Petrokemija Loss in the First Eight Months Amounts to 153 Million Kuna

The loss of Petrokemija Kutina in the first eight months of this year amounted to 153 million kuna, and it is possible that the annual loss will be greater than last year, prompting the management to undertake a series of activities to mitigate the negative effects of this situation, Petrokemija reported via the Zagreb Stock Exchange.

The management of Petrokemija notes that the company continued to operate with a loss greater than previously publicly announced estimates in the third quarter, and therefore decided to “publish new elements of judgment regarding the achievement of key business indicators by the end of 2013.”

The loss is attributed to reduced demand for mineral fertilizers in Croatia and the region during the summer and a decrease in fertilizer prices on the global market.

Prices of key products on the global market have fallen by between 20 and 30 percent over the past twelve months, while the decline in raw material prices has been significantly smaller, indicating a possible annual operational loss greater than in 2012, the announcement states. According to previously published data, Petrokemija d.d. reported a loss of 187.2 million kuna in last year’s operations.

It is added that, given that the market situation has not significantly changed during September and the first decade of October, the management is taking a series of measures to mitigate the negative effects of the disrupted market position.

Thus, operational cost-saving measures have been initiated at all levels of the company, preparatory actions are underway to reduce the number of employees by approximately seven percent by the end of the year through a redundancy program, and the process of shutting down the subsidiary in Slovenia, which no longer has justification for continuing operations, is in progress.

As a key measure, the initiation of activities to find a strategic partner in accordance with the Government’s decision is emphasized, and it is reported that based on the collected offers, the selection of an advisor for finding a strategic partner is underway.

In parallel, Petrokemija will implement a restructuring project in collaboration with the consulting firm AT Kearney, which conducted a thorough analysis of the business at the end of 2012 as a basis for the recently completed recapitalization process, the announcement states.