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Oct 31, 2017 12:20 EEST
October 31 (SeeNews) - Croatia's ailing concern Agrokor said it expects its non-consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) to double to 452 million euro ($526.1 million) in 2021, from 226 million euro in 2016.
EBITDA is expected to reach 254 million euro at the end of 2017, with the food business contributing 142 million euro, retail 72 million euro and the agri business 40 million euro, Agrokor said in a five-year viability plan published by the extraordinary management of the food-to-retail concern on Monday.
The concern's non-consolidated revenues are projected to drop slightly to 6.3 billion euro at the end of 2021, compared to 6.6 billion euro at the end of last year.
In 2017, total revenues are projected at 5.8 million euro, with the retail business expected to generate 4.3 billion euro. The food business is expected to generate revenues of 1.1 billion kuna, while the agri sector should contribute 387 million euro.
Agrokor, which employs some 60,000 people throughout the region, was put under state-run crisis management in April this year after it hit serious financial problems.
The concern also announced on Monday that its retail business will undergo significant restructuring, while the food sector will continue to grow and optimise EBITDA performance.
Currently, the retail business is burdened by a number of unfavourable commercial arrangements, which have diluted earnings, the extraordinary management found.
"Unfavourable 'sale and leaseback' arrangements provided working capital for the group, but resulted in high rental expenses which heavily diluted operating performance," Agrokor said.
The extraordinary management of Agrokor plans to strip retailer Konzum of unjustified expenditure and to focus on positioning, assortment, prices and operating models/costs to achieve benchmark level performance, it said.
Additionally, Agrokor plans to develop the operating performance of its Slovenian retail unit, Mercator, to provide superior returns and to use the platform developed, selected investments, and appropriate refinancing, to begin building additional revenue. In Bosnia, Agrokor hopes that by splitting up Mercator and Konzum it will deliver two profitable businesses.
The concern has over 2,800 retail locations throughout the region.
Agrokor's management also said it plans to sell assets belonging to Agrokor Portfolio Holdings (APH), which is expected to generate 40 million euro of free cash flow over four years based on a conservative scenario, as well as rent reduction and the exit of onerous leases.
APH includes 80 legal entities, of which 41 entities (16 businesses) are operating in various industries in the Adria region, including market-leading businesses in advertising, travel and salt production; 23 entities containing a mix of physical assets (predominantly real estate) and financial assets (predominantly deferred consideration for company sales); 16 are shell companies. APH also holds a portfolio of 201 real estate assets and two movables.
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