How are Agrokor’s cooperatives doing?

(Agrokor, Public domain)

After crisis in Agrokor many were left with fears over the future of numerous cooperatives who worked with Agrokor.

It seemed that Agrokor was the biggest issue in Croatian economy. But the shortage of workers, very visible now, exploded last year and continues to make a boundary for growth to the largest number of entrepreneurs. At first, this problem was considered to be the worst part of the north-western part of Croatia, where mostly low-income manufacturing companies are. They spoke loudly about the problem, as well as construction companies and large shipyards, where the most important personnel went for bigger salaries in Italy and other EU countries. Issues with worker shortages turned out to be far more serious, as a sufficient number of workers cannot be found in the transport, manufacturing, machinery manufacturing, forestry, tourism and hospitality sectors, also in healthcare or even in trade. In fact, it is almost impossible to enumerate a sector which is not confronted with — what was ten or fifteen years ago in Croatia completely unthinkable — the demand for workers is higher than the available offer.

The shortage of workers will effect Agrokor and will mark the company’s relations with those whose business is tied with Agrokor’s success. Ivica Todoric, the flour company Granolio, and the security company, Sokol Marić, publicly announced that the Agrokor crisis broke their business. Sokol Marić’s owner Zdravko Marić initiated a pre-litigation procedure, citing as one of the reasons an uncertain liquidity of the company as a result of the Agrokor case. Sokol Marić’s total revenues decrease 28 per cent last year, as the company was left without any new clients. At the end of the year it had a profit of HRK16m (EUR215,200). Granolio, which had already been in the pre-accession process for bankruptcy, last year retained one-third lower total revenues, and the loss reached half of the revenues.

The coffee, tea and snacks factory, Frank, reported a loss of HRK302m (EUR40,6m) last year, with a drop in revenues of HRK784m (EUR105,4m). Nevertheless, there was no a dramatic earthquake in the balance sheets of most of those businesses that worked with or for Agrokor. The positions of the largest companies in food production remained unchanged — Vindija is the leader, followed by Podravka, Dukat, and Koka and Meat Industry Braća Pivac. In the manufacture of machines and appliances, most of Harburg-Freudenberger Belišće, General Electric Croatia from Karlovac, Same Deutz-Fahr Žetelice from Županja and Kostwein produce machinery from Varaždin, have record higher revenues. The largest furniture manufacturers, LPT and Prima furniture, have been growing. A trend in the expansion of waste and recycling business hasn’t stopped for years, where all the biggest — Ce-to-r, Ciak, Osijek Drava Internacional, DS Unija paper Croatia and Metiss Bakar, had a significant income growth last year.

On the list of the biggest companies that were shaken by Agrokor crisis, is the retail chain Konzum. All the other largest chain stores — Lidl, Plodine, Spar, Kaufland and Tommy — recorded a strong growth; especially Lidl and Spar went up and overcame Kaufland’s.

For the next year companies from the Agrokor portfolio will probably be present in the rankings of the largest Croatian companies. According to the latest semi-annual “Business Expectations” survey, carried out by the Croatian Chamber of Commerce, entrepreneurs do not expect significant changes in business. Approximately 46 per cent of entrepreneurs will have the same revenues, 36 per cent expect an increase, and only 18 per cent of entrepreneurs expect to have a lower income.

Only 22 per cent of businessmen said they expect growth in investment. Analysts of Croatian Chamber of Commerce calculated how much investment they can generate as a category of demand for GDP growth. The focus was on the largest infrastructure project in Croatia, almost HRK4bn (EUR538,3m) worth construction of the Pelješac Bridge. The economists’ budget calculation says that a HRK1bn investment in one year is increasing the growth rate by approximately 0.3 percentage points. But to start more investments, Croatian experts are returning to the beginning and to the question of how to find the workers.

Currently, the biggest owners of Agrokor are Russian banks: VTB and Sberbank. A special representative of the Russian capital, Maxim Poletayev became one of the most powerful man in Croatian economy, as Agrokor still controls the major parts of Croatian agronomy, but also of the most competitive companies in Croatian markets. The court case with Ivica Todorić is still going on and the case is far from over, but at least the companies within the cluster and Agrokor’s cooperatives are working without delays, trying to preserve their position on the Croatian and regional market.

Apart from the workers’ shortages other issues are also important, especially in the sectors controlled by the government. At the time of the Agrokor crisis it was emphasized that the collapse of this largest, domestic company was “hiding” problems for other companies associated with local budgets. One of these companies, shipyard Uljanik from Pula, which merged with 3. Maj in Rijeka, has become the first-rate political, economic and, above all, social story in end of August 2018, although its problems were known more than a year ago. A whole year was needed to capitalize Petrokemija. Nevertheless, the decision to transfer HRK450m (EUR60,5m) of debt to the state should help negotiate with prospective partners to recapitalize and thus take over the company, and finally to see what the fate of a Croatian mineral fertilizer producer will be. Recapitalization is expected for the machinery company Đuro Đaković in Slavonski Brod, which managed to make positive outcomes last year, but part of INA’s oil refinery in Sisak is closed, as well as once extremely important building company Viadukt.

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