After receiving a number of non-binding offers for the acquisition of the companies Ledo plus, Ledo Čitluk and Frikom, forming together with several smaller affiliated companies the Frozen Food Business Group, Fortenova Group have decided to move forward to the next phase of the sales process by inviting a select number of bidders to start due diligence.
“The market test has confirmed that there is strong international interest among potential investors in our Frozen Food business. The qualified non-binding offers come from companies with outstanding investment and operational track record. We are glad that we will be entering due diligence process with some extremely strong potential partners”, said James Pearson, Fortenova Group’s Chief Financial Officer.
“Our ultimate goal, over and above maximising value, remains to be selection of a strategic partner who will make the maximum contribution to the further development of the Frozen Food Business Group. Even though we are entering the due diligence phase now, completion of the process still depends on finding the partner who will recognize the full value and potential of this business and its people”, said Fabris Peruško, Fortenova Group’s Chief Executive Officer and member of the Board of Directors. “In order to proactively achieve our targeted capital structure via deleveraging the company, Fortenova Group is ready to dispose of only one segment of the core business, which potentially would be the Frozen Food Business Group. I expect the due diligence process to be completed by the end of this year and we will continue to keep our people and the market informed of further developments in a timely manner”, concluded Peruško.”
Belje plus, part of the Fortenova Group, and MEGGLE Croatia reached and signed an agreement on the purchase of the assets of the MEGGLE dairy in Osijek. By purchasing MEGGLE’s property and production line – with the intention to commence own production as of 1st January 2021 – Belje will preserve the long-standing tradition of milk production in that part of Slavonia.
With the start of the production in Osijek Belje will purchase a certain quantity of milk from MEGGLE’s present contractors, while the need for employees is still under review, with around 100 people expected to be employed.
Fortenova Group already accounts for around 10 per cent of the total milk quantity produced in Croatia, which is around 5 per cent of the local needs. Most of the milk produced at Belje is used for the production of ABC cheese, with its annual production currently at the level of 3,700 tonnes, while plans have been developed for the significant expansion of its portfolio.
“We are happy with the agreement reached and with having closed the sale of MEGGLE’s assets in Osijek, as well as with Belje’s decision to produce on that location following our withdrawal. After having made the final decision on closing down our production in Croatia, the MEGGLE Group has exerted maximum efforts to find a buyer for the assets in order for as many of our employees as possible to have new employment after 31st December and for our contractors not to have any standstill in the purchase of milk. Until the end of the year MEGGLE shall continue to restructure its operations, in accordance with the agreement reached with the trade unions, while meeting all the assumed obligations in time and in full”, said Marjan Vučak, President of the Management Board of MEGGLE Croatia.
“The MEGGLE Group is aware of how important it is to preserve the milk production in Osijek, which is why we had delayed our decision for as long as this was possible and we are glad that with the new owner it will be continued after all. Over all these years Meggle has been a socially sensitive and responsible employer and a reliable business partner. Having reached this agreement with Fortenova Group confirms that we have continued to behave that way in this restructuring process, too, and we shall keep operating according to the same principles going forward”, said Matthias Oettel, CEO of the MEGGLE Group.
“Fortenova Group has continuously worked on further improving the value and strengthening the portfolio of its brands. In order to utilise all potentials of ABC fresh cream cheese, which is one of the strongest regional brands and one of our strongest export products, Belje needs additional production capacities and MEGGLE’s withdrawal enabled us to secure them within short time. With the Osijek plant we have secured the prerequisites for the development of new products, made of local raw material, of premium quality and higher added value. With this move we shall continue to work on the preservation and further growth of the local agricultural production, which along with saving existing and opening new jobs is of great significance for Slavonia and the broader community. Fortenova Group views its operations in the long term and we are currently preparing the company for operations in the period following the crisis in order to have as strong as possible a lever for growth once the recovery starts, with this transaction to be entirely financed from our operations” – said Fabris Peruško, Chief Executive Officer of Fortenova Group.
“The acquisition of Meggle’s assets and the development of new products can be an additional encouragement to increase the quantities of milk produced and for small producers to invest in dairy cow farms in Croatia. This would certainly have a positive effect on the change of trends, after this year the long-lasting decline in milk quantities produced in Croatia has finally been stopped. The dairy industry is one of the major focus areas of the 2020-2025 strategy in Fortenova Group’s Agriculture Division, and the Belje food industry will be the platform on which the development in that segment will gain momentum” – says Andrej Dean, President of the Management Board of Belje.
The transaction will be carried out once all the required regulatory approvals are in place.
Fortenova Group d.d. and Osijek Koteks d.d., a leading Croatian construction company, finalised an agreement whereby Osijek Koteks has acquired Projektgradnja plus d.o.o., a fully owned subsidiary of Fortenova. Osijek Koteks was selected as the best bidder through a competitive sale process managed by Fortenova and Deloitte Croatia as the exclusive financial advisor to Fortenova.
By closing this transaction, Fortenova Group continues towards its aim to focus on three core segments of retail, food and agriculture. Since the start of the sale process approximately a year ago, Fortenova Group has also divested its subsidiary Rivijera, which manages the Triestina camp in Ičići near Opatija, as well as minority stakes in ID Riva Tours and Gulliver putovanja. ID Riva Tours is a German tour operator organising trips to Croatia, with offices in Poreč, Žminj, Rijeka, Zadar and Trogir, while Gulliver putovanja is one of Croatia’s leading destination management companies in the majority ownership of the global tour operator TUI.
James Pearson, Fortenova Group’s Chief Financial Officer, emphasized on this occasion the importance of the company’s focus on core business: “I would first of all like to thank all the employees of Projektgradnja, and Rivijera, for their skills, dedication and hard work while they were part of the Fortenova Group. We now wish them the best with their new partners and hopefully, much deserved success in the future. For Fortenova, these four transactions, along with others we expect to make in the coming months, allow the Group to make good progress in moving towards its previously announced focus on three core divisions of retail, food and agriculture. The aim is to have a sharper focus on these three divisions and have an overall less complex Group to enable us to deliver better returns as we go forward.”
As part of the sale process for all these businesses Fortenova Group was focused on finding buyers who share Fortenova’s vision of developing the acquired businesses for the benefit of their employees, partners and other stakeholders. As a result of this transaction, Projektgradnja gained a strategic partner who will improve and strengthen its operations, and secure its long-term prospects. At the same time, Osijek Koteks will complement its portfolio which mainly consists of civil engineering and construction material production with building construction projects, and strengthen its overall expertise in civil engineering by taking over some 200 Projektgradnja’s construction experts. It is worth noticing that Projektgradnja executed some of the largest and most complex construction projects in Croatia, and is well qualified to perform all kinds of construction works. Over the last four and a half years Projektgradnja completed 69 projects with the total value of more than EUR 173 million.
Over the first six months of 2020 the Group thus generated consolidated revenues of almost HRK 10 billion (9,910 million) and consolidated EBITDA of HRK 531.9 million. The consolidated results pertain to Fortenova grupa d.d. and its 95 subsidiaries, without Mercator, the transfer whereof to Fortenova grupa d.d. is expected by the end of the year. A strong cash position of HRK 1.5 billion on its accounts and stronger market shares were the features that Fortenova Group concluded its operations with in the first half of 2020.
According to non-consolidated indicators, the core businesses non-consolidated net sales revenues for the period were 4.3 per cent lower than in 2019, which was expected in view of the global economic lockdown that marked the H1/2020 operations due to measures introduced to prevent the spread of COVID-19, and EBITDA was improved by almost 3 per cent against the same period of 2019.
While net sales revenues in the Retail & Wholesale and Food segments dropped by 3.9 per cent and 8.3 per cent, respectively, total revenues in agriculture grew by six per cent due to the increase in pig prices. Agriculture segment also features excellent EBITDA growth rate of 41.5 per cent in H1/2020 against the previous year. Retail EBITDA grew by HRK 37 million, with the major positive effect accounted for by Q1/2020 and the implementation of measures taken to adjust operations to COVID-19 circumstances. The lockdown conditions were mostly reflected in the Food operations, particularly the segment that primarily leans on the HORECA channel and tourist flows, resulting in a drop of EBITDA by 11.5 per cent compared to the same period of 2019 though market shares increased in oil, beverages and frozen food and business in Serbia performed well.
“Given the impact of COVID-19 on the first half of 2020, we are very satisfied with our operations. When it comes to our consumers and the community in which we operate, the most important thing was to keep the supply chain running without interruption and to protect the safety of our employees and our customers, and when it comes to the position of Fortenova Group – to reduce the negative effects of the crisis as much as possible by implementing measures intended to adapt our operations and to manage liquidity reserves as firmly as possible, which we have successfully done, as shown by the six-months results. The period also featured very positive steps in the process of transferring Mercator and Dijamant to Fortenova Group and optimism regarding the results of the tourist season, which was way better than expected” – said Fabris Peruško, Chief Executive Officer of Fortenova Group at the presentation of the H12020 business results to DR Holders, i.e. owners of the company.
Commenting on the financial results of H12020, James Pearson, Executive Director for Finance of Fortenova Group, said that “in view of the negative impact of COVID-19 we have managed our cash and profitability very well”, stating further: “Fortenova Group now has a very clear and agreed strategy to deliver financial health of the Group. This we will continue to deliver on and we expect to fully comply to our lender requirements going forward”.
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.
As of mid May and early June, respectively, the companies Konzum plus d.o.o. and Ledo plus d.o.o. will be headed by new Presidents of the Boards. Thus Zoran Mitreski will replace Slavko Ledić as President of the Management Board of Konzum and Ivan Babić will assume the management of Ledo instead of Marin Poljak. In order for Fortenova Group operations to be even more efficient in the forthcoming period, Fabris Peruško, Chief Executive Officer of Fortenova Group, has together with the Executive Directors and the Board of Directors introduced changes with a view to further strengthening the management teams and improving the two key business areas of Fortenova Group.
The position of the President of the Managment Board of Konzum, the largest national retail chain, will as of 16th May 2020 be assumed by Zoran Mitreski, former Member of the Management Board of Konzum for purchasing and marketing. At the same time, with a view to further standardizing and strengthening synergic potentials as well as simplifying operations, the frozen food segment within Fortenova Group’s Food Business Area will be integrated in terms of management. As of 1st June 2020 Ivan Babić, currently director of the Turnaround Department at Fortenova grupa d.d., will assume the management of the frozen food segment as Executive Director and at the same time as Managing Director of the company Ledo plus.
Both Slavko Ledić, former President of the Management Board of Konzum and Marin Poljak, former Managing Director of Ledo plus, will continue their careers outside Fortenova Group.
„In realizing those decisions we were primarily guided by the wish for improvement and continuity, which we have achieved with these appointments. Our colleagues Mitreski and Babić are deeply integrated in the operations of the companies the management of which they are about to assume. With long-standing experience in retail, and particularly in Konzum where he has together with other colleagues run the company through the most challenging stages of its operations, since the deep crisis in 2017, through the Extraordinary Administration Procedure to the stabilization of operations and resumption of excellent results, Zoran Mitreski is the key person for Konzum’s further development. The leadership that he has shown today, under the circumstances of the coronavirus pandemic, has significantly contributed to the fact that Konzum has again demonstrated exceptional strength under significantly aggravated operating conditions.
Similarly, Ivan Babić as head of the turnaround project, particularly important for the processes that Fortenova Group has undergone, had the opportunity to familiarize himself in detail with all our businesses and has with his strategic considerations and operational skills made a great contribution in raising Fortenova Group’s operating profit by EUR 100m through the restructuring over the last two years. The experience he has gained by doing that work and by running the restructuring at MOL, where he worked prior to joining Fortenova Group, guarantee that our colleague Babić will justify the trust placed in him to run the operations of the frozen food segment“ – said Fabris Peruško, Chief Executive Officer of Fortenova Group.
“I feel great pride, but at the same time great responsibility. On the one hand, this confirms that the Management Board that I have been part of in the former composition led the company in the right direction and I can only say that my appointment will provide for positive continuity. We shall continue working on all projects started and, of course, I look forward to all future ones. Konzum is made of people and I am sure that our winning team will continue to overcome all challenges just as it has done so far“, said Zoran Mitreski, the new President of the Board of Konzum.
Ivan Babić, the new Executive Director of Fortenova Group’s frozen food segment, said on the occasion of the appointment: „I am honored by the decision to entrust me with the responsible duty of running the new frozen food segment in the Food Business Area. After two years of very intensive work on the turnaround project and the cooperation with numerous teams from all parts of Fortenova Group, I believe that I have not only sufficient knowledge, but also the experience required to achieve the strategic objectives set. I very much look forward to new business challenges and particularly to the cooperation with colleagues on developing and strengthening the market positions of our companies.“
Peruško also thanked the former heads of Konzum and Ledo for the contribution they made to the companies and to Fortenova Group, particularly over the period of the Settlement Plan implementation and the transformation of the companies.
„The managerial skills, knowledge and personality of Slavko Ledić were key to maintaining Konzum’s operations in the crisis the company went through in 2017. In spite of a number of aggravating circumstances, Konzum survived and within very short time regained customer confidence and resumed its upward trajectory. Ledić headed the team that impeccably realized the Settlement Plan implementation, which was extremely complex in a retail company with more than 10,000 employees. In parellel to that, Konzum continuously improved its business results and was one of the major drivers of operating profit growth of the entire Group. At the end of the day, the period of extraordinary retail operations under challenging conditions that we are currently witnessing is largely the result of Ledić’s organisational skills and knowledge of retail operations. I therefore extend my sincere appreciation to our colleague Ledić for his hard work and engagement and wish him lots of success in his further career“ – Peruško said.
In his acknowledgment to Marin Poljak, former President of the Board of Ledo plus, Peruško highlighted his contribution to developing the organisation, the new vision and the realization of Ledo’s strategic plan. „Under his management Ledo continued to affirm its leading position in product innovation and quality under aggravated operating conditions“ – said Fabris Peruško on the occasion of announcing changes in leading positions at two Fortenova Group companies.
PIK Vinkovci invite all interested small agricultural producers and family farms in Croatia who want to place their products on the market through Konzum to contact them at their collecting stations or through the email address: firstname.lastname@example.org.
Namely, PIK Vinkovci have together with Konzum taken part in the initiative launched by Fortenova Group in cooperation with the Agricultural Chamber and the Ministry of Agriculture in order for agricultural produce, which small producers cannot sell through green markets due to the extraordinary measures, to be placed through Konzum’s retail network.
The placement will be realized through distributors, who will repurchase their produce subject to meeting highest quality standards. At Fortenova Group that will be PIK Vinkovci, given their long-standing tradition in agricultural production and repurchase of produce as well as the current collaboration in repurchase with several hundred contract farmers from all over Croatia.
The partnership which PIK Vinkovci within the scope of this project offer to small local producers whose existence is directly jeopardized by the closing of green markets, shall provide them with an essentially needed new sales channel. Thus the fact that Konzum is the largest national retail chain with over 600 points of sale, which will from now on additionally become an efficient sales channel for all small producers and family farms that so far offered their products mainly to local communities and green markets, has become particularly important in this project. This all builds on Konzum’s already existing focus on Croatian production, given that products of Croatian origin account for 80 per cent of Konzum’s turnover in the fruit and vegetables category.
PIK Vinkovci plus d.o.o. started gaining experience in vegetable, crop, livestock and seed production and repurchasing back in 1962 and today, measured by its storage capacities of 86,800 tons in total as well as silo and drying capacities, the company is among the largest in the Republic of Croatia. It is also one of the leading companies on the territory of the County of Vukovar and Srijem, tilling more than 5,000 ha of land, employing over 500 people and investing in development and new technologies.
„PIK Vinkovci have an exceptionally good and fair cooperation with more than 500 contract farmers a year, from Eastern Slavonia and from all across Croatia. Through five collecting centers, which strategically cover the agricultural production of the entire Republic of Croatia, they repurchase over 20,000 tons of fruit and vegetables a year. We take pride in the contribution that we have made to the integrated development and preservation of traditional and natural values, as we daily meet people’s needs for quality local food on the Croatian market. In cooperation with Konzum as well as our existing and future contract farmers, whom we herewith once again invite to join us, we will certainly be able to keep fulfilling our basic mission – to supply all our customers with quality local products“ – Vlado Čondić Galiničić, Executive Director of Agriculture at Fortenova Group, commented on PIK Vinkovci’s initiative.
Fabris Peruško, CEO of Fortenova Group, pointed out that Fortenova Group has in this project secured the repurchase of Croatian agricultural produce through PIK Vinkovci and their placement through Konzum’s retail network.
„We have thus, in these challenging times, used the key segments of our operations to create an important link and platform to preserve small agricultural production in Croatia. At the same time, we have once again demonstrated our overall strategic orientation towards Croatian production and made an important contribution to the future of Croatia’s agricultural production. By providing an alternative distribution and sales channel in circumstances of the rigorous measures introduced to prevent the coronavirus spread, we have proved how important a business partner small agricultural producers and family farms are to us. Moreover, we have conveyed a message about the values that we share – the importance of buying Croatian products, focus on the self-sufficiency of national and local production and strengthening of local supply chains“ – said Fabris Peruško, CEO of Fortenova Group.
INVITATION BY PIK VINKOVCI TO SMALL AGRICULTURAL PRODUCERS AND FAMILY FARMS
Key agricultural crops to be repurchased by PIK Vinkovci: watermelon, cabbage, new potatoes, melon, cucumber, crystal lettuce, kale, leek, tomato, apple, zucchini, red cabbage, grapes, pumpkin, asparagus, parsley, chard, onion, pepper, plum, celery root, peach, nectarine, pear, garlic, eggplant, red beet, apricot, kohlrabi, sweetcorn, celery, cherry, radish, spring onions etc.
The fruit and vegetable repurchase will be realized according to defined quality standards and with all new contract farmers a cooperation agreement will be signed to define the contractual relations. A constituent part of each agreement will be a product quality standard regulation.
Contact repurchase/collecting stations:
Collecting Center Lipovac, Cvjetno naselje bb, Lipovac
Collecting Center Čeminac, Školska 5a, Čeminac
Collecting Center Polača, Industrijska zona Primat bb, Polača (near Zadar)
Collecting Center Kaštela, Trogirska cesta broj 5, Trogir
Collecting Center Zagreb, Kelekova 47, Zagreb
The contact email address for all small producers is: email@example.com, the contact number for Dalmatia and Zagreb is: 023 662 548, while the contact number for Slavonia is: 032 270 084.
Fruit and vegetables of local origin already account for over 80 per cent of turnover in that category at Konzum and through the new initiative we are ready to offer our repurchasing capacities and sales network to those who have no possibility of putting their products on the market as the green markets have been closed
Citizens will soon be able to continue buying local producers’ fruit and vegetables, that they, until recently, were purchasing on local markets, at Konzum stores all across Croatia. Konzum’s initiative was prompted by the decision of the Civil Protection Committee of the Republic of Croatia on the measure of suspending the operations of green markets and all accompanying facilities. Products of local origin already account for more than 80 per cent of Konzum’s fruit and vegetables turnover and with this initiative Konzum shall secure additional space on its shelves all over Croatia for local producers who had offered their products mainly in local communities so far. Interested farmers can contact the distributors PIK Vinkovci, Marinada and Fragaria, who will repurchase the goods and deliver them to Konzum with guaranteed highest quality standards. The project can also be joined by small fruit and vegetable growers who have applied to Konzum’s „The Best from Croatia“ competition, once they make arrangements for the cooperation with the aforementioned distributors.
In collaboration with the Small Croatian Producer cluster Konzum has offered a selection of quality local products from small local producers at specially designed areas in several of its stores. With the new initiative and in agreement with the Small Croatian Producer cluster we shall continue to place on the market goods of producers acting within the scope of that cluster who have already participated in the project „The Best from Croatia“.
„While we appreciate all decisions made by the Civil Protection Committee of the Republic of Croatia as they are intended to protect the population’s health and safety, we also want to help primarily small family farms to whom an important sales channel is not available any more and whose existence has thus been jeopardized. Since the very beginning Konzum has been fostering partnerships with local producers and this initiative is a continuation of our strategic focus on supporting Croatian production. In the current situation that we have been faced with due to the coronavirus epidemic, self-sufficiency has proved to be particularly important in maintaining the supply chain and hence we all together have to work on strengthening the local agriculture“, said Zoran Mitreski, Member of the Management Board of Konzum.
Konzum already cooperates with more than 4000 small and large fruit and vegetable producers from all over Croatia, via direct deliveries to own distribution centers, their repurchasing stations or its strategic parterns.
With this initiative we are ready to offer our repurchasing capacities and sales network to those who have no possibility of putting their products on the market.
Observing Italy’s experience, Konzum started preparing stocks several weeks ago, its key advantage being the strategic cooperation with local suppliers of many years
You can see the video of the statement in Croatian here.
In all of its production and agricultural facilities as well as in retail, Fortenova Group implemented a number of measures to secure continuity of operations under the extraordinary conditions of defense against the coronavirus spread. Under intensified measures of sanitary and personal hygiene, the employees of Jamnica, Zvijezda, PIK Vrbovec, Ledo, Belje, PIK Vinkovci and all other Fortenova Group companies are working normally to secure products for the shelves and stocks in retail, thus guaranteeing availability of those goods on the market in the forthcoming period.
Given that the exceptionally strong demand over the last days at Konzum stores created jams that made it very difficult, in spite of the employees’ efforts, to fill the shelves in the stores at the same pace at which customers emptied them, Fortenova Group points out that Croatia’s largest retail chain has sufficient quantities of goods, particularly food and hygiene items, which are in highest demand in the current situation. The high demand also resulted in an increase in turnover, which was significantly higher than usual at individual Konzum stores in the peak periods.
„The increased demand, particularly after specific articles, is the only reason why the shelves are empty from time to time, as long as our staff does not have the time to replenish them. We have started to get prepared for that situation weeks ago, observing the experience in Italy, and have additionally increased our stocks. The warehouses are full and there are sufficient goods to meet the demand over several months. Food stores will certainly stay open, in compliance with the national measures of defense against the coronavirus disease and at Konzum, ie. at Fortenova Group we will make sure that there are sufficient quantities of all key products“ – says Fabris Peruško, CEO of Fortenova Group.
Peruško particularly pointed out that in the current situation Konzum’s great advantage was its strategic cooperation with local suppliers of many years, which was also a guarantee that there would be no delivery disruptions nor price increases at Konzum stores.
„Although the majority of our food items are of local origin, for some time we have also been working on establishing alternative sources of supply, in case there should be any major limitations or stoppages in the supply of goods that are imported from the most affected countries. We would like to ask our customers for their understanding – large surges make pressure on the stores, which increases the health risk both for our customers and our employees. I would therefore like to appeal to our customers to comply with the provision of keeping distance at the cash desks and in the store as well as using primarily contactless, ie. card payment, as those measures are key in preserving the health of everyone in the stores“ – said Zoran Mitreski, Member of the Management Board of Konzum for Purchasing and Marketing.
„All our employees, particularly those whose work is not visible as they are either in production or in the logistics chain, give their best to maintain operations under circumstances that are significantly more difficult. This is an opportunity to say thank you to them as well as to Konzum’s employees for all the efforts that they have been exerting for the system to function under extraordinary circumstances, for the supply of goods to be sufficient and for all customers to be served. As employers we will find a way to reward them for this extraordinary engagement“ – said Fabris Peruško and reiterated that the Fortenova Group food production as well as Konzum’s stores would keep on working and that it was most important now to overcome the days of probably even stricter measures of defense against the virus spread that are ahead of us with calm heads and no panic.
Further strengthening of wholesale and utilisation of synergies at Fortenova Group level
Fortenova Group made the decision that at the end of 2019 VELPRO-Centar plus would merge with Konzum plus. The objective of such merger is to additionally strengthen the Fortenova Group wholesale segment, with the largest wholesale in Croatia operating under the wing of Konzum, Croatia’s largest retail company. At the same time, such move will result in significant synergies and increased operational efficiency. The amalgamation will also provide for numerous other advantages, primarily the optimisation of assortment which will be formed to meet customer needs in all sales channels, and for a stable coverage of the national market with a high level of supply and distribution services, particularly during the tourist season. The main pillar in strengthening the distribution are its employees with long-standing experience, the distribution fleet with more than 150 delivery trucks, as well as 16 cash&carry and distribution centers, with further modernisation of sales premises and processes planned.
All current business partners of VELPRO-Centar plus will continue to be an important part of the merged chain’s operations, particularly Plus market and other small storeholders to whom Velpro centar has been a significant strategic partner in developing independent retail in Croatia for many years. Thus VELPRO-Centar plus does business with more than 450 legal entities under the small store brand Plus market and has strategic cooperations with all small storeholder associations across Croatia. At the same time, given that this is a merger process, the new company shall assume the obligations from all existing contracts and agreed distribution terms, which also applies to public procurement contracts. VELPRO Centar plus shall continue to be present in all sales channels (Horeca and Retail).
Ivica Pivar, Director of VELPRO Centar plus, said: „VELPRO – Centar plus has so far been the largest wholesaler on the Croatian market and after the merger with Konzum we will additionally strengthen our business, particularly its further development and long-term sustainability. Significant synergies that we will realise by a more efficient assortment, supply chain and entire operations management will enable a major improvement of overall services to our end customers – small storeholders and independent retailers, through Plus market stores, HoReCa, as well as in the public procurement segment.
VELPRO – Centar plus has 16 wholesale centers in Croatia and employs more than 800 people in total. For most of the employees the amalgamation process actually means to return under the wing of Konzum, within the scope of which VELPRO Centar plus operated until 31 December 2015, which provides employees with additional security as it ensures the long-term sustainability of business and shifts in development.
Slavko Ledić, CEO of Konzum plus, stated on this occasion: „By merging with VELPRO-Centar plus Konzum shall additionally strengthen its market position in all key indicators. Konzum shall thus generate an additional HRK 1bn in total revenues, its network will expand to 16 wholesale centers in Croatia and our team will grow to 11,000 employees. 800 of them, coming from VELPRO-Centar plus, will serve more than 4,500 wholesale customers. The large team of Konzum and VELPRO employees will have a common goal and mission, though – besides being the leader on the retail market, to also be the most successful wholesaler in Croatia, which will create new values for our employees, customers, suppliers and all other stakeholders.“
Peruško: The excellent results we have achieved reflect a number of activities aimed at raising overall operational efficiency
Growth of revenues, operating profit and operating margin as well as significant cost control due to operational optimization measures and improved efficiency are the most important features of Fortenova Group’s operations over the period Q1-Q3/2019.
The Group’s core business (retail and wholesale, food and agriculture) realized EUR 2.6bn of unconsolidated revenues or 3.5 per cent more compared to the same period last year.
At the same time, total unconsolidated operating profit of the core business (net of Mercator) reached EUR 231.7m. The major part of EBITDA growth was accounted for by the retail and wholesale segment with 19 per cent and the agriculture segment with a growth of 28 per cent. Thus operating profit of retail and wholesale for Q1-Q3/2019 amounted to EUR 62.1m and of agriculture to EUR 27m. Operating profit of the food segment was EUR 142.7m, or at the same level as in the corresponding period last year, due to the impact of bad weather on beverages and ice – cream businesses in the first part of the tourist season.
In a year-on-year comparison, pro forma consolidated revenues of Fortenova Group grew by seven per cent and amount to EUR 2.5 bn for the period Q1-Q3/2019 (net of Mercator).and consolidated operating profit reached EUR 200.3 m.
Konzum was the strongest generator of both revenue and operating profit growth in the retail and wholesale segment and along with the revenue increase of almost 4.8 per cent, the nation’s largest retail chain recorded a growth of all key performance indicators.
„Everything we have been able to realize over these nine months, and particularly over the two years since I have been with the company, provides lots of reasons for satisfaction. The excellent results we have achieved reflect a number of activities aimed at raising overall operational efficiency“, Fabris Peruško, CEO of Fortenova Group said when presenting the results to DR Holders, ie. the owners of the company and reminded them of several key events and developments which were crucial to the operations of Fortenova Group.
„Primarily, we have successfully prepared and implemented the creditors’ Settlement Plan, which was an extremely demanding task, without any significant negative effects on the businesses of our operating companies, our partners and suppliers. In parallel, we were negotiating the refinancing, which was by no means easy given that the company had practically only just emerged from bankruptcy. With the successful closing of the refinancing we realized the largest corporate debt issuance in Croatia and in the region. In addition, we have initiated numerous internal transformation activities and along with the ownership structure, through the settlement we have also redesigned the company’s organizational and governance structure, raised its corporate governance standards and strengthened the executive management with professionals who have international experience. Furthermore, we have initiated the divestment of four companies from our non-core business and of our real estate portfolio, featuring since recently, 143 properties. Most importantly, as our results clearly show, we have continuously raised operating profit and proved that we can accomplish the most important goals“ – Peruško highlighted.
As major challenges to the business in the forthcoming period Peruško mentioned the Mercator asset transfer processes in Slovenia and Serbia. Also, one of the challenges will be the Agricultural Land Act in Croatia which has negative impact on institutionalized agriculture as well as on Croatia’s GDP. In his opinion, the greatest challenge to the business in the long term, requiring a systemic solution, will be the negative trends in the region’s demography, not only in terms of reduced available workforce, but also in terms of a drop in the number of customers to purchase Fortenova Group’s operating companies’ products.
Fortenova Group – Croatia’s leading food donor
Over the course of 2019 until the World Food Day, celebrated on 16 October, Fortenova Group has donated food worth HRK 3.3m in total, which makes it the leading food donor in Croatia. The largest donor within Fortenova Group is Konzum, having donated food worth HRK 2.8m, while the rest has been donated by companies from the Food and Agriculture business segments: Zvijezda, Jamnica, Ledo, Pik Vrbovec, Belje, PIK Vinkovci, VUPIK and Agrolaguna. Fortenova Group is also major strategic partner to various non-profit organizations in donating food in Croatia. Particularly worth noting are the cooperation of Fortenova Group with Mreža hrane (Food Network), the Red Cross and its social self-service stores, SOS Children’s Village, soup kitchens as well as a number of other national and local institutions and associations.
The World Food Day is an opportunity to additionally highlight the two key global challenges related to food according to SDG2 (Sustainable Development Goals): the hunger challenge on the one hand and healthy, balanced and long-term sustainable nutrition on the other. Worldwide more than 820 million people suffer from hunger and an even greater number struggle with overweight. Research shows that more than 53 million Europeans cannot afford a quality meal every other day, while in Croatia more than a quarter of the population cannot afford a quality meal every day. At the same time the European Union produces 88 million tons of food a year which goes to waste, whereof Croatia accounts for 400,000 tons of discarded food or more than a thousand tons of food gone to waste every day.
The reasons thereto are many, from farmers who cannot sell their produce, to manufacturers who only use part of the raw material and the rest is discarded. The largest share of discarded food in the European Union, as much as 53 per cent, comes from households, as a result of poor planning and lack of education. Retail participates in food waste with around 5 per cent, as due to the complexity of donating procedures retailers usually opt for discarding the food, which is easier and cheaper for them. Nevertheless, this segment has seen significant changes, also in Croatia, with retail chains donating more and more food. They are headed by Croatia’s largest retail chain Konzum, which has been proclaimed Best Donor in Brussels in the food retailers category for the second year in a row, within the scope of the initiative of Croatian MEP Biljana Borzan and the coordinator of the Food Network platform Zoran Grozdanov.
„Within Fortenova Group, whose entire business is related to food, whether it be its production or retail, we have intensively been working on the challenges regarding food waste and the choice of health food. In pursuance thereof we have been recognized as Croatia’s greatest food donor. At the same time, through Konzum’s project of awarding customer loyalty such as Zdravoljupci (Health Lovers), we have in a fun way strived to make kids – from the earliest age on – and their families aware of the importance of daily fruit and vegetable consumption and a balanced and healthy diet. We have also placed a strong focus on the importance of encouraging local production and the consumption of domestic, local and seasonal products. We shall continue to pursue such approach going forward, through initiatives and projects intended to make an active contribution to making people aware of and educating them on these topics“ – explained Dubravka Jusić, Executive Director of Marketing at Fortenova Group.
Both this year and in the forthcoming period Fortenova Group and all its companies will continue to cooperate with local communities and associations across Croatia through the realisation of numerous food donations. The process of donating food at Fortenova Group involves a whole team of people who have exerted great efforts for food to be donated in a timely manner to those who need it most. At the same time, internal processes have continuously been improved and the procedures of ordering stocks optimized, primarily in order to reduce the total quantity of food with shelf life about to expire and also to donate it to the greatest possible extent. Besides the above, the Fortenova Group will continue to undertake numerous educational activities and projects intended to inform customers, employees, business partners and the entire public and make them aware of the importance of reducing food waste.