Agrokor Invests 40 Mln Kuna (5.6 Mln Euro) in Fodder Factory in Croatia, Aims To Double Share on Serbia's Retail Mkt

"In Belje [eastern Croata] we have started building a new factory for fodder production and thus we will raise capacity by 200,000 tonnes from this location alone," Agrokor's senior executive vice-president Ljerka Puljic said in a written statement to SeeNews. The investment in the new factory will be completed by spring next year, she added.

She said the company aims eventually for 15% of the Serbian retail market, with the help of a 70 million euro EBRD loan.

Agrokor analysed the competitiveness of its own production chain and as a result, in crop growing and livestock rearing, thanks to investments made in the last few years, it has achieved results "above the European average" and secured its competitiveness, Puljic said. 

"In this chain there remains the processing of fodder. We have to modernise our factory to reduce production costs so we are a world leader, and this is the aim of the investment. When we complete this, in every part of our own production chain we will be among the best in the world," she added.

Currently, Agrokor produces 200,000 tonnes of fodder annually at three existing factories. Agrokor uses some 40% of its fodder production for the needs of its farms and sells the rest. It estimates its share in Croatia's fodder production at 26 to 27%.

Agrokor announced earlier this month it has cut the price of fodder by an average of 24% following a strong harvest and general drop of maize prices. This may not result in an immediate fall in meat prices as the cycle of breeding animals is longer but it will help stabilise them and prevent a rise, Puljic told reporters then.

Agrokor's market share in meat production in Croatia is some 13% according to official estimates.

"We are also active in our core businesses outside Croatia and this is the single way to secure volumes and therefore competitiveness, in line with international players," Puljic said.

Agrokor's core businesses are production and distribution of food and drinks and retail. Its Croatian subsidiaries include the country’s largest producers of mineral water, ice-cream, cooking oil and margarine, meat, and farm company Belje, as well as Croatia's largest retailer, Konzum. Konzum ranked 12th among the 100 biggest companies in southeastern Europe by net sales revenue for 2007, a survey by SeeNews indicates.

"Agrokor in the past few years has displayed a very aggressive expansion policy outside Croatia and in a number of segments of food production we have reached the position of regional leader - in the production of ice-cream, bottled water, cooking oil and margarine, we have the strongest volumes when considering all our activities in southeastern Europe and we are proud of this," Puljic said in the statement. "In the last three years we have done the same in retail - we are leader in Bosnia, and in Croatia, number two in Serbia and we will keep on investing in Serbia."

"In Serbia, we have a market share of some 7.0% and we aim in the longer run to reach some 15% in the retail market," she told SeeNews.

Agrokor received this month a 70 million euro loan from EBRD for investment in development of its retail business in Serbia. It will use the proceeds of the loan to open new stores and to modernise stores that it has already acquired.

"We have created pre-conditions for stronger investments in Serbia and we expect expansion in all our core businesses in the region," she said without elaborating. "We will top some 100 stores in Serbia this year, we will be a very serious retailer there," she added.

Agrokor's shares are not listed on the Zagreb bourse. Konzum's shares closed at 164 kuna on Friday, up 7.89%, while shares of Belje gained 4.5% to 142.13 kuna.

Agrokor's consolidated sales revenue rose 37% last year to almost 21 billion kuna, while its operating profit grew 62% to 1.08 billion kuna.

(1 euro = 7.1636 Croatian kuna)