Baltic bulletin: notes on the Estonian, Latvian and Lithuanian security markets
Friday, July 17, 2009 21:32It’s tough times in the Baltics. I spoke with Andres Kiil, the head of the Estonian-based pan-Baltic integrator Pristis, this morning, and while we were mainly talking about his company’s recent acquisition of a stake in the Estonian security services company Skorpion, the conversation turned to the economy and business in general.
As an integrator doing business across three Baltic countries that have been hit especially hard by the economic crisis, Kiil has a unique vantage point on this small but previously dynamic market. As opposed to most people I spoke to at the Sicherheits Expo in Munich last week, who were cautiously optimistic and sensing that after a tough end of 2008 and beginning of 2009, things were beginning to pick up, Kiil said that the situation in the Baltics was still very difficult.
That’s not entirely surprising, since Latvia, Lithuania and Estonia have been the most hard-hit of the 27 EU member states by the economic crisis. Lithuania, for example, suffered the biggest GDP contraction in the EU in 1Q 2009, with its economy shrinking 12.6 percent.
After posting record results for 2008, Kiil said his business was contracting overall right now, with installations down about 50 percent from where there were at this point last year. To counter that, Pristis is going after the service market, and that strategy has already started to pay off. Revenues from service and maintenance are up 10 percent today compared to a year ago—a real accomplishment, considering the economy.
With a growing emphasis on the service side and successful restructuring already completed, Kiil said Pristis is still on track to post a profit this year. In his view, Estonia may be a little ahead of its neighbors—he expects the local economy to bottom out later this year or in early 2010—but Latvia and Lithuania probably won’t see things turn around until sometime in 2010.
Kiil expects things in the region to get worse before they get better, and he said that the next 12 months are going to be critical for a lot of companies.