The Supervisory Board of Podravka d.d. confirmed the report of Podravka’s Management Board on the approval of the financial statements for 2004.

The Podravka Group realised total revenue of HRK 3,414.3 million which represents a 2.8% growth over 2003. Sales revenues in 2004 amounted to 3,294.9 million and were 2.4% higher than the previous year. The Croatian market continues to be the most significant market, recording a 1% growth over the previous year, and with sales amounting to HRK 1,769.1 million it makes up 53.7% of total revenues. Sales on foreign markets were 4% higher than in 2003, reaching HRK 1,525.8 million, which accounts for 46.3% of total revenues.

In 2004, the Podravka Group recorded net profit of HRK 84.2 million, which is significantly higher than the previous year when it stood at HRK 10 million. Besides organic growth, the realised profit is also the result of savings and control of operating costs.

Since 2004, by adopting a new organisation, the Podravka Group has had 3 strategic business areas (SBAs). The Food and Beverages SBA realised 2% growth, and accounts for 81.7% of the total revenue with revenue of HRK 2.69 billion. With the new organisation, the Food and Beverages SBA also includes the sales of consumer goods (Nestle, Adria, Heinz, and Kraš), which accounts for 21% of this segment. The Pharmaceuticals SBA, with revenue of HRK 594.7 million, grew by 4% in spite of the unfavourable situation in the market of pharmaceuticals in Croatia where Belupo earns the largest part of its revenue. The Services SBA realised revenue of HRK 11.4 million.

Observed in terms of product groups, the largest growth in sales was achieved in the frozen food category (48%), mill and bakery products (35%), and consumer goods (10%), while the most significant brand, Vegeta, realised a 2% growth in sales. A quite significant drop in sales (15%) was recorded in the beverages category, which was due to unfavourable weather conditions and a strong surge of competition in the market segment of natural spring and mineral water.

In the markets of Southeast Europe (Slovenia, Bosnia and Herzegovina, Serbia and Montenegro, and Macedonia) revenue of HRK 723 million was realised, which is 5% up on 2003. The markets of Central Europe (Poland, Hungary, Czech Republic, Slovakia), with revenue of HRK 488 million, recorded a 2% growth thanks to the full stabilisation of Podravka’s operations in the Polish market, while the markets of Western Europe, the transoceanic countries, and the Far East achieved revenues of HRK 201 million with a 8% growth in sales. The only market to suffer a drop in sales when compared with the previous year is the market of Eastern Europe. Revenue of HRK 113.8 million was realised on this market, representing a drop of 2%, which was mostly affected by the unfavourable exchange rate of the American dollar in 2004.

A new factory of solid and semi-solid drugs was opened in 2004 at Belupo d.d., continuing the investment cycle (total investment of HRK 131.4 million). A new series of bonds was issued to the amount of EUR 27 million with a due date in 2007, and the programme of care for the surplus of employees, amounting to 252, was continued. A new organisational structure was adopted as part of the Efficiency Project, while the Vegeta plant in Mohacs, Hungary, was closed. A 50% share of Cerera in Podravka International Bratislava was purchased, which gives Podravka 100% ownership of this company.