The Public Agency of the Republic of Slovenia for the Protection of Competition (Javna agencija Republike Slovenije za varstvo konkurence (AVK)) passed a decision on December 16th, 2019 whereby it has temporarily seized the shares of Mercator d.d. from Agrokor d.d. Unprecedented in the working practice of this Slovenian regulatory agency to date, this decision amounts to an expropriation of the private property of Agrokor d.d. by way of an interim seizure of Mercator shares, without any underlying court decision and with no valid legal justification.
The seizure is based on a disproportionate, non-final penalty in the amount of EUR 53.9 million, as well unprecedented in the practice of this regulator. This penalty, imposed by AVK in September 2019 in relation to a concentration case, has been appealed by Agrokor. The non-final penalty is clearly disproportionate since the company in question, Costella d.o.o., generates only slightly more than EUR 1 million in revenue yearly. This company was acquired by Ivica Todorić, ie. Agrokor AG from Switzerland, back in 2016.
The seizure of Mercator shares is in itself also largely disproportionate, since the shares in question have an appraised value of in excess of EUR 140 million, and the appealable penalty – that is being contested – is in the amount of EUR 53.9 million.
Moreover, according to AVK’s explanation, the interim measure of seizure of Mercator d.d. shares was passed pursuant to the Misdemeanor Act, in particular the provisions of that Act which in their essence apply to traffic offences or similar offences, which are discovered in flagranti, committed by foreign nationals – natural persons in the Republic of Slovenia.
Therefore, Agrokor considers this act of seizure of shares as a gross, intentional misapplication and misuse of law, committed by a state regulatory body that is supposed to enforce the national laws and whose head officers are appointed by the Parliament of Slovenia as the supreme legislative body of the country.
By way of background, the Misdemeanor Act which has been applied in this case to seize shares, essentially provides for the possibility of interim seizure of the driver’s license or car from a foreign national who was for example driving too fast, for as long as the fine is not paid, as there is a reasonable likelihood that the accused may escape, which would result in possible non-payment of the fine. The core pre-conditions that must be satisfied under the Act in order for a temporary seizure to be imposed, are that the infringer would either escape abroad or seek to hide himself. However, it goes without saying that neither of these pre-conditions can be fulfilled with respect to a validly existing foreign legal entity (given that such an entity can neither “run away” nor can it “hide itself”). In addition, the purpose of the law is to provide immediate protection. The written resolution has to be served on the infringer within 3 hours and the courts should decide on the appeal within 48 hours, whereas in the case at hand AVK waited for two months to seek temporary seizure, which in addition casts doubt on AVK’s intentions.
Although AVK has in its practice to date never seized any property from anyone as a means of security for a payment, let alone pursuant to the Misdemeanor Act, which has been in force since 2006, in the current case, by inadequately applying that law, it has now seized Agrokor d.d.’s 69.57 per cent share in Mercator d.d., allegedly as a means of security for paying the non-final penalty in the amount of EUR 53.9 million, against which Agrokor has sought court protection based on firm arguments.
By way of reminder, due to not having reported the concentration of the companies Agrokor AG and Ardeya Global Ltd., AVK passed a decision on September 24th, 2019 imposing a fine in the amount of EUR 53.9 million on Agrokor as legal person and EUR 5.000 for the accountable (natural) person. According to AVK’s explanation, by that concentration Agrokor acquired a 100 per cent share in the company that owns the Slovenian company Costella d.o.o. and was, pursuant to the Slovenian Competition Act, allegedly obliged to report the concentration within 30 days of signing of the takeover agreement. As such a report was not filed, on April 9th, 2019 AVK instituted proceedings to assess the concentration ex officio.
Agrokor has both publicly and directly explained that it considers this decision of the AVK to be completely unsubstantiated, since all decisions related to the above described acquisition were made and executed solely by Ivica Todorić alone, without the knowledge or participation of any other member of the then Management Board of Agrokor d.d. and thus the acquisition had nothing to do with Agrokor d.d., but with Agrokor AG from Switzerland, which has not been under control of Agrokor d.d., but was initially run solely by Mr. Todorić and since 2017 by an administrator/commissioner appointed by the Swiss court, who in October 2019 sent the concentration form to AVK on behalf of Agrokor AG.
Furthermore, the decision of AVK imposing the EUR 53.9 million fine is not final, as Agrokor filed a request for court protection against it, which was submitted to AVK on November 8th, 2019. But AVK has unexplainably not yet forwarded this request for court protection, filed by Agrokor, to the competent County Court of Ljubljana in order to allow the court to decide on the request for court protection and has instead by its own decision, without participation of the court, on December 16th, 2019 initiated the temporary seizure of Mercator d.d. shares owned by Agrokor d.d.
To put the disproportionality of the AVK ruling imposing a fine on Agrokor in the amount of EUR 53.9 million, as well as of the seizure of Mercator shares as alleged security for the collection of that fine into context, it is important to note that Costella d.o.o. is a company that globally generates only slightly more than EUR 1 million of revenue per year. This fact clearly indicates how disproportionate the magnitude of the fine imposed by the AVK is, let alone the seizure of Agrokor’s Mercator shares. It is also worthwhile mentioning that back in 2006, when the Misdemeanor Act was undergoing the Slovenian Parliamentary procedure, the Parliaments’ legislative and legal body expressly warned about the possibility that in some instances seizures under the law might be significantly disproportionate.
As regards the magnitude of the fine, by way of comparison, the European Commission fined Canon EUR 28 million for not having reported a concentration by which it acquired control of Toshiba Medical Systems and has previously in similar circumstances fined Electrabel EUR 20 million with respect to its acquisition of Compagnie Nationale du Rhône, where the acquired company had generated at least EUR 25 million in not less than three countries, otherwise the European Commission would not have been involved in the first place.
Historically, the AVK has never imposed a fine of more than several hundred thousand euros. In fact, its previous highest fine ever in the context of acquisitions and takeovers amounted to around EUR 150.000 (belated concentration report), while the fine for Pop TV in the amount of EUR 4.9 million was later declared null and void by the court in the judicial part of the misdemeanor procedure.
The above arguments, individually and collectively, clearly indicate that AVK’s ruling on the fine is unsubstantiated and the Extraordinary Administrator of Agrokor has to express serious concerns that the ruling has only been passed to serve as a means to expropriate Mercator shares.
The seizure of Agrokor’s Mercator shares was executed without any court decision, pursuant to a law that as a rule applies mostly to traffic offences. Such actions, irrespective of the final outcome, render Slovenia exceptionally insecure for foreign investors and call into question Slovenia’s commitment to compliance with Article 63 of the Treaty on the Functioning of the European Union, which ensures that the fundamental principle of European Union of the free movement of capital between EU Member States is respected, and certain provisions contained in the European Convention on Human Rights, including the protection of private property.
We have today informed the Embassies of all EU member states in Slovenia, as well as the US and Russian Embassies, given the origin of the key investors in Agrokor, of the aforesaid facts. The Extraordinary Administrator of Agrokor shall continue to protect the company’s property with all available legal means.
Fortenova Group has today in collaboration with the Croatian Business Council for Sustainable Development signed the Diversity Charter for all segments of its operations and its operating companies in Croatia and across the region. The Charter was signed by Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, and Mirjana Matešić, Ph.D., Director or the Croatian Business Council for Sustainable Development. The signing follows after Fortenova Group recently formally joined HR PSOR and UN Global Compact, the world’s largest sustainable development and corporate sustainability initiative.
With today’s adoption of the Diversity Charter Fortenova Group has undertaken to publicly support and develop diversity in all of its work environments, operating companies and the business environment in general.
“It is important to note that today’s signing of the Diversity Charter is a logical upgrade on our commitment to sustainable development. I am particularly proud of the speed at which Fortenova Group has within very short time made key strides in accepting sustainable operations and its values; from our Code of Ethics and accession to HR PSOR and UN Global Compact, until today when we have signed the Diversity Charter. Sustainability and diversity are Fortenova Group’s fundamental values and a constituent part of our corporate culture” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors on the occasion of signing the Diversity Charter.
Mirjana Matešić, Ph.D., Director of the Croatian Business Council for Sustainable Development, stated on that occasion: “We are pleased that by signing the Diversity Charter Fortenova Group has publicly, on behalf of all its employees, accepted the responsibility to apply diversity and equal opportunities at the workplace in all of its companies. Diversity is one of the main tools for achieving innovativeness and creativity, required more than ever in order to realize our transformation towards sustainability”.
Fortenova Group companies traditionally reward their employees for the Christmas holidays and hence Fortenova grupa d.d. and its operating companies will this year again pay out Christmas bonuses and gifts for children, in accordance with the collective agreements and the possibilities of the respective companies. This year Fortenova Group will thus invest more than HRK 34 million in the Christmas rewards for its employees.
„The Christmas bonuses, gifts for children and all the other rewards that we have realized are primarily a way to thank all our employees for their great contribution and engagement. This year has been the most successful in the history of Fortenova Group so far, both in terms of financial performance and the successful closing of our great strategic projects such as the divestment of the Frozen Food Business Group and the integration of Mercator, as well as the commencement of a significant investment cycle in our overall operations. All those successes and the huge amount of work that we have done would not have been possible without the contribution of our 50,000 hard working and talented employees across the region, who deserve a huge commendation and thanks from the entire team of Executive Directors. At the same time, I wish all our employees and their families happy and enjoyable holidays” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors.
„At Fortenova Group we have continuously been developing and improving the overall work environment, the rewarding systems and benefits for our people, all in order to make our companies as good and desirable as possible places for the work and development of our employees. I believe that this is why Fortenova Group has for the second year in a row been among the best employers in Croatia and the region, where we are also the largest employer. In the forthcoming period we shall, together with our social partners, continue to be focused on our employees and on finding creative and innovative ways for their motivation, rewarding and development, all in line with out corporate values and business objectives” – said Gordana Fabris, Fortenova Group’s Director of Human Resources, on this occasion.
On 7th December 2021 at the Jana production facility in Gorica Svetojanska Fortenova Group announced its key capital investments for the forthcoming period worth EUR 130 million and once again reminded of the major investments realized over the course of 2021 that amounted to EUR 125 million in total.
At the same time, the company presented the most important highlights of its operations in the period I-IX/2021, according to which Fortenova Group’s total consolidated revenue exceeded that in the same period of 2020 by 54 per cent and amounted to HRK 22 billion, while adjusted consolidated EBITDA grew by 29 per cent and amounted to HRK 1.7 billion. Additional growth was recorded in profits as well, and hence the first nine months of the year saw net profits in the amount of HRK 1.3 billion or an improvement of HRK 1,855 million against the loss generated in I-IX/2020. At the end of September the Group had HRK 2.5 billion of cash and cash equivalents on its accounts, and due to the significant decrease in debt resulting from the divestment of the Frozen Food segment, the leverage ratio went down to 4.2 times.
Fortenova Group’s major capital investments in the FMCG segment are the new, cutting-edge technology aseptic line for bottling refreshing soft drinks at Jana worth EUR 11.5 million, the installation whereof is in its final stage, the extraction plant at Dijamant with a capacity of 1,200 tonnes per day and the new slaughterhouse at PIK Vrbovec.
The new plant at Dijamant is worth EUR 29.3 million and is the largest individual investment at Fortenova Group, while the investment in the new slaughterhouse at PIK Vrbovec is at the level of EUR 8.2 million. At both companies preparations are in the final stage and the realization of the projects is about to begin. Also during 2021, Fortenova Group realized a scale-up of the ketchup production plant at Zvijezda to 10,000 tonnes, as well as the acquisition of the Osijek-based dairy and the launch of a new milk and dairy product line under the brand “Kravica Kraljica”, while the Food segment also saw the launch of Fortenova Group’s two key innovations on the market – the Planet of Plants line of plant-based products without ingredients of animal origin and the PIK&GO meat snacks line.
When it comes to investments in Fortenova Group’s retail business, along with Konzum’s acquisition of the Istria-based retailer Miracolo, which increased Konzum’s presence in the region with 15 new stores, a total of 45 new points of sale were opened in 2021, and a number of digitalization projects were realized, the most recent one being the introduction of payment in cryptocurrencies where Konzum is the first consumer goods retailer in Croatia to provide that possibility.
“Over a period of two years Fortenova invests a total of more than EUR 255 million in the economies of the region. It was the increase of investment power that was one of the most important objectives of a number of activities that we have completed over the last two and a half years. We have brought the company to an acceptable level of leverage and enabled it to invest in the development of its core businesses, while also generating excellent operational results. With the planned additional deleveraging we expect our investment potential to grow to a level of up to EUR 200 million, where we already have an elaborate and innovative business plan in place that includes, for example, the opening of more than 200 new or refurbished retail stores across the region, new distribution centres – the largest being the new Mercator Distribution and Logistics Center in Ljubljana, a new e-commerce platform as well as the launches of a number of new and innovative food products” – said Fabris Peruško, Member of the Board of Directors and Chief Executive Officer of Fortenova Group.
“Our strong investment projects in the Food & Beverage segment, amounting to more than 50 million euros, are intended to further strengthen the leading market positions of our brands, while at the same time extend Fortenova Group’s product portfolio in order to respond to new trends and emerging consumer preferences. These investments also demonstrate in a tangible manner the new orientation of our company towards more sustainable and efficient operations. Last but certainly not least, the increase in production capacities constitutes the basis for expanding our regional presence by entering new markets and categories, which shall fundamentally improve the competitive edge of all our companies” – said Sotiris Yannopoulos, Fortenova Group’s Executive Director for Food & Beverages.
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.