Financial competitiveness analysis in the Hungarian dairy industry

Rózsa, Andrea – Tálas, Dorisz

Keywords: dairy industry, competitiveness, financial position, working capital management, long-term growth

The main aim of our study was to analyse the time-series change of competitiveness based on financial position in the Hungarian dairy industry, considering the leading manufacturing companies. The study shows the national economic significance of the sector based on the current statistical data and the professional literature of this field. Firstly, high level of revenue concentration was shown during the last three years, confirming the results of earlier studies. Consequently, a strong competitive situation among a few competitors was realised. Those corporations included in the research sample had three common features: high amount of equity, high amount of revenue and a diversified product structure. The methodological background was created by the combination of the scientific definition of competitiveness at company level with relevant financial data and indicators. In association with similar domestic and international studies, comparative financial analysis of competitors was achieved concerning a four year period (2008-2011), and the change of the financial position was tested by a self-created indicator system at both the company and sector level. Liquidity based on balance sheets and cash flow statements, working capital processes (changing of turnover ratios and cash conversion cycles) and profitability were analysed. As the most important result of our research, it was shown that, in order to sustain a competitive position, companies in the study continuously had improved the efficiency of working capital processes. Moreover, based on our research method it was substantiated that there is a Hungarian owned competitor in the sample that has outstanding financial condition and performance; consequently, it has a significant position in the domestic competitive environment. According to the results of the research, this company has an opportunity to improve further its market position, market share and competitiveness in the future. Finally, by applying the created financial indicator system, important characteristics and reasons were identified concerning the change and the composition of the capital structure, the low level of technological improvements, and unfavourable profitability process of the competitors.

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