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Fortenova Group presents 2020 results, assessing them as good04/29/2021
In 2020 Fortenova Group performed well despite the adverse effect of the COVID-19 pandemic, which impacted April – December of 2020 business operations. The COVID-19 impact was particularly felt in Croatia given the size of tourism in the country. The Group maintained or even increased its market shares in a number of key product categories, realized several key strategic projects and due to the implemented preventive measures, alleviated the impact of the crisis and increased its cash liquidity by HRK ~350 million, to an amount of HRK 2 billion at year end.
Those were the basic features of the 2020 operations highlighted in the presentation of the 2020 results held for Fortenova Group’s DR holders.
Fortenova Group’s total consolidated revenue from continuing operations for the year amounted to HRK 21 billion, while the total consolidated adjusted EBITDA amounted to HRK 1.3 billion.
Compared to the 2019 pro forma consolidated results of Fortenova Group, net of the results of the discontinued operations Kompas Ljubljana, Kompas Poreč and the entire Kompas network for both periods, Fortenova Group’s total consolidated revenue was 11.7 per cent lower, while on the thus adjusted basis consolidated EBITDA was 30.1 per cent lower. The announced 2020 results are net of Mercator, which will be integrated into Fortenova Group in 2021.
“The COVID-19 pandemic left a trail on everything, including the operating results of our companies. It had the strongest negative effect on those companies that are closely related to the tourist industry and the HORECA channel. Also, the markets where the tourist season has a strong impact on the GDP, such as Croatia and Montenegro, were hit more severely. Serbia, for example, has not felt the consequences of the weak tourist season, but the market was faced with all the other consequences of the pandemic. Nevertheless, our companies successfully met and even outperformed their 2020 plans, which had been corrected last year in view of the pandemic and envisaged lower results than those in 2019” – said Fabris Peruško, Chief Executive Officer of Fortenova Group and Member of the Board of Directors, commenting on the 2020 results.
Comparing the non-consolidated results of core businesses including 16 companies in the retail, food and agriculture divisions of Fortenova Group with their 2019 performance, the 2020 non-consolidated total revenues in the amount of HRK 23 billion were six per cent lower, while EBITDA in the amount of HRK 1,6 billion was 16.8 per cent lower.
The pandemic had the strongest negative effect on the operations of the Food Division companies that are directly linked to the HORECA channel and the consumption during the tourist season, as well as the Retail and Wholesale Division. Consequently, both their non-consolidated revenues and EBITDA were lower than in the year before. Non-consolidated total revenue of the Food Division was nine per cent lower than in 2019, while the non-consolidated revenue of Retail decreased by five per cent. The non-consolidated revenue of the Agriculture Division was only one per cent lower compared to 2019.
The non-consolidated EBITDA of Food was 12.5 per cent lower compared to the 2019 performance, while in Retail the drop amounted to 6.5 per cent. Due to the negative impact of the major drop in pig prices in Q4/2020, the drop in cattle prices and lower yields of agricultural crops, EBITDA in Agriculture was lower by 56.8 per cent compared to the year before.
Nevertheless, both Dijamant and Frikom also performed strongly as they not only gained share but benefitted from increased consumption in Serbia with COVID-19 restrictions limiting travel from the country. Also, despite the lack of tourists, Konzum was on a like-for-like basis able to keep its 2020 retail sales above 2019 by 0,3 per cent, as it performed well in manging its supply chain and benefited from its store format and on-line offer.
“As Konzum generates around 40 per cent of its total revenues and around 70 per cent of its annual EBITDA in the four months from June to September, the results achieved in 2020 are excellent, indeed. Looking at the entire Fortenova Group, the overall negative effect of the pandemic and non-cash foreign exchange losses could unfortunately not be compensated, but given the projects that we have initiated, we expect a performance improvement already in 2021. A refinancing of Fortenova Group’s debt at more favourable conditions is planned to take place in the period of the next two years and will additionally strengthen the company’s financial position” said James Pearson, Fortenova Group’s Executive Director for Finance.
“We are satisfied with the 2020 operating performance due to, among other things, the implementation of a number of measures intended to alleviate the negative effects of the pandemic, as well as additional improvements achieved in our business operations and cost control. In spite of the crisis caused by the pandemic, by exerting exceptional efforts and with increased costs related to the health preservation of our people and to securing an uninterrupted supply chain for the market under the conditions of the crisis, we were able to realize several development projects, too. Last year we acquired the assets of Meggle’s Osijek-based dairy plant and have now recently launched the new Kravica Kraljica dairy brand. Furthermore, Jamnica’s investments in development resulted in the launch of the new product Botanica last year, and of Barts - the first alcoholic sparkling water in Croatia – this year, which is now building distribution. Further new product launches, upgrades and improvements will be appearing from our other food businesses as we go through this year and complete the development work done in 2020.
Looking ahead, two major projects that will positively affect our results in 2021, are the divestment of the Frozen Food Business and the integration of Mercator. We are also hoping that this year’s tourist season will be better than last year’s, ahead of a full tourist season returning in 2022. What cannot be seen directly in these results, is the engagement of all our employees in making the business run smoothly under the crisis circumstances and in meeting all plans set. I would like to sincerely thank all Fortenova Group employees for that, as it really made an impact.
Through 2020 and already in 2021 Fortenova management team has delivered on a number of key projects specifically managing the impact of COVID-19, completing the transfer of Mercator and fixing its capital structure through the sale of the Frozen business, which puts the Group into a fundamentally stronger position going forward.” – Fabris Peruško said.
" Agrolaguna is a company engaged in winemaking, olive growing and cattle farming on 1200 ha of cultivated land. "
" Konzum is the leading retail chain in Croatia with 700 stores serving more than 650.000 customers daily. "
" Belje is the biggest agricultural company in the region with 20,000ha of arable fields and cattle raising on over 20 farms, which ensures From field to table product traceability for Belje cheeses, traditional cured meat products and wines. "
" Jamnica is the largest Croatian producer of mineral and spring waters and soft drinks with tradition spanning 180 years. "
" Ledo is the largest manufacturer of industrial ice cream and the largest distributor of frozen food in Croatia. "
" PIK Vrbovec is the leading company in Croatian and region's meat industry with 80 years of tradition in the production and processing of meat products. "
" Zvijezda is the largest producer of edible oils in Croatia and the only producer of margarine, vegetable fat, mayonnaise and delicious mayonnaise-based products and ketchup in Croatia. "
" Tisak is the biggest retail newsstand chain with over 900 locations and Croatia's leading distributor of print and tobacco products, prepaid top-up cards, telecom operators' start packages and other products. "