KONČAR Group began its development a century ago as a small workshop and is now one of Croatia’s largest exporters and regional leader in the electrical industry and rolling stock products. Over the years, the company has supplied products and services in almost 130 markets, including more than 400,000 transformers of various types and construction of thousands of substations. KONČAR has built or revitalized a total of 375 hydropower plants across the globe, manufactured and refurbished 700 generators and manufactured and supplied more than 330 locomotives and 180 low-floor trams and trains. Operations based on own development, expertise of employees and a custom-made, unique approach to our customers is what has accompanied all of KONČAR’s transformations throughout history.
Easy Engineering: What are the main areas of activity of the company?
KONČAR: Our market niche is a more direct relationship with customers, where we have them as our partners, which is something that large corporations are not always able to provide. Individual customer and partner approach reflects our orientation to innovation and development of unique and complex products and services. In Croatia, in general, we have to consider our potential in the context of economies of scale. As a small economy, we are more robust when we focus on specific niches that can bring us significant added value. Producing complex solutions globally is not always the optimal approach and it is hard to achieve when you know that you are sometimes competing with global giants. High-quality niches create room for a certain degree of flexibility, with sustainable returns to ensure further development and innovation.
E.E: What’s the news for 2021 about new products?
KONČAR: Contracts for new projects in 2021 are worth HRK 3.1 billion, with as much as 58% pertaining to foreign markets. Two of our major projects include a new agreement with a Croatian customer for 11 new electric multiple units for urban-suburban traffic and 10 units for regional traffic, and our ongoing collaboration with the Latvian company Liepājas Tramvaj, for which we are manufacturing twelve low-floor trams.
We will focus on enhancing the power engineering portfolio, strengthening KONČAR’s role in development and delivery of solutions based on renewable energy sources. We are also considering increasing our capacities in ICT solutions and experiences, as well as upgrading the technology that our manufacturing systems are based on. This would be based on the overall digitization of power engineering and allow us to follow suit with this energy transition that has already begun. This requires major investments aimed at bringing our production facilities to a level that is necessary to ensure stronger presence and continued survival on the global market.
Apart from improving efficiency of the organizational structure and production processes, our focus also lies on employee growth and development, revenue growth, expansion onto new markets and expansion of the product and service portfolio. As the regional leader in power engineering and rolling stock manufacturing, KONČAR has to be at the forefront of those changes.
E.E: What are the ranges of products?
KONČAR: The core businesses of KONČAR Group are energy, traction vehicles and infrastructure, ICT solutions, research and development, and product testing and certification. We design and deliver equipment and facilities for electricity generation, transmission and distribution. KONČAR develops and offers renewable energy equipment and solutions in step with global trends. In the area of transport, KONČAR is the region’s leading manufacturer of electric rail vehicles. We produce low-floor electric motor and diesel electric trains, low-floor trams and modernize electric locomotives. KONČAR develops and integrates on-trend digital solutions into its products and facilities while innovation, knowledge, proprietary development and expertise have been the foundation of our work since the very beginning.
E.E: At what stage is the market where you are currently active?
KONČAR: Last year’s events made it clear to us that in the midst of unforeseeable crisis, there can be no survival without energy and investments in energy systems. And while certain energy sectors experienced negative consequences of the crisis, the certainty of electricity supply emerged as an inevitable element of a healthy economy and day-to-day life, making it clear that investments in sustainable energy solutions are needed. More than ever before, the world has turned to investments in and development of renewable energy sources and new technologies. Many countries have turned their focus on climate neutrality, a concept that requires major investments in the energy sector, specifically investments in smart networks and renewable sources. On annual basis, KONČAR exports to as many as 90 countries. We export high-tech products, and our top export markets include Sweden, Germany, Austria, Bulgaria, Finland, United Arab Emirates, Hungary, Latvia, Great Britain and the United States of America.
E.E: What can you tell us about market trends?
KONČAR: This pandemic has reaffirmed two very important facts. It showed us how vital uninterrupted electricity supply is, highlighting how 21st century economy completely relies on it. Secondly, we observe the rising topic of localization of manufacturing to the EU market. There has been much talk last year about reshoring, the concept of moving production back to its original country from where business was relocated. Major players in the European market have become aware of the fact that we cannot always rely on distant offshore production. There is a need and a justification for purposeful strengthening of European production, in order to ensure resilience in the face of any future crises and new global challenges, which is certainly something we are taking into account when considering our own strategy.
E.E: What are the most innovative products marketed?
KONČAR: Ever since its beginnings, KONČAR has been recognized for its innovativeness and excellence. In 2019, KONČAR’s PROZA NET platform for digitization of automated power systems was the first in the world to be awarded the certificate of conformity with the internationally recognized industry standard, making it the world’s first system certified for cyber security of critical infrastructure. Last year we made several new steps forward in the transformers segment. For example, we supplied nine transformers to a US buyer for substation own power supply, with voltage level of 525 kV and power output of 250 kVA. Those were the largest instrument transformers the company has ever manufactured, and among the largest transformers of their type in the world, in terms of voltage level and power output. This achievement is all the more important seeing that the buyer was one of the most strategically important power companies in the USA.
Gordan Kolak, President of the Management Board of Končar
E.E: What estimations do you have for 2021?
KONČAR: In 2021, KONČAR Group companies plan to generate operating income in the amount of HRK 3.4 billion, which is a 10% increase compared to the business assessment for 2020. Revenue from sales in the Croatian market is planned to amount to HRK 1.4 billion, which is a 23% increase in comparison to the previous year. Consequently, the planned share of exports amounts to almost 60%, whereas new contracts are planned at around HRK 3 billion. KONČAR Group’s plan for 2021 also involves HRK 125 million worth of investments. As a result, the company expects a significant impact in terms of increased revenue to be generated in the Croatian market, based on the planned delivery of trains to HŽ Passenger Transport. On the other hand, we also predict further growth of revenue from export, forecasted at HRK 1,9 billion, or 59%. In this context, KONČAR’s planned major export destinations are Germany, Sweden, Austria, Latvia, Bosnia and Herzegovina, Hungary, North Macedonia and the United Arab Emirates.