What happened at the Adris assembly?

The session of the General Assembly of the Adris Group, held yesterday in Rovinj, marked the conclusion of the annual shareholder meetings of all companies within the Group. Throughout the day, meetings were also held for the Tobacco Factory Zagreb, Maistra, Croatian Tobacco, Istragrafika, iNovine, and Cromaris.

In presenting last year’s business results and the business plan for this year, the CEO of Adris Group, Ante Vlahović, emphasized that Adris Group achieved total revenues of 3.37 billion kuna in 2012, which is 5.2 percent higher than last year’s. Business revenues amounted to 2.96 billion kuna, which is 3.6 percent higher than last year’s. Revenues from the sale of goods and services amounted to 2.87 billion kuna. In the domestic market, 1.56 billion kuna was achieved, while in foreign markets, 1.32 billion kuna was achieved, representing a growth of 5.8 percent. Today, Adris generates almost half of its revenues from the sale of goods and services in foreign markets, with nearly 60 percent in the highly competitive EU market. From 2007 to 2012, Adris achieved an average annual export growth rate of seven percent.

Profit before tax amounts to 584 million kuna, while net profit is 506 million kuna. Speaking about the operations of the tobacco segment of the Group, Vlahović pointed out that 2012 was marked by a drastic increase in excise duties, which caused further increases in retail prices. Consequently, with rising retail prices and declining purchasing power, demand continued to fall in key TDR markets, averaging 5-10 percent annually. There is also a pronounced shift in demand towards lower price segments. In Croatia, the share of the lowest price segment has doubled in four years, while in Bosnia and Herzegovina, it has increased fourfold. There is also a strong trend of growth in cut tobacco. In Croatia, for example, in four years, the share of smokers of cut tobacco has increased fivefold, currently accounting for about 10 percent, while in Bosnia and Herzegovina, it has increased thirtyfold in three years, accounting for about 11 percent with a strong growth trend.

Despite unfavorable economic conditions, TDR maintained its leading position in the markets of Croatia and Bosnia and Herzegovina with an average market share of 68 and 32 percent, respectively. In other regional markets, it continues to hold stable market positions. In 2012, TDR’s total sales amounted to 11.56 billion cigarettes, with 63 percent achieved through exports. Compared to last year’s sales, cigarette sales in 2012 decreased by 3.8 percent. TDR’s total revenue amounted to 1.74 billion kuna, while business revenues were 1.64 billion kuna, which is 4.2 percent lower than last year’s. The operating profit in 2012 amounted to 262 million kuna. Croatia’s exit from CEFTA brings higher tariffs in regional markets, which will increase annual costs by more than 10 million euros. TDR, as a socially responsible company, is seeking solutions primarily to retain jobs in Croatia.

Croatian Tobacco ended the 2012 business year with a positive result. The production year was exceptionally difficult as drought negatively affected yields and the quality of tobacco.
Istragrafika, still the leading Croatian producer of commercial cardboard packaging, achieved sales revenues in 2012 amounting to 120 million kuna, with an export growth of 16 percent. The stagnation of industrial production in Croatia, changes in the packaging of finished products, rising cardboard prices, and customer pressure on sales prices are challenges in this sector. The sustainability of Istragrafika’s business is a key challenge in the coming years.

During 2012, iNovine transferred its knowledge and experience (know-how) to the market of Bosnia and Herzegovina. Since the second half of July 2012, the largest retail chain of kiosks and one of the largest distributors of newspapers, tobacco products, and mobile top-ups in Bosnia and Herzegovina, Opresa, has been operating under the iNovine brand. Two million euros were invested in the new visual identity and modernization of operations in Bosnia and Herzegovina, the process of informatization of the entire sales network has been completed, and additional investments are expected in the introduction of new services and employee training.

Speaking about the operations of the tourism business unit, Vlahović emphasized that the tourism segment of the Group achieved 3.04 million overnight stays, which is five percent more than in 2011. Despite a very mild recovery of the economies of the main emitting markets, there was a seven percent increase in overnight prices. This is also a result of new, recognizable offerings in the higher price segment, adapted to new tourism trends. The Monte Mulini and Lone hotels, positioned in the five-star segment, have contributed to the recognition of the destination and premium offerings. Additionally, the growth of direct sales channels positively impacted the increase in average prices.
In 2012, Maistra worked intensively on improving operational business. The new organization of the company, divided into luxury segments, hotels, and resorts, as well as camps, allows for more efficient management of marketing and sales activities, operational standards, and consequently, costs. In 2012, the tourism segment of Adris achieved business revenue of 688 million kuna, which is 14.9 percent higher than last year’s. The operating profit amounted to 94 million kuna, which is double last year’s profit.
Cromaris continues to achieve strong sales growth rates, said Vlahović. For example, from 2008 to 2012, the average annual sales growth rate was 25 percent. Such strong growth required organizational and technological restructuring of the company, focusing on marketing and sales activities. To support such strong growth and development, another recapitalization of 145 million kuna was carried out in 2012. In 2012, a production-logistics center was purchased and renovated in the port of Gaženica in Zadar. Equipment for the production of fish processing was installed. This enabled a stronger entry into higher value-added segments, thereby increasing the recognition of the Cromaris brand among consumers. In 2012, all preparations were made for opening a company in Italy, the largest European market for sea bream and sea bass. In 2012, Cromaris operated positively.

Finally, Vlahović emphasized that Adris is today ‘a manufacturing, export-oriented, and socially responsible company with strong investment potential. It is organizationally and financially ready for new business.’ By the decision of the Assembly, an amount of 114.8 million kuna will be allocated from the undistributed retained earnings of the Company for the payment of dividends, which amounts to 7 kuna per share. The dividend will be paid on July 26, 2013, to the accounts of shareholders according to the status and statement of the Central Clearing Depository Company d.d. as of June 28, 2013. The total net profit of Adris Group d.d. for 2012, amounting to 448,326,562.16 kuna, will be allocated to the statutory reserves of the Company. Finally, the Assembly granted discharge to the members of the Management Board and the Supervisory Board.