Podravka d.d., Croatia’s second-biggest food producer, plans to boost capital by 65 million euros ($71 million) to fund expansion in central Europe and Russia and complete the purchase of Slovenia’s Zito bread maker.
“We are looking at several targets in several markets,” Chief Executive Officer Zvonimir Mrsic said in an interview in his Zagreb office on Thursday. “Zito was the first step, but our potential in terms of capital strength and organization is much bigger. We have turned the company around over the last three years and it would be a shame to stop at Zito.”
The Koprivnica-based company, 26 percent owned by the Croatian state, will ask shareholders for approval of its capital increase plan at a meeting in June, spokesman Vedran Simunovic said by phone on Friday.
The expansion follows an overhaul during which Podravka cut 23 percent of jobs and reduced output that wasn’t profitable enough. The company, with products including processed fruits and vegetables, soups and ready-to-eat meals, as well as the pharmaceutical line Belupo and the spice Vegeta, posted a 39 percent increase in net income last year.
It opened offices in Africa, the Middle East and China as about 60 percent of Podravka’s sales are outside Croatia and its target is to expand this to 75 percent, according to Mrsic.
“We have a number of new products in the pipeline, some of them specifically targeted for our foreign market,” he said.
The company has focused on a new initiative to offer semi-ready and ready-to-eat meals as well as bread and bakery products to hotels, restaurants, hospitals and other institutions in Croatia and abroad. Podravka in January hired Peter Fuchs, former head of Falkensteiner Hotel Group and Valamar d.d., as a vice president to manage the new program.
“Tourism is a growing industry and our program is tied to it,” Mrsic said. “This is where Zito and its baking products fits our strategy.”
After getting approval from Slovenia’s antitrust regulator Podravka will announce a bid for the remaining stake in Zito. Podravka got a bridge loan from two Croatian banks this week to finance the purchase of a 51.6 percent stake in Zito for 33 million euros, Mrsic said.
The company this year also plans to start building two new pharmaceuticals plants at an estimated cost of 350 million kuna ($50 million). Work should be completed in 2017, Mrsic said.