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Doprastav rides government's highway plan to profits

The government's ambitious highway construction program has put Doprastav managers on the road to success. Leading the pack of Slovak highway construction companies, Doprastav has won contracts on about two thirds of highways already under construction or about to be started.
In 1997, the highway program dominated the company's construction activities. Of the company's total construction output, over 83% came from highway construction.


Cashing the check. Profiting from Prime Minister Vladimír Mečiar's (left) highway plan, construction workers make 25% more than average Slovaks.
TASR

The government's ambitious highway construction program has put Doprastav managers on the road to success. Leading the pack of Slovak highway construction companies, Doprastav has won contracts on about two thirds of highways already under construction or about to be started.

In 1997, the highway program dominated the company's construction activities. Of the company's total construction output, over 83% came from highway construction.

Doprastav posted audited net profits of 268.7 million Sk ($7.7 million) in 1997, a nearly 44% improvement over 186.9 million in 1996. The company's revenues almost doubled last year, totalling 8.17 billion Sk ($233 million).

According to Ivan Šesták, Doprastav's Director General, the achieved results stem from "investments into machinery equipment and technology, their uninterrupted utilization and the high professionalism of [our] workers at all levels," as he wrote in company's annual report 1997.

Doprastav's good fortune started with its privatization, which began in January 1994 and was completed by April 1995. The National Property Fund, the state privatization agency, sold a 51% stake in Doprastav to a joint stock company owned by employees, DOAS a.s., raising their overall stake to 61.4%.

"We had to adapt to completely different conditions," said Pavel Obenau, Šesták's assistant, adding that "in state-owned companies, workers were losing their motivation, mostly because of salaries. This has changed since 1994."

Besides increasing its workforce by 11%, Doprastav was financially sound enough to raise wages last year. The average monthly salary of company employees in 1997 was more than 12,400 Sk ($360), almost 25% higher than the average Slovak salary, which was 9,369 Sk ($272) at the end of 1997.

Favorable results enabled the company in 1996 to pay a dividend of 50 Sk per share, or 5% of the nominal value. But the annual shareholders meeting (AGM) on April 15, 1998 decided that Doprastav would pay an even higher dividend.

"The AGM decided on payment of a 7.5 percent dividend from a 1,000 crown nominal share," said Ján Zarecký, the head of the company's financial department.

Zarecký pointed out that the higher salaries and increased dividends had been made possible by the company's success in winning tenders for building three more stretches of the country's highway network. Doprastav faced strong competition for the contracts from Váhostav and Hydrostav, two other major Slovak construction companies.

According to Ján Mikolaj, Director General of the Slovak Highway and Road Authority (SSC), "the most important thing [in winning a tender] is price. This is 70% of the battle. The rest is the company's reputation. All of last year's tenders were awarded on the basis of the cheapest offer. This is because Doprastav, Váhostav and Hydrostav are basically at the same level."

Last year was the most successful in Doprastav's 45-year existence, and company officials have reiterated that cementing their position in the highway network program is a top priority. Having already won two contracts this year, Doprastav has set its sights on many more major tenders.

However, in August 1998, Doprastav will face perhaps the most difficult task in its history - the completion of the western Slovakia highway section, a home stretch over 45 kilometers in length. Obenau explained that only one side of the highway will be ready, but that even so, users will be able to drive non-stop from Bratislava to a point about 40 kilometers short of Žilina. "I am convinced the section will be finished on time, no doubt about it," Obenau added.

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