Podravka's net profit in 2005 amounts to HRK 62.6 million

- Total sales revenue of HRK 3,441 million – Gross profit reaches HRK 1,337 million – 6% growth of sales in foreign markets – 19% growth of sales in the market of East Europe – proposed dividend of HRK 5 per share – HRK 136 million of total investment in 2005

Total sales to the amount of HRK 3,441 million were achieved in 2005, which is 4.4% up on the sales realised in 2004. In the last eight months of the reporting period, sales showed continuous growth, with significant shifts in foreign markets where a total growth of 6% was reached. The average annual growth in sales in foreign markets during the period 2000-2005 amounted to 8.9%, in the Croatian market to 5.8%, while the total average annual growth in the observed period amounted to 7.2%.
This brought a net profit of HRK 62.6 million, on the basis of which a HRK 5 per share dividend will be proposed.

In the sales structure of the Podravka Group, the Strategic Business Area (SBA) of Food and Beverages accounts for 81.9%, Pharmaceuticals for 17.8%, and Services for 0.3% of total sales. A 5% growth in sales was recorded in Food and Beverages, and a 3% growth in sales of Pharmaceuticals.

The Croatian market accounts for 47.3% of sales in Food and Beverages, and the foreign market for the remaining 52.7%. The growth of Food and Beverages in the Croatian market amounts to 4.5%, while growth in foreign markets amounts to 5.2%. In the area of Pharmaceuticals, 79.6% of sales are realised in the market of the Republic of Croatia, while 20.4% of sales are realised in foreign markets. The growth of sales in Pharmaceuticals in the Croatian market amounts to 1.5%, while foreign markets record an 11% growth in sales.

If we view products by group, the greatest growth in sales was achieved in the group of meat and meat products, which amounted to 15%. A significant growth in sales was also achieved in the Podravka dishes group (6%), and the fruit and vegetables group (9%). Consumer goods also achieved a 16% growth in sales. A 9% drop was recorded in the sales of rice and legumes, which was mainly the consequence of a drop in sales in the Czech Republic. A dip in sales was also observed in the area of beverages to the amount of 4%. The sales of Vegeta and the sales of children’s food, desserts and snacks remained at the same level as in 2004. Nevertheless, the most significant brand – Vegeta – and the category of food complements account for most of the total revenue (19.1 ), while pharmaceuticals account for 17.8, meat products for 9.1%, children’s food for 7.9%, etc. Consumer goods account for 19.4% of total revenue.

The largest growth, of 19%, was realised in the market of East Europe. Food and Beverages grew by 15% which was mostly due to the 20% increase in the strategic market of Russia. In the same market, Vegeta recorded a 5% rise, children’s food a 59% growth, and the sales of soups recorded a jump of 40%. The stronger penetration of Belupo into the Russian market resulted in a 33% growth in the sales in the SBA of Pharmaceuticals.
Sales in South East Europe (SEE) recorded a 9% growth. This is mostly the consequence of the growth in the market of Bosnia and Herzegovina (11%) and of the increase in the market of Serbia (35%). Food and Beverages in SEE achieved a 9% growth.

In the markets of Western Europe, transoceanic countries and the Far East, sales grew by 8% compared with 2004, while a 4% drop was recorded only in the Central Eastern European market. A drop in the sales of rice, legumes and other products accounts for most of the total drop in sales, since the sales of this group of products experienced a 10% decrease. The sales of Vegeta remained at the same level as in 2004, while a 27% growth was realised in the sales of fruit and vegetables.
Foreign markets achieved a total of 46.9% of total sales, which is 0.6 pp more than in 2004 when these markets accounted for 46.3% of sales, while the share of sales in the Croatian market amounted to 53.1%. Sales achieved in Croatia in 2005 amounted to HRK 1.83 billion and were 3% higher than in the comparable reporting period.

Highlights in Podravka’s operation in 2005 were the appointment of the new Management Board, the launch of two new products: Vegeta Mediteran and Ketchup, the adoption of the Corporate Governance Code, and the Superbrand Award to Vegeta in Russia. In the autumn, Rieber Food Polsa S.A and Podravka International Export-Import Sp. z.o.o. established a strategic alliance in the segment of sales and distribution in the Polish market, which was also extended to the market of Hungary. In the Polish market, the two companies established a joint sales executive with 150 employees. This strategic partnership, besides strengthening the position of both companies’ brands, will also result in savings in the area of sales and distribution.
Podravka also established other partnerships in 2005. In the SEE market, Podravka signed partnership agreements with Vegafruit, a company from Bosnia and Herzegovina, on cooperation in the area of the processing, distribution and export of fruit and vegetables, with Swisslion Takovo on cooperation in the area of production in the market of Serbia and Montenegro, and with Agrokomerc on the distribution of Agrokomerc’s products in the territory of Bosnia and Herzegovina. An agreement was also signed with HUH (Croatian Association of Hoteliers and Restaurateurs) on long-term business cooperation. Besides the traditional form of cooperation, these organisations will work together on improving and creating a new gastronomic supply for tourism.