Last year, marked by increasing revenue and adjusted EDITDA, ends with strong cash position while Q1 2020 shows best results in the past three years
In presenting the results of last year’s operations to its DR holders, Fortenova Group highlighted the growth of both most important performance indicators in 2019 – total revenue and EBITDA, accompanied by building strong liquidity reserves due to which it entered the year 2020 with a cash position of HRK 1.6bn.
The pro forma consolidated total revenue of Fortenova grupa d.d. in 2019 reached almost HRK 24 billion (23,946 million), with consolidated adjusted EBITDA amounting to almost HRK 1.7bn (1,662 million). Given that Fortenova grupa d.d. has been operational since 1st April 2019, the presented results are the pro forma consolidated results of Fortenova grupa d.d. and the 102 companies, net of Mercator, the transfer of which to Fortenova grupa d.d. is not yet completed.
The Core segments, which include the results of 17 core companies of Fortenova grupa d.d., companies from the business areas of Retail and Wholesale, Food and Agriculture, generated a total of HRK 24,805 million in unconsolidated revenues in 2019, or a growth of 3.6 % against the year 2018. At the same time unconsolidated EBITDA of the Core segments saw a year-on-year growth of 13 % and amounted to HRK 1,917 million.
All Fortenova grupa d.d. Core segments experienced total revenue growth in 2019 – Retail and Wholesale of 3%, while both Food and Agriculture generated 4% higher revenues than in the year 2018. Total revenues generated in Retail and Wholesale amounted to HRK 13,934 million, in Food HRK 8,267 million and in Agriculture HRK 2,604 million.
Having maintained the same level of EBITDA as in the previous year, with HRK 1,132 million realized in 2019 the Food Business segment made the largest contribution to the Group total. The highest positive effect on total revenue growth in Food was accounted for by the edible oils and meat divisions.
The highest growth of revenue and EBITDA in the Retail and Wholesale business area was accounted for by Konzum, whose EBITDA in 2019 outperformed the one from the previous year by 25.5 %. Total revenues generated by Croatia’s largest retail chain in 2019 grew by 4.5%, in spite of the fact that it had a lower number of stores than in the previous year. In the Agriculture segment the increase in revenue was mostly accounted for by PIK Vinkovci, while the highest growth of profits in 2019, was generated at Belje with HRK 62 million.
Fortenova grupa d.d. was able to continue the favourable operating trends in Q12020, with consolidated revenues, net of Mercator, amounting to HRK 4.814 million, while adjusted consolidated EBITDA for the period amounted to HRK 93.6 million.
At the same time, in Q12020 the Core segments generated unconsolidated total revenue growth of 8 %, while the unconsolidated EBITDA for the quarter amounted to HRK 245 million or 90 % more compared to the results generated by Agrokor d.d. in the period preceding the Settlement Plan implementation.
„The growth of all key performance indicators, particularly EBITDA, as well as the fact that we secured a smooth operational continuity, have proved that the numerous transformational processes that have been taking place at Fortenova grupa with a view to achieving significant cost control and improving efficiency, have borne fruit. Furthermore, as already known, over the course of 2019 the company refinanced its SPFA debt, implemented changes in organisation and governance and obtained a new capital and ownership structure. At the same time, Fortenova Group has been settling all its liabilities regularly and without exception and entered the year 2020 with a very strong cash position of HRK 1,635 million on its accounts. Hence the measures taken by the Group at the end of Q12020 in order to adjust its operations to the impact of the COVID-19 crisis were primarily directed at maintaining its strong liquidity and employment in order for the Fortenova grupa to be ready to move on once the crisis is over” – said Fabris Peruško, CEO of Fortenova Group at the presentation of the 2019 results to the holders of Depositary Receipt s, ie. the owners of the company.
Following the information published today about the divestment of the branch offices of Sberbank Europe AG in Croatia, Bosnia and Herzegovina, Slovenia, Serbia and Hungary to the companies AIK Banka a.d. Beograd, Gorenjska banka d.d., Kranj and Agri Europe Cyprus Limited, in reply to the queries received at Fortenova grupa d.d. we would like to announce that the aforementioned disposal has no impact whatsoever on the ownership of Sberbank Russia in Fortenova Group. Sberbank Russia remains Fortenova Group’s largest individual shareholder.
For more than two years, Fortenova Group has been continuously conducting the process of disinvesting companies and real estate that are not in the function of its core business. Consequently, a decision was made to sell the office space owned by the Fortenova Group within Cibona Tower. The management of the process is entrusted to Colliers, global commercial real estate consultants.
Cibona Business Tower is one of the most representative business buildings in Zagreb. Fortenova Group is its majority owner with a share of 76.03 percent in which it has 5905.16 m² of office space, and with the addition of garage surface, the total area is 6,718 m². Overall, it is the total of 16 floors of modern office space in a prestigious and easily accessible location, in the city centre.
On this occasion, James Pearson, Fortenova Group’s Executive Director of Finance stated: “The Fortenova Group is recording excellent business results this year, with the realization of all key business projects and goals that were set. One of the most important components of our business is focus on the core activities and the disinvestment of parts of the business and assets that are not in their function. Since Fortenova Group no longer uses the office space of Cibona Tower for its own needs, we decided to sell it with the assistance of a specialized partner. “
Fortenova Group, comprising some of the most significant companies in Croatia and the region, such as Konzum, Mercator, Jamnica, Zvijezda, Dijamant, Belje, Tisak, Sarajevski kiseljak etc., has formally joined the UN Global Compact, the world’s largest sustainable development and corporate sustainability initiative. Fortenova Group has thus become part of a large community of 18,000 members from 162 countries of the world that have committed to adhering to the Ten Principles of the UN Global Compact. The principles comprise fundamental operating responsibilities in the areas of human rights, labour, environment and anti-corruption, based on internationally adopted declarations and conventions of the UN and constituting the normative authority for responsible operations.
UN Global Compact has, as a special initiative of the Secretary General of the United Nations, been mandated to direct and provide support to the business community worldwide in achieving progress and meeting the Sustainable Development Goals and the Agenda 2030.
“Since it first commenced its operations, Fortenova Group started to live its fundamental values, with sustainable operations being one of the four key pillars of the culture of responsibility that we have been building towards our employees, the communities in which we operate, our consumers, partners, suppliers, the environment and the society as a whole. From the Code of Ethics that we adopted just a few months after our incorporation, to the development of a reporting concept in accordance with GRI standards that we shall already adhere to in our next operating report. Fortenova Group has within only two years raised its social and corporate responsibility to a very high level, creating the prerequisites for sustainable development in its environment. Given that we engage in food production and distribution, food safety systems are part of our integrated management system and among the initiatives and continuous investments in green and socially responsible projects, particularly worth being singled out are the recent projects carried out by our companies in reducing the carbon footprint of our packaging. Hence our joining this global initiative is but a natural step to round off all our activities in that direction, and because of everything that we have currently been witnessing – global climatic, health, economic as well as value challenges, the accession to the Compact is the more important for us” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, on the occasion of Fortenova Group joining the UN Global Compact.
Through operating strategies in all of its core businesses Fortenova Group has opted for sustainable development and efficient management in the long term, thus also driving a stronger involvement of the business sector in activities intended to progress towards sustainable development goals and achieving corporate sustainability in accordance with the principles of the UN Global Compact.
“It is my great pleasure to welcome Fortenova Group on behalf of the UN Global compact. By joining this initiative, the company has demonstrated its commitment to the sustainability goals set, while at the same time raising the already high expectations of its stakeholders. I am looking forward to the collaboration, with a view to the company progressing towards meeting those expectations” – said Vali Marszalek, Executive Director of Global Compact Network Croatia.
Fortenova Group has completed the sale to Nomad Foods of the Frozen Food Business Group after receiving all regulatory approvals.
The Frozen Food Business Group comprises Ledo plus d.o.o. in Croatia, Ledo Čitluk in Bosnia & Herzegovina and Frikom d.o.o. in Serbia, as well as several related companies in other South East Europe markets and has a market leading portfolio of frozen food and ice cream brands enjoying a strong recognition among consumers in Croatia, Serbia, Bosnia and Herzegovina, with a tradition of more than half a century.
“This major transaction has been closed one year after the Frozen Food Business Group divestment process was initiated in Fortenova Group, despite the project having been carried out under very challenging circumstances of the pandemic. We have worked hard and are proud of the fact that with this transaction we have met our most important goals in full. The achieved price of EUR 615m has acknowledged the value of our business and at the same time we have introduced a strategic partner to the region who will continue to develop the business and be focused on developing Ledo’s and Frikom’s iconic brands. We also expect Nomad Foods will be an important business partner for Fortenova’s regional retail business going forward. For Fortenova 2021 is becoming a transformational year. We have not only completed the refinance and transfer of Mercator, where we are delivering on planned synergies, we have also delivered on a successful summer season and now we have completed the planned sale of the Frozen Food Business Group, all of which are now resulting in Fortenova having a substanitally stronger capital structure.” – said Fabris Peruško, CEO and member of the Board of Directors of Fortenova Group, thanking all employees of the Frozen Food Business Group for the contribution that they have with their work built into the operational success of their respective companies. “We wish them all the best with the new partners and hope for their success in the future, which they truly deserve” – Peruško added.
“In 2021, besides the refinance and transfer of Mercator, the delivery on all our plans in the summer season, where all our businesses and Divisions have delivered excellent operational results both in profit and cash, and the sale of the Frozen Food Business Group, Fortenova has also completed its program of non-core divestments and achieved numerous operational improvements to our businesses, all of which are contributing to the improvement of our financial metrics. In respect of this transaction, we will use the funds from the sale of the Frozen Foods Business Group to immediately repay debt and as a result we will be significantly deleveraging the company. With clear and continued delivery on our plans in 2021, Fortenova can now look forward with real confidence to the future as this Frozen Food transaction step changes our financial position and capital structure and will allow us to invest and grow our very strong businesses in the coming years. Finally, I would also like to thank our friends and colleagues in all companies in the Frozen Food Business Group for their skill, commitment, and hard work during the time when they were part of Fortenova Group.” – said James Pearson, CFO of Fortenova Group.
The programme was developed in collaboration with experts from LQ Group as the third comprehensive education programme within the long-term project of improving the knowledge and skills of Fortenova Group employees
On 14th September 2021 Fortenova Group commenced the implementation of the Discover programme – the third group programme within the DRIVE Beyond Excellence long-term project developed by Fortenova Group with a view to improving the knowledge and skills of its employees.
Following the start of the education of the first generation of participants of the Navigate and Accelerate programmes, another 139 Fortenova Group employees from the Retail, Food and Agriculture divisions, as well Fortenova grupa d.d. and mStart, have embarked on the Discover programme.
The education is focused on acquiring new knowledge and competencies in different operational areas, and the programme has been developed together with the experts from LQ Group. Over the following months the attendees will have the opportunity to acquire new knowledge and skills in different business areas, with particular emphasize on the competencies that are important to be developed in order to be able to successfully cope with day-to-day business challenges and tasks.
The education is intended to improve the managerial skills of Fortenova Group employees as well as to transfer the acquired knowledge further in order to enhance the overall level of employee competencies and efficiencies and contribute to the atmosphere of togetherness, collaboration and sharing fostered by Fortenova Group.
Over the period of only a few months Fortenova Group has developed three comprehensive education programmes, with over 250 employees from all our companies currently taking part.
“We believe that providing the conditions for personal and professional growth and development is the strongest lever in striving to strengthen the Group’s overall human resources and the best response to all our business challenges. The Drive Beyond Excellence education is a long-term, systematic model supporting the professional and personal development of Fortenova Group employees in order for them to make a contribution to the operating results and to generating new values for the company, as well as to creating the atmosphere of one of the most desirable employers on the territories of the region where Fortenova Group operates” – said Gordana Fabris, Fortenova Group’s Director of Human Resources, at the promotion of the Discover education programme.
Fortenova Group has closed the divestment of the Aviva Polyclinic, one of Croatia’s leading polyclinics, to the investment company Provectus Capital Partners (PCP). Aviva Polyclinic is a selected healthcare provider for private patients, companies and insurers, offering a wide range of services for its more than 40,000 users in the areas of prevention, diagnostics, medical treatment and rehabilitation. The Polyclinic has a tradition of more than 40 years and is also one of the country’s largest private polyclinics with over 80 employees.
Provectus Capital Partners is an investment company focusing on the markets of Southeast Europe, which has acquired the Aviva Polyclinic through ASEF (Adriatic Structured Equity Fund). Aviva Polyclinic is PCP’s third investment in Croatia.
PCP will continue to invest in the operational growth of Aviva, which will take center stage in the company’s further plans towards consolidating the private sector healthcare in Croatia.
”The private healthcare sector in Croatia has a significant growth potential in the years to come, and with the acquisition of Aviva we have gained a quality position and the key know-how for the continuation of our investments, with a view to consolidating the healthcare sector. We are committed to Aviva’s further development and new investments in order to secure the maximum added value both for our users and our employees and thus improve and secure high-quality sustainable operations and sustainable value for Aviva itself in the long term”, said Igor Čičak, President of the Management Board and Lead Partner at PCP.
Commenting on the transaction, James Pearson, Fortenova Group’s Executive Director of Finance, said: “Through the collaboration with Provectus Capital Partners, Fortenova Group has secured a high-quality strategic and financial partner and enabled the further development and realization of Aviva Polyclinic’s full potential, all to the benefit of its patients, suppliers and hard-working employees, whom we would particularly like to thank for their contribution”.
Fabris Peruško, Member of the Board of Directors and Chief Executive Officer of Fortenova Group, pointed out on that occasion: “With this transaction Fortenova Group is about to successfully complete the entire process of divesting its non-core businesses. We are very happy with the realization of the project overall, as we were able to find high-quality partners for all our non-core companies, that will develop their future operations. At the same time, this will enable Fortenova Group to create a focused portfolio and strengthen its capital structure.”
With a view to additionally connecting and strengthening the synergies in Fortenova Group’s retail operations in Bosnia and Herzegovina, the companies Konzum and Mercator in that country shall as of 1st September 2021 be run by management boards having the same composition.
Thus Nihad Imširović is President of the Management Boards of both Konzum B&H and Mercator B&H, Nedeljka Bilić is Member of the Management Board for Finance at both Konzum B&H and Mercator B&H, while Members of the Boards of both companies are Ahmet Koštreba and Haris Omeragić.
“This is yet another step in strengthening our leadership position in regional retail, primarily built on a combination of knowledge, experience and the capabilities of both companies’ employees, as well as reaping the benefits of state-of-the-art technologies, particularly when it comes to improving service quality and providing our customers with a premium shopping experience. This is the foundation upon which we have been building a stronger and more competitive retail business, while fostering all the well-recognized specific features of the Konzum and Mercator brands. I wish all colleagues who are assuming joint responsibility for this mission of ours a lot of success” – said Siegfried Ganshorn, Fortenova Group’s CEO for Retail.
Fortenova Group, now reporting with Mercator consolidated from 1st May 2021, and also benefiting from improved trading condition vs H1/2020, recorded a consolidated revenue from continuing operations increase of 35 per cent. In addition, H1/2021 adjusted consolidated EBITDA was 14 per cent higher, and the Group recorded a net profit in the amount of HRK 318 million vs a loss in H1/2020. At the end of H1/2021 the Group also had more than HRK 1,8 billion of cash on its accounts so maintaining its strong liquidity position. These were the key highlights of Fortenova Group’s half-year results presentation to its depositary receipt holders.
“With consolidated revenues from continuing operations of HRK 12 billion, adjusted consolidated EBITDA of HRK 1.1 billion and HRK 318 million of net profit we can proudly say that behind us is the best first half of the year ever, not only in terms of performance, but also in terms of several major projects having been closed, which have placed the Group on track in terms of strengthening its profitability. First and foremost of these is business integration of Mercator and its consolidation into our financial statements from 1 May 2021. Given the excellent tourist season, the Group is continuing to trade strongly in Q3, and this along with the synergies that we are achieving in Retail, and the expected closing of the Frozen Food Business Group sale to Nomad Foods will mean that the Fortenova Group’s financial position will continue to improve” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, commenting on the results achieved in H1/2021.
When it comes to non-consolidated results of the core businesses pertaining to 21 companies in the Retail, Food and Agriculture divisions of Fortenova Group, the total generated net sales revenue increased by 2.4 per cent, EBITDA grew by 12.5 per cent, while EBIT was as much as 39.5 per cent higher compared to the same period last year, when Mercator is included on a like for like basis.
In terms of the respective divisions, Food division generated the best improvement in results compared to last year, with a 12.5 per cent higher net sales revenues, 23.6 per cent higher EBITDA and 40.1 per cent higher EBIT in the first half of the year, following the impact of COVID-19 on H1/2020 results and the launch of several innovative products on the market in 2021.
The Retail division saw revenue growth of 1.2 per cent, EBITDA grew 10.9 per cent and EBIT grew 65.9 per cent, with Mercator included on a like for like basis. These improvements are a result of synergies, improved general trading as well as the wholesale segment in Konzum experiencing a strong recovery, following the relaxation of COVID-19 measures and the opening of HORECA channels.
Due to the major decrease in pork selling prices vs H1/2020, the Agriculture division incurred a decline in revenue of 12.5 per cent, which resulted in an EBITDA decline of HRK 19 million and EBIT decline of HRK 21 million.
“In H1/2021 Fortenova Group was very focused on in-market execution, delivering planned improvements to the business, and completing a number of key projects. This focus on delivery is clearly shown with improved operating performance, the divestment of the Frozen Food Business Group fully on track, Mercator debt being refinanced alongside 89.73% of its shares transferred to Fortenova Group and its integration into the Retail Division proceeding very successfully, as well as several non-core business divestment transactions being completed, enabling further focus on the core divisions. Overall, this has been a very positive H1 for the Group.” – said James Pearson, Fortenova Group’s Executive Director of Finance.
The programme devised by Fortenova Group and Selectio involves almost 100 Fortenova Group employees
Fortenova Group started the implementation of the Accelerate programme – the second group programme within the DRIVE Beyond Excellence project, developed to improve the knowledge and skills of Fortenova Group employees in the long term.
Following the commencement of education for the first generation within the Navigate programme, another 98 employees, recognized for their development and career advancement potential by assuming more responsible managerial positions within Fortenova Group and its operating companies, have entered the Accelerate programme.
Their education focuses on acquiring a number of new competencies and knowledge in various operational areas. The programme has been developed in cooperation with the Selectio Group, Croatia’s leading human resources consultancy.
Through eight modules the attendees will gain insight in the areas of finance, supply chains, sales, building customer relations or comprehensive project management, with particular emphasis on strengthening the skills in team leadership, recognizing specific personal traits of team members and encouraging their creativity, agility and inclination to thinking outside the box.
The education is intended to improve the students’ managerial skills and strengthen the overall level of employee competencies and efficiency by transfer of the acquired knowledge to their teams, thus contributing to the atmosphere of togetherness, collaboration and sharing, fostered by Fortenova Group in its work environment.
“Supporting the development of our employees’ professional competencies is in our common interest. Besides strengthening the employees’ personal potential and additionally motivating them in overcoming new business challenges, we herewith also significantly contribute to Fortenova Group’s more successful operations overall, which is particularly important in an environment that requires continuous adjustments and change management” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors at the kick-off of the Accelerate programme, while Aleksandar Zemunić, Director of the company Selectio, pointed out that they were delighted to be Fortenova Group’s partner in implementing such a comprehensive and ambitious development programme.
“We believe that with the expertise of our consultants and educators Fortenova Group employees will realize their potentials more easily and we are pleased to have the opportunity to support them on that journey” – he said on that occasion.
“Our goal is for the group skill development programmes within the scope of the DRIVE Beyond Excellence project to involve around 220 Fortenova Group and operating company employees in the first year and we are very happy that the first two generations of employees have already started their education as part of the project. We believe that securing the conditions for personal and professional growth and development is the strongest lever in strengthening the Group’s overall human resources and the best response to any business challenge” – said Gordana Fabris, Director of Fortenova Group’s Human Resources.
For the second year in a row, Fortenova Group is among the 20 best employers in Croatia, according to the results of the survey Employer of the First Choice, conducted by the MojPosao portal for the 17th year in a row. Fortenova Group was on this list for the first time only a year and a half since its inception, and this year it has further confirmed its place on the list of the best employers. The survey was conducted in late 2020 and early 2021, and 20,000 respondents participated.
Gordana Fabris, Director of Human Resources at Fortenova Group, emphasized on that occasion: “We are proud of this result. This research shows that despite the fact that we are a very young company that is simultaneously transforming and developing a new corporate culture, for the second year in a row we are also one of the most desirable employers. From the very beginning of its operations, Fortenova Group has always focused on the importance of employees, creating a quality work environment and improving reward conditions, all of which have contributed to our excellent results within this research. Today, Fortenova Group is the largest employer in the region with more than 50,000 employees. This represents a great responsibility for us in the upcoming period, in accordance with our values of excellence, to continuously work to be an even better and more desirable employer and improve all segments of human resource management … “
The aim of this research is to find out which employers on the Croatian labor market are the most attractive to the general public. The research is anonymous, based solely on respondents’ perceptions of companies and their free choice. It is in fact the respondents who ‘create’ the list of employers they would most like to work for, and reveal the reasons why these employers are considered the ‘most desirable’. In addition to Fortenova Group, this year’s list also includes other large Croatian companies such as dm-drogerie markt, Lidl, Müller store Zagreb, Rimac Automobili, Atlantic Grupa, HEP, Kaufland Croatia, PLIVA Croatia, INA, Infobip, Hrvatski Telekom, BIPA , Valamar, Zagreb Holding, Pevex, Coca-Cola HBC Croatia, Jadran – Galenski Laboratorij, Ericsson Nikola Tesla and A1 Croatia. The results of the research show that, unlike last year, when harmonious relations in the workplace were the most important factor in evaluating the degree of attractiveness of a particular employer, this year the most “crucial” votes went to job security (40%). Harmonious relations in the workplace (for 39% of respondents this is a crucial reason for attractiveness) are ranked second, while in third place, just like last year, is the social responsibility of the employer (36%).
As part of the improvement programme for the knowledge and skills of its employees entitled DRIVE Beyond Excellence, in partnership with the experts from the COTRUGLI Business School Fortenova Group has developed the Navigate programme, intended to strengthen the professional competencies of Fortenova Group employees in order for them to also significantly contribute to meeting Fortenova Group’s strategic goals by investing in their own development and to deal with new business challenges with ease.
The first generation of Navigate programme attendees comprises 35 employees of Fortenova Group and its operating companies. Over the course of the 14 months of the education programme they will go through seven thematic units providing them with the opportunity to strengthen their leadership skills, ponder possible improvements at their respective companies, acquire new, practical organizational knowledge and through all of that additionally mobilize their teams and organizations. An integral part of the programme is also a concrete project from Fortenova Group’s operations, where the students will work under the sponsorship of one of Fortenova Group’s Executive Directors.
In order to adjust the entire programme as much as possible to the Fortenova Group environment and the projects taking place at the operating companies, the content of the DRIVE programme for future attendees will be designed based on the feedback, proposals and ideas of the attendees from previous generations. Therefore the students of the first DRIVE programme generation will also be ambassadors of sorts for the programme.
On the occasion of the DRIVE Beyond Excellence education programme kick-off Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, said: “It is our wish to be not only the largest, but also the most desirable employer in the region and hence we consider this significant investment in the expansion of our employees’ knowledge, that we have just started, to be one of the key elements in achieving that goal. I personally believe that building a systematic support that will provide talents with the possibility of personal growth and development is also of particular importance in the perception of the company as employer and in accomplishing all our business objectives. A structured approach to improving human resources will create new values for the Group and contribute to creating togetherness, which is extremely important for Fortenova Group to meet its ambitious business goals.”
“Being the educational partner in this significant project is a particular pleasure for us and we are looking forward to realizing all the objectives set. The trust placed in us motivates us, in accordance with the School’s mission, to encourage students to pursue a continuous development in order to set an example and introduce positive changes and thus contribute to the development of their organization and the society as a whole” – said Zoran Đorđević, Partner and Programme Director of COTRUGLI Business School.
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.