Arhiva Business - Fortenova Grupa

Fortenova Group and Podravka sign sale-purchase agreement for Agriculture Division Fortenova group

26.07.2024.

Fortenova Group publishes 2023 Financial Statements and Sustainability Report Fortenova group

16.07.2024.

With the publication of its audited Consolidated Financial Statements and the Sustainability Report for 2023, Fortenova Group has rounded off a very intensive first half of the year. In particular, after last week’s announcement of a very successful implementation of its ownership transformation and the fact that it no longer has any sanctioned shareholders in its ownership structure, as well as of the decision on having selected Podravka as its partner to continue the process of divesting the agriculture business, in the Financial Statements and the Sustainability Report the Group has now presented its last year’s business operations to the public in detail.

The audited Consolidated Financial Statements disclose the key financial indicators, while the Sustainability Report features a comprehensive overview of the Group’s and its operating companies’ operations in 2023, focusing on the activities in seven key sustainability topics.

When it comes to the financial indicators for 2023, according to the audited consolidated results the Group generated total consolidated revenues of more than EUR 5.8 billion. Adjusted consolidated operating profits were lower than in the year before and amounted to EUR 251 million. The net debt at the end of 2023 was EUR 970 million, while the net debt to adjusted operating profits ratio was 3.86 times. In a year-on-year comparison, all of the Group’s business divisions recorded higher total revenues, while having generated lower operating profits.

“Reflecting on last year’s financial results, it is important to note that, regardless of the specific circumstances that we found ourselves in, which we extensively addressed in the previous days, the Group has accomplished the most important goals planned, particularly having in mind the impact that global economic developments have had on our operations. As expected, the reduced operating profits as compared to the previous year were primarily due to the high increase in costs, particularly of energy and raw materials, and the increase in employee benefits. Nevertheless, despite the growth of our financing costs, the total net debt to adjusted profits ratio is on a satisfactory level” – said Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, commenting on the 2023 financial indicators.

When it comes to the third consecutive Sustainability Report, it contains information about the businesses of 39 operating companies and Fortenova grupa d.d. and indicates key strides made in the area of sustainability in 2023, as confirmed by two awards received by the Group in the previous period. The first one is the Gold Award and the “Regional ESG Leader” acknowledgement for overall ESG achievements, awarded in the competition of large companies from the territory of Central and Southeast Europe by the International Economic Forum “Perspektive” and the company “Promo global”, while the Group received the “Hrvoje Požar” annual award in the category of a realized rational energy management project for the implementation of a comprehensive energy efficiency project. The achievement of energy efficiency is one of the priorities that the Group has intensively been working towards since 2022, when it started to establish the processes of determining all emission sources in its own operating process and the entire supply chain. Following an integral calculation of the carbon footprint from all established sources, studies were prepared in collaboration with the Hrvoje Požar Institute for each of the Group’s 40 companies engaged in different business activities, aimed at reducing their carbon footprint, as well as the pertaining documentation for the implementation of measures for its reduction in the period between 2025 and 2030. At the same time, the plans on reducing the carbon footprint at Group level started to be implemented already over the course of 2023 by initiating projects intended to increase the share of renewable energy sources in the overall consumption, define summer and winter store temperatures, reduce lighting outside the working hours to a security minimum, install LED lighting and close the refrigerated display cabinets in the stores, install higher capacity compressors and economizers on the boilers in specific companies and modernize the vehicles. Thereby, savings of 5 percent were made at Group level in the overall energy consumption.

Another important step was the increase in employee investments, which is particularly important given the total number of workers employed by the Group across the region and the risk arising from labour shortages. Since 2019 the labour costs have thus increased at Group level by almost EUR 200 million, with the Group continuing to invest in the growth of total employee benefits (salaries, performance-related remuneration and various bonuses/rewards), where it has been recognized in the broader environment for actively advocating the search for new and the relaxation of existing models of substituting the insufficient number of the working population in the countries of the region.

Another thing the Group companies have in common is the initiative related to the reduction of food waste, where Konzum HR has for the sixth consecutive year been recognized as the largest food donor in Croatia, while at the same time four Group companies – Fortenova grupa d.d., Konzum HR, Zvijezda HR and PIK Vrbovec HR – have, upon initiative of the Ministry of Agriculture, acceded to the Voluntary Agreement on the Prevention and Reduction of Food Waste, “Together against food waste”.

Furthermore, given that it has defined the diversity of representation at all levels, along with achieving gender equality, as one of its ESG goals, over the course of 2023 the Group adopted the Diversity, Equity and Inclusion Policy, with action plans prepared for the implementation of the Policy in 2024.

“The package of information where we have presented in detail everything that we did in 2023 is yet another proof of our dedication to responsible business operations, and in that light our strides regarding sustainability topics should be viewed as well. This, of course, also applies to a number of activities that we have undertaken over the course of last year, related to securing the stability and safety of our operations, particularly when it comes to the financial aspect, but also with regard to different external challenges and abrupt changes to the conditions in which our business operations took place”, Peruško concluded, commenting on the key elements of the Group’s Sustainability Report.

The 2023 Sustainability Report is available at the following link: https://fortenova.hr/wp-content/uploads/2024/07/Fortenova-Group-Sustainability-report-2023.pdf

Fortenova Group and its 22 companies receive Best Places to Work certificate Fortenova group

24.05.2024.

Following a successfully completed evaluation process, Fortenova Group received the Best Places to Work certificate for 22 of its companies, an international certification witnessing that our organizations have recognized the importance of a positive experience at the workplace and above all, that they appreciate their employees.

Fortenova Group thus ranks among the world’s leading companies that have consistently generated good long-term operational results through the high engagement of their employees, participative leadership and focus on people.

Along with the fact that the recognition of the Group as the Best Place to Work confirms the importance of each employee’s contribution and develops and strengthens employer branding, the Best Place to Work certificate sets Fortenova Group and its companies apart from others on the labour market and enables us to attract new high-quality employees, particularly young people who recognize the importance of independent certifications and the strong focus of companies in building a desirable place for work.

“Within very short time we have received the second independent verification that our dedication to permanent improvements of working conditions and employee satisfaction in general have borne results. Even more importantly, through this certification process, this has been verified by employees from different companies and different markets where the Group operates. And if our colleagues across the Group, regardless of whether they work in the stores, in production, logistics or administration, have recognized our strides in improving the quality of the work environment, this is a great motivation for all of us to continue to pursue the development activities in that area”, said Fabris Peruško, Fortenova Group’s CEO and Member of the Board of Directors.

Gordana Fabris, Fortenova Group’s Executive Director of Human Resources, highlighted the pride in Fortenova Group having received the Best Places to Work certificate and with it the confirmation of the international community that our focus on employees has been recognized and borne results. “We are particularly proud of the fact that 22 of our companies from five different countries took part in the certification process, with over 2200 employees having participated in the poll, and the results have shown that we are among the best employers in the region. Thank you to all of you for taking part in the certification process, because this way we make Fortenova Group an even stronger and better company” – she said on the occasion of receiving the certificate.

With four brands at the top of the BRANDscore list, Zvijezda is still Fortenova Group’s strongest company Companies

22.04.2024.

Fortenova Group generates EUR 2.7bn revenue and EUR 101m operating profits in H1/23 Fortenova group

29.09.2023.

Fortenova Group publishes its financial results for H1/2023 and its 2022 financial statements.

In respect of the unaudited consolidated statements, for H1/2023 the company generated EUR 2.7 bn of total revenue, outperforming the same period last year by 9 percent. Adjusted operating profits amounted to EUR 101 million. Net debt has remained below EUR 1.1 billion, with the liquidity on the company’s accounts at EUR 279 million. All of the Group’s business divisions have recorded total revenue growth against the same period last year, though with reduced operating profits. The drop in operating profits is primarily due to the large increase in electricity and raw material costs, increase in salaries, as well as the selling price limits for specific product categories imposed by the Governments in the area.

In respect of financial results for 2022, the audited consolidated results the Group presented total consolidated revenues of more than HRK 40.7 billion or EUR 5.4 billion, exceeding the 2021 revenue by 30 percent. Consolidated adjusted operating profits grew by over 20 percent, amounting to more than HRK 2.3 billion or EUR 310 million, along with a positive net result. At the end of 2022 the net debt was slightly below EUR 1.1 billion, with a leverage ratio of 3.44 times (as per Lender defined terms), which represents half of the leverage ratio that the Group had in 2019, the year of Fortenova Group’s foundation. Cash on the company’s account at year end was EUR 290 million.

“The Group’s operating results continue to show that Fortenova Group has managed to separate its operational performance from its ownership issues, where the presence of sanctioned co-owners in the structure makes it more difficult to achieve a sustainable and efficient capital structure. With the recently executed refinancing with our existing lender HPS, we will no longer have sanctioned entities on the credit side of the Group which delivers on our plans “– said Fabris Peruško, Fortenova Group’s CEO and Member of the Board of Directors.

“The Group delivered outstanding results in 2022 with the growth with the highest ever cash EBITDA and the first full year positive net result coming only from ongoing operations. H1 2023, has as expected been more challenging given the impact of inflation on costs and consumer income and purchasing power. The Group has so far shown considerable resilience given these headwinds with the Retail Group in particularly continuing to perform very well.” – said James Pearson, Fortenova Group’s Chief Financial Officer.

Along with the financial performance indicators, Fortenova Group has also disclosed a thorough and comprehensive overview of the Group’s operating performance in 2022 in its second consecutive Sustainability Report, where it has presented a number of activities and initiatives related to the process of establishing the strategic framework for sustainability management. Those activities have had positive effects on all the markets on which the Group operates – among its customers, clients, business partners, in the local community as well as among its employees and other stakeholders.

The Group is particularly focused on working on its sustainability and on publishing the Sustainability Report, in spite of the numerous challenges that it faced last year. “At no point has this called into question our commitment to one of the company’s strategic priorities – the realization of our sustainability goals and the positioning of Fortenova Group as a responsible corporation. The Report has presented our most important actions when it comes to environmental, social and governance topics in the Group to the broader public and, moreover, offered an in-depth insight into our operations and our environmental impact. We see this thorough annual analysis of all our constituents as an excellent lever in improving transparency and raising awareness of our priorities” – Fabris Peruško concluded.

As presented in the Report, as part of each of the seven key topics that constitute the strategic sustainability framework, in mid-2022 the Group established internal working groups with a view to defining measurable initiatives for the period until 2030. Thus, for example, standing out within the “GHG Reduction” topic there is the project of Scope 1, 2 and 3 calculations for all Fortenova Group companies, intended to set up an action plan for achieving climate neutrality, while as part of the “waste management” topic, all Beverages Group companies are currently implementing the project of introducing the tethered cap. Konzum, for example, initiated the project called Recyclopedia, intended to educate consumers and prevent the creation of food waste in households and was declared the Best Donor for the fifth consecutive time. Along with encouraging short supply chains, a Supplier Code is in preparation as well. Last year the Group also conducted surveys regarding gender equality on all markets and adopted a Diversity, Equity and Inclusion Policy. An important aspect of the Group’s strategic framework is also the topic of initiating a project to identify climate risks and opportunities and build sustainability criteria into investment decisions.

Fortenova Group supports Croatian Government’s initiative to fight inflation Fortenova group

14.09.2023.

Fortenova Group invites shareholders to vote on bond refinancing Fortenova group

16.06.2023.

An invitation was sent today by Fortenova Group to the Depositary Receipt Holders for a Meeting to be held on 27 June, where they will, among other things, vote on the Group’s proposal to refinance the existing bond in the amount from EUR 1.1bn to EUR 1.2bn with the Group’s current majority creditor HPS Investment Partners.

In the materials for the Meeting, the DR Holders were provided with a detailed presentation on how the Group’s management, prior to putting the proposal on accepting the terms and conditions of the refinancing offered by HPS to the vote at the DR Holders’ Meeting, explored all other viable refinancing options that were available to Fortenova Group, including extensive discussions with regional and investment banks as well as bond market considerations.

After significant efforts to find financing with banks and bond markets, the Fortenova Group management has decided to enter a new financing for the period until 29 November 2024 with HPS, the existing leading non sanctioned creditor, provided that the DR Holders vote in favour of this proposal.

The conditions of the new financing of the entire amount of the current bond ranging from EUR 1.1bn to EUR 1.2bn offered by HPS in regards of margin and EURIBOR floor remain the same as for the current bond. The terms of the new bond include an Original Issue Discount, a one-off payment of 6.75 percent of the bond amount to be issued, which partly reflects sanctioned entities being in the Group’s capital structure and underlines the necessity of dealing with this problem as soon as possible. When the issue of the sanctioned entities being in the Group’s capital structure is resolved, Fortenova Group’s access to the banking market will reopen and the company will explore it again.

One of the terms agreed with HPS as part of the new financing is the commencement of a process for the potential divestment of Fortenova Group’s Agriculture Division by no later than 31 December 2023. Should the divestment actually take place, proceeds will be used for the Group’s further deleveraging or for strategic investments in the Group’s other core retail and food businesses.

With regards to its operating business, the Fortenova Group continues to perform extremely well. Preliminary unaudited results for 2022 show net revenues exceeding EUR 5.2 billion, operating profits according to IFRS-16 of more than EUR 470 million (adjusted operating profits of more than EUR 300 million), with EUR 1.1 billion of net debt of. Group liquidity was in excess of EUR 280 million and the Group achieved its best-ever ratio of total net debt to adjusted operating profits of 3.5 times.

Ivan Karadžić, izvršni direktor kompanije Mercator-CG i Hilmija Franca, izvršni direktor kompanije Franca

Mercator-CG and Franca sign Sale-Purchase Agreement Fortenova group

31.05.2023.

The company Mercator-CG and the retail chain Franca signed a sale-purchase agreement today, whereby Mercator-CG acquired the Franca retail facilities in almost all municipalities in Montenegro.

This is Fortenova Group’s first acquisition in the region, whereby the company has accomplished one of its strategic goals – to secure the strengthening of its store network on the SEE markets and its availability to the customers not only through organic growth, but also through acquisitions of local retailers.

The transaction was previously approved by the Competition Protection Agency and with its realisation Mercator-CG, which operates under the brand IDEA, has improved its offer to consumers and availability, ensuring a footprint covering the entire country.

Namely, the retail chain owned by the Franca family has 67 stores, with most of them – 13 to be precise – located in Podgorica, eight in Budva and seven in Bijelo Polje. With the acquisition of the new stores the retail network of the IDEA brand grows to almost 200 stores and with the takeover of 900 Franca retail employees the significance of the company Mercator-CG as one of the country’s largest employers shall grow as well, because following this acquisition the IDEA brand will employ more than 2 500 people. As employer, Mercator-CG has also assumed all contractual obligations towards its new employees.

On behalf of Mercator-CG the Sale-Purchase Agreement was signed by Ivan Karadžić, Executive Director of Mercator-CG, Ivan Antonijević and Boško Vuković, both Deputy Executive Directors of Mercator-CG and on behalf of Franca by the co-owners of shares and members of the Franca family: Hilmija Franca, Hatema Franca, Halida Franca, Sead Franca, Safet Franca and Halid Franca.

The agreement signing ceremony that finalised the transaction was also attended by Fabris Peruško, Fortenova Group’s Chief Executive Officer and Member of the Board of Directors, who stated on that occasion:

„Fortenova Group has strongly supported this acquisition pursued by the company Mercator-CG because it bears witness to the fact that we are implementing our strategy of strengthening the regional presence in retail. We have a clear vision of what we want to achieve in this business in all the five countries of our operations, we want to provide high-quality offerings and service, affordable prices as well as a strong footprint and a wide choice for our consumers. We can already clearly see the effects of synergies in retail that have started with the integration of Mercator in 2021 – from improved implementation and management to excellent collaboration with local suppliers, which has due to the shorter supply chains proved to be our key competitive advantage in the two recent crises. Given that the Franca family is a producer of high-quality fresh and processed meat, I am certain that the good partnership collaboration will continue in this case, too” – Peruško said.

Viewed from the angle of Hilmija Franca, Franca company’s Executive Director, with this acquisition Franca will consolidate its leadership position on the Montenegrin fresh and processed meat market. Franca will continue to be present on the market under that name, as one of the largest and most recognisable local brands. “The most important thing for us is that all 900 employees will stay employed with the new company” – says he and continues:

“To become part of a regional network and join forces with one of Montenegro’s largest chains means a great deal to us. We are exceptionally proud that our products will be present in all IDEA stores and thus even closer to numerous consumers. At the same time, I am sure that this partnership will also open the gates to other markets for us as leaders in our country’s meat industry. The focus of the company Franca will be on development projects in the primary processing industry and on strengthening exports to countries of the EU and the region. Like before, agricultural producers will remain Franca’s priority through repurchases. I believe that this important business step will be the beginning of new, great successes for all of us” – Franca said.

Ivan Karadžić, Executive Director of the company Mercator-CG noted on the occasion of closing the transaction that there was no doubt that this acquisition would be yet another stride in meeting business goals.

„This is an important point in our operations. The merger of the Franca store chain is an important step in our strategic development as it positions us as leader on the Montenegrin market and with around 200 stores the only chain present in all municipalities of Montenegro. With this acquisition our company shall also become the country’s largest employer with over 2 500 employees and I would like to use this opportunity to wish the more than 900 employees of Franca Markets a sincere welcome to our team. I am happy that they will become part of our company and that we will continue to meet the goals set as one team. With this acquisition and the focus on fresh, local, private label, the Super Card and digital transformation we are changing the retail market in Montenegro, improving our customer service and implementing state-of-the-art trends by using the power of the Group we belong to” – said Karadžić.

Zoran Mitreski, Executive Director of Fortenova Group for Retail and President of the Management Board of Konzum also highlighted the importance of the realised acquisition, particularly in the light of expanding the store network.

„We have strong investment dynamics within the system. Last year we opened more than 150 points of sale across the region, whereof 60 new and 90 refurbished ones. The formal takeover and integration of Franca will follow in autumn, as well as further investments and the continued exploration of further merger and acquisition opportunities in retail”, Mitreski announced.

On a different note, the Franca retail chain was established as part of the company founded by the Franca family in 1990, having started from the former meat industry “Meso-promet”. Over the last 30+ years they have developed one of the most significant production and retail companies on the territory of Montenegro, with a total of 1 500 employees. Franca has based its recognition on the market largely on local fresh and processed meat from their own farms, with their products present not only on the Montenegrin market, but also in the region and in some EU countries.

The realised acquisition will also mean the combining of expertise, technologies, brands and other resources of both companies and provide for a stronger market position, meeting different customer needs as well as assortment extension, primarily by offering premium local products.