The mine of the Orbán family pays the highest dividend among its competitors

The mining company of Prime Minister Viktor Orbán’s father, Dolomit Kft. has been one of the most successful companies of the market for many years, both in terms of revenue and profit. According to the latest investigation of Direkt36, the company also stands out from its competitors in another important aspect: the last couple of years, it has paid a much higher dividend to its owners than the sectorial average.

This is an important number, because the sum of the dividend shows how much money the owners of a certain company can take home from the profit earned. According to the latest data available, Dolomit Kft. paid 1,8 billion forints (4,98 million euros) as dividends in 2019, which is more than the thirteen times more than the sectorial average.

In our analysis, we compared the performance of Dolomit Kft. with those companies that carry out the same activities (quarrying, plaster and chalk mining). There are currently 70 such companies in the market.

Dolomit Kft. és az iparági átlag

In the researched time period between 2015 and 2019, from those 70 companies there were only 23 – along with Dolomit Kft. – that closed each year with a certain amount of profit. It is up to the shareholders of a company to decide how the year’s profit should be used: they can either reinvest it into the company, or – partly or totally – pay it to the shareholders in the form of dividends.

The amount of money the owners of Dolomit Kft. receive from the total dividend depends on the share they have in the company. That means that Győző Orbán senior, who owns 51,16% of the shares in Dolomit Kft. has been receiving more than half of the total dividend payment each year. This means that between 2015 and 2019, more than 4 billion 372 million Forints (12 million euros) was paid to the father of Prime Minister Viktor Orbán.

id. Orbán Győző osztaléka

In the last couple of years, only a small number of the researched 70 companies could pay dividend: since 2015, there have always been a maximum of 11 companies each year that decided to pay dividend to the owners. The mining company majority-owned by Győző Orbán – which, as it was revealed in a series of Direkt36 articles, has been delivering building materials to several state-funded constructions – has always been amongst the best-paying ventures in the last five years. Its dividend payments in the past years looked like this:

  • In 2015, Dolomit was outperformed only by the German-Austrian owned Basalt Középkő Kőbányák Kft.
  • In 2016, after a brief setback, Dolomit paid the fourth highest dividend and was preceded by three multinational companies, but still managed to pay the highest dividend amongst the Hungarian-owned enterprises.
  • In 2017, Dolomit Kft. paid the highest amount of dividend to the shareholders in the whole market.
  • In 2018, only the Hungarian subsidiary of the French Colas group paid higher dividends.
  • In 2019, Dolomit Kft. paid the market’s highest dividend again.

Legmagasabb osztalékot fizető cégek

Dolomit Kft. never reinvested its profit into the company but always paid the whole amount of money as dividends.

Beside the Orbán-mine, there was only one company, the Basalt Középkő Kőbányák Kft. that paid such a high portion of the profit as dividends. Other competitors, even if they paid a certain amount of dividend, only used one part of the profit to do so, and put the other part of it into the company’s reserves, which can be used later to cover innovation and other expenses of the company.

“If someone pays all the money as dividend instead of reserving it, it can mean that they either don’t see any possible ways of development for the company, or they don’t feel it is necessary to pile up a certain amount of safety money, which later can help the company to endure” – said a source from the construction industry. He added that such reserves might easily be much needed, as “we never know, when a global pandemic comes around, destroying the economy.”

More profitable than ever

In the last few years, Dolomit Kft. has been amongst the most successful mining companies both in terms of revenue and profit. By 2018, it managed to outperform all of its major competitors in one important aspect: Győző Orbán’s company achieved the highest profit margin. The profit margin shows how much profit the company made in relation to sales.

In 2018, Dolomit Kft. achieved a 41, 3% profit margin, which was outstanding not only in the history of the company, but in all of the market (it was more than the double of the 18, 8% sectorial average back then). Although in 2019 both the revenue and the profit of Dolomit Kft. decreased (the company produced a 1,8-billion-forint profit and a 4-billion-forint revenue), the profit margin kept increasing, and reached almost 45%, which is close to being three times as high as the sectorial average.

A CEO of another mining company said that the outstanding profit margin can be the natural outcome of a normal market operation. “The stone is not a homogenous material. It cannot be said that the same material is quarried in each mine.  The quality of the stone and the level of modernization all influence the profit margin, and if someone has good quality stone in a region where there is also a demand for it, it will be expensive.”

According to another source in the construction industry, there are other reasons of the price differences. The source said that before 2010, it was typical for customers to deviate from the cheapest offer by a maximum of 3-5 percent. “By now, that gap could be as high as 30 to 50 percent. Of course, this only applies to the prices of special, VIP suppliers.

Dolomit Kft. regularly participates in major constructions financed by the European Union and the Hungarian state, despite the fact that it offers its products at a significantly higher price – in some cases, 60-70 percent higher – than its main competitors.

We asked Dolomit Kft. about the reasons for its outstanding performance, but the company did not respond to our request. Viktor Orban’s press officer, Bertalan Havasi, responded to our questions with a familiar comment: “The prime minister does not deal with business questions.”

For Hungarian company data, we used the services of Opten.
This article was written by Fannyi Matyasovszki, as part of Direkt36’s traineeship program.