 5% compared to 2019, but in certain sectors, there was an increase.
The mining sector, despite the difficulties and the decline in turnover, performed better than in 2019 – this was a consequence of rising prices in international markets. The banking sector also performed better than the previous year and this came as a result of better management of the credit portfolio and the growth of said portfolio.
The retail sector performed better than in 2019 as well. At the beginning of the pandemic, countless logistical difficulties were encountered, but this didn’t last long, as our international partners also responded promptly. For BALFIN Group, this sector had a better performance thanks to the expansion of sale points, the increase of online purchases, along with the proper management of operating expenses.
The real estate sector performed better compared to 2019 as well. The 2019 earthquake and the 2020 pandemic led to an increased demand for new housing concepts, such as those developed by BALFIN Group in Austria and Albania.
If I had to summarise the main contributors to the positive performance of the Group during 2020, I would highlight: the retail sector in Albania, Kosovo, Bosnia and Herzegovina, North Macedonia, and Montenegro; the real estate sector in Albania and Austria, as well as the banking sector.
The pandemic and the measures to stop it from further spreading – such as the quarantine, found businesses “unprepared”. What was your reaction to the situation?
As we all witnessed, the emergency emerging from the Covid-19 pandemic caught everyone unprepared – even international health-care institutions. The same applied to us and the entire global business community. However, I cannot say that we did not have plenty of instruments at our disposal.
As soon as it assessed that the pandemic would affect Albania as well, we activated the Emergency Team. This is a structure with well-defined positions in place to manage emergency cases, consisting of members of BALFIN Group’s Board of Directors, along with other members – according to the expertise of important areas. One of the first decisions taken was to adopt a series of measures that would ensure the health of our employees, customers, partners, and imminent communities.
The Group’s internal physicians, in all the countries where we operate, were engaged from the very beginning, and played an important role by advising employees and their families, but also by ensuring compliance with measures undertaken to prevent the spread of the virus. In addition to taking care of the health of all employees of the group companies which count to approximately 6000, we have ensured the smooth running and continuity of business operations ingroup companies.
As an investment group operating in several markets, including the European Union market, in its work practices, BALFIN Group regularly manages liquidity, where even in normal situations, we always create and maintain reserves for emergencies. Due to the crisis some sectors faced, the investment program was slower and had some delays, which did not affect the overall performance of the Group.
On the other hand, during this period we identified and approved new investment projects, which in the years to come will benefit the Group and the countries where they will be implemented.
Looking back in time, how did the pandemic change the concept of risk management, remote work, etc., for your group?
By working with international partners, BALFIN Group itself, as well as the Group-owned companies, have long built a good experience of remote work management. It has been several years since we created a platform for conducting online meetings or sharing information and documents from anywhere. As we operate in seven countries, this came as a necessity long ago.
This existing infrastructure made it a little easier for us to adapt to working from home, even though most of our employees prefer working from the office.
In terms of risk management, this is a long-standing, well-structured functional practice at BALFIN Group. The pandemic also helped us spot new areas of improvement, especially in terms of better anticipating situations similar to the one we experienced in 2020.
To what extent did you make use of this situation to purchase smaller businesses or diversify the portfolio?
We are an investment group on the constant look out for new opportunities in the regional market and beyond. The pandemic helped speed up some processes, as well as provided us with a new perspective on planned investments.
2020 was an important year for the retail sector, as despite the effects of the pandemic, we managed to expand the sales network, the stores of Group companies in Albania, Bosnia and Herzegovina, Kosovo, and Montenegro. In line with the expansion of the network, investment was carried out to improve customer service. We have also invested in improving our online stores, by offering shoppers everything found in the physical stores for their home, through online orders.
In 2020 we have identified and started the work for the materialisation of some investments in real estate development, in tourism or in the construction of residential areas, with a completely new concept for the market.
In addition to the above-mentioned investments, strengthening and better managing the current investment portfolio, and keeping the jobs positions intact so that none of the employees of the group companies would feel threatened in an otherwise very uncertain year, have been important to BALFIN Group.
Your group has expanded its investments in construction and tourism. How much potential do you see in these sectors?
It is correct that BALFIN Group’s portfolio has expanded in the real estate development and tourism sectors with new projects. In addition to Albania and North Macedonia, we have successfully approached Austria as well.
We have focused on the development of residential areas with an entirely new vision. We are building communities, neighbourhoods, with a very high standard infrastructure, recreational spaces, and every necessary service. This makes our projects easily recognizable and highly sought-after, especially for residential purposes, and also marks them as a safe investment. This is a compelling argument of success for all our projects in real estate development. We have implemented this vision in Albania, North Macedonia, and Austria with the same high standards, thus building a high trust in our customers.
Tourism remains a very important sector, especially in Albania, where there are opportunities to increase the standard of supply the country currently offers. One of the most note-worthy developments has been signing an agreement with one of the largest hotel groups in the world – “Accor”.
In cooperation with Accor, we are going to build a five-star hotel on the Albanian Riviera. “M Gallery” will be the first hotel of this standard in Albania. This is a significant agreement for Albania, as it is difficult to attract Accor-sized partners when there is still work to be done in improving public infrastructure.
Undertaking investments in tourism calls for special attention and requires road infrastructure, ports, airports, energy, and water supply, along with incentive schemes that are crucial for the development of this strategic sector in Albania. The identification and training of the workforce that will provide a high standard service, able to compete with other tourism alternatives in the region and Europe, is also a challenge
How has the speed of recovery been so far this year, and what is the expectation until the end of the year, according to the respective sectors where you operate?
Our expectations are positive, but everything will depend on the dynamics and developments of the upcoming months, specifically those related to the pandemic.
The diversification of the investment portfolio in different sectors helps to ensure a stable return on total investment for the Group, despite the international market fluctuations. In total, BALFIN Group companies will realize approximately 115 million euros of investments in 2021.
This fall (2021), one of the most prominent Group investments, “East Gate Mall” will be inaugurated in Skopje. This shopping centre marks the third one of its kind owned by BALFIN Group, after the undisputed success of TEG and QTU in Tirana. BALFIN Group is already one of the largest foreign investors in North Macedonia. In Tirana, work has already begun to expand the TEG shopping centre and several new internationally renowned brands will be approaching.
In the meantime, in 2021 we started investing in a new concept for the retail sector. We will build a “Retail Park” in Korça – a project that we will be replicated in other cities in Albania and North Macedonia, thus getting closer to the customer with all services and sales channels.
Additionally, in the retail sector, the expansion of the chain of stores has so fa, proceeded as forecasted, and the number of partners has increased. The chain of stores has increased throughout the Western Balkans, at a very high rate bringing us closer to the customers in more cities.
As mentioned earlier, in the field of tourism we are focused on bringing the first “M Gallery” hotel in the country, in cooperation with Accor Group. This hotel will be the first one to ever provide such standards in Albania.
Regarding investment in real estate development, another moment worthy of attention is the latest investment in Vienna, Austria. This marks the second investment in real estate development in Austria for BALFIN Group. Additionally, in Albania, several residential projects are being developed, inspired by a completely different and new philosophy.
Investments in the potential consolidation in the banking sector in Albania, as well as its expansion in the region is part of the Group’s strategy. Tirana Bank – part of the Group since 2019 – will continue to expand the number of branches, but also improve online services and solutions, and e-banking. Moreover, Tirana Bank will be present in Pristina, within 2021, with a representative office.
The mineral extraction and processing sector are somewhat penalized by the increase in the price of electricity. However, we are still optimistic, considering that the prices of ferro-nickel and ferro-chrome are rising in international markets. Therefore, we are proceeding with investments in this sector, increasing production, standards, working conditions and opening more job positions.
Considering the above, coupled with the professionalism and dedication of people at BALFIN, we are optimistic about our Group’s progress during 2021 – the markets and industries, as well as the countries we operate in.