Reiwag cannot cope with grey economy, decides to pull out of Hungary

Reiwag has become known for its splendid growth but Chief Executive Viktor Wagner is now sounding a retreat.

"We have to withdraw from Hungary, because we no longer see ourselves in a position where we can legally make money," Wagner told Austrian newspaper Wirtschaftsblatt on Monday, adding that the grey economy dominates in Hungary.

The CEO claims some of Reiwag’s competitors employ 70 to 80% of their staff illegally. The company has decided to exit Hungary after an eight-year presence. In its peak days Reiwag’s headcount in Hungary exceeded 600 people, whereas six months ago its staff was tenth of that in size. In early 2013 the company still had more than 130 employees.

According to data by Céginfo.hu, Reiwag Ltd. has been under liquidation since 1 January 2014, with no employees. The company owned by Reiwag GmbH posted HUF 488.4 million net revenues and HUF 61.6 million after-tax profit last year, but its performance has been constantly deteriorating for years. In 2010, its sales reached nearly HUF 1.2 billion and its profit amounted to HUF 54 m. In the meantime, the company’s equity also melted to HUF 111.5 m from HUF 268.5 m in 2010.

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