Agrokor Considers Sale Of Companies To Reduce Debt
Croatian retail consortium Agrokor has said that it plans to sell or restructure a number of its business operations in order to reduce its debt of HRK 56 billion (€7.4 billion).
According to its sustainability plan, Agrokor's retail segment, made up of Mercator, Konzum, Velpro, Tisak, and Konzum’s operations in Bosnia and Herzegovina, will undergo significant restructuring.
In the past, the company's focus was mainly on revenue growth combined with a high level of capital investment, which has created a large infrastructure of high fixed costs with a number of unfavourable arrangements that have reduced earnings.
By 2021, the company says that revenues in the retail segment will have declined by 8% compared to 2016, and EBITDA should increase by 338%. The cost of restructuring is estimated at €14 million.
More than 75% of Agrokor's retail sector revenue comes from Slovenia and Croatia. Agrokor's retail activities in the Adria region consist of more than 2,800 stores, providing services for 17.5 million customers.
In the food segment, Agrokor notes that revenues should increase 14% by 2021, with EBITDA growing by 24%. The cost of restructuring this unit is estimated at €8 million.
The company's food segment is composed of four activities - drinks, frozen food, oil and meat - with 21 companies, including Jamnica, Sarajevski Kiseljak, Ledo and PIK Vrbovec.
Elsewhere, a 5% decline is expected for the strategic business activities that make up the group's core business, while EBITDA should double between 2016 and 2021.
Last year, the Agrokor Group generated over €6 billion in revenue and EBITDA of €230 million.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Branislav Pekic. Click subscribe to sign up to ESM: The European Supermarket Magazine