Zoran Kulušić-Neral: Manufacturers in construction are currently operating without profit or with very low margins

The Swedish-Finnish corporation Assa Abloy operates worldwide with 48,000 employees and a revenue of 8.4 billion euros, making it the largest global supplier of intelligent locking solutions for buildings and other security solutions. Its market share is 14 percent, and they jokingly say they are the largest locksmith in the world.

In the last 25 years, Assa Abloy has had nearly 300 acquisitions. One of them is the Bjelovar-based Metalind (since 2011), which has since changed its name to Assa Abloy Croatia. Metalind was founded in 1996 and currently employs 160 staff, with its most well-known products being steel and aluminum fire doors. In addition, they produce fire-resistant glass and special door designs – burglary-resistant, smoke-tight, X-ray, bullet-resistant, and soundproof doors.

Assa Abloy Croatia is among the leading metal companies in Croatia, with a production capacity consisting of four production halls totaling ten thousand square meters. They have their own laboratory for testing the fire resistance of doors and fittings, certified by the renowned IFT (Das Institut für Fenstertechnik) from Rosenheim. The company is performing well, and although it achieved results last year that only impressed the Group’s leadership, Zoran Kulušić-Neral, a member of the Management Board and director of the Assa Abloy Adria region (covering the markets of the former Yugoslavia and Albania), explains to Lider the position they find themselves in as a subcontractor during a time of reduced investment volumes and enormous raw material price increases. They are just a representative example of all similar companies, and although the company stands on solid ground and has a powerful Group behind it, the situation is by no means easy. Nevertheless, he says that last year’s results are encouraging, and for that reason, he was eager to introduce part of his young team in the company – Ivana Vencl (production director), Sanja Rakocija Begović (finance director), and Matija Perđun (sales manager) who joined us during the interview.

In 2019, you achieved a revenue of 81.7 million kuna. How did you perform last year?

Very well, so much so that we received an award from the Group because the revenues and profits of AA Croatia were the only ones to significantly grow at the level of Central Eastern Europe compared to 2019. This was mainly because at the end of 2019 we signed an excellent contract with China Road and Bridge Corporation, which is building the Pelješac Bridge, and as a subcontractor, we participated in the construction of the tunnel on the Boljare – Bar highway in Montenegro, where our fire doors were installed. For our young team, negotiating with the Chinese was a new experience, for which we prepared for a year. This is the largest project Metalind has undertaken to date, worth 1.7 million euros. We have information that there will be a second phase of the project, an additional 49 kilometers of highway that will mostly go through tunnels, so I hope we will get that job as well.

What were the revenues and profits then?

We are still in the auditing process, and therefore I cannot mention the figures yet. We did not feel the crisis, primarily due to the aforementioned project in Montenegro, which helped us cover a large part of the costs we had in Croatia as a consequence of the corona. We did not use any state aid measures.

What is the revenue from exports?

We export to the countries of the former Yugoslavia and Albania, and a bit to Romania and Turkey, which accounts for a total of 20 percent of our revenue. We sell fire-resistant glass to Turkey through our sister company. In Romania, we export both fire-resistant glass and sell our finished products on specific projects with ASSA ABLOY Romania. In Serbia, we worked on the ‘Belgrade Waterfront’ project, and now we have contracted a new job on the same project. The Serbian market is extremely competitive, outside the EU, it is a very large construction site with very low prices, and there is a legal obligation for recertification every two years. We fight for every project there, and we are currently working on creating an offer from our Group that will include not only our products but also those of our sister companies. However, for now, we generate 80 percent of our revenue in Croatia, and besides the work in Montenegro, it has also helped us that no contracted project in Croatia has been canceled, only some have been postponed.

So there are projects, but in reduced volume?

Yes, primarily because investments in hotels have been absent, and a large portion of AA Croatia’s revenue comes from them. This year, only two large hotels are being built. Nevertheless, we have managed to find some new sources of revenue and sales channels through which we will market our products. Besides doors, we also have hardware solutions such as access control, and fittings, such as cylinders, locks, electric receivers, door closers… which are also sold in the countries of the region. Of course, the crisis was felt here too, but what is good is that we automatically install Assa Abloy fittings in the doors, so as the door sales increase, so does the sales of fittings. Fire doors and fittings are two segments for which we must ensure profitability.

How can subcontractors compete with the demands of contractors during a crisis?

Due to the corona, there were many fewer large investments, so builders were forced to lower prices to win projects, and then, following that situation, subcontractors also had to lower their prices and work with much lower margins. Compared to last year, everyone is now particularly careful about project costs. What is good in our business is that fire doors are a legal requirement for commercial or residential buildings. However, the production of these doors cannot come at the expense of quality because it concerns the safety of people, for example, children in kindergartens. Production standards must be respected, and we cannot now use less material to save costs. Control bodies go once a year to check whether materials are used according to regulations.

For example, before we started making doors for stadiums in Qatar, their control was a prerequisite for concluding the deal. We entered there in collaboration with the Assa Abloy affiliated company Prometal from Dubai. As a small company from Bjelovar, we thus entered a large project, with the caveat that we did not do the second phase due to the significant pressure on prices. Otherwise, we completed that project with a lower margin than, for example, in Croatia, but it was a good experience for our entire young team.

Read the entire interview in the new issue of the digital and printed edition of Lider.

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