The Largest Domestic Textile Company AquafilCRO in Croatia Has Never Sold a Gram of Its Products

AquafilCRO is the largest textile company in Croatia. According to Fina’s data for 2021, the revenue of this company from Oroslavje in the Croatian Zagorje accounted for 15 percent of the total revenue of all 346 entrepreneurs producing textiles in Croatia. Despite this, AquafilCRO is rarely heard of in the wider public. If the company had not regularly received awards in recent years such as the ‘Golden Key’ for the best medium exporter or the ‘Golden Kuna’ for the most successful large trading company in Krapina-Zagorje County, it would probably not even be mentioned in the media.

The largest textile company in Croatia is not insignificant within the Italian group Aquafil, which has a total of twenty production locations worldwide, from Slovenia (where it has as many as four factories) to Tokyo, Chile, and California. Last year, it achieved a revenue of 684.1 million euros, with AquafilCRO contributing 49.3 million euros. According to the achieved revenues and profits, last year was, in fact, a record year for both the Oroslavje company and the entire group, whose revenues increased by twenty percent. When they summed up last year’s business results in Trento, where Aquafil’s headquarters are located, the company’s president and CEO Giulio Bonazzi triumphantly stated:

– In 2022, we achieved record results. We reaped the fruits of long-term work that confirmed Aquafil’s resilience and leadership, even in a complex context. Aquafil’s strategic decisions made many years ago have proven to be key. Geographical diversification allowed us to take advantage of important market opportunities in some regions, mitigating potentially less favorable results in other areas. Investments in research and development have expanded the range of sustainable products, enabling Aquafil to become a benchmark for the market and a solution that everyone would like to replicate (…) I want to emphasize that we look at the next three years with optimism and expect growth in all our businesses globally.

However, the business results for the first half of this year showed that the optimism regarding the group’s business in the next three years was, to put it mildly, premature. The group finished the half-year with a revenue decline of 11.4 percent compared to the same period last year and plunged into a loss of four million euros, compared to a profit of nearly 18 million euros in the first half of last year.

– The first half of the year was marked by significant volatility. The reference context was more challenging than expected. In the EMEA region, the end market significantly slowed down, which affected the Group’s sold quantities. Moreover, the high unit value of inventories stored in the previous year, along with a strong reduction in raw material prices, caused a temporary but significant drop in margins – Bonazzi had to state in the Group’s half-year business report.

Everything that applies to the Aquafil Group also applies to AquafilCRO. After a revenue drop of about twenty percent in the pandemic year of 2020, the Oroslavje company returned to pre-pandemic levels the following year, and then in 2022 achieved a strong revenue growth (of 33 percent) and a profit jump of 167 percent, to 2.23 million euros. However, this financial result did not arise from an increase in produced and sold quantities (on the contrary, production was six percent lower than the previous year, although the product mix was more favorable), but from an increase in inventories and their valuation, whose value nearly doubled last year.

– After the pandemic, we naively assumed, without any justified and rational reasons, that everything would return to normal and that we would once again focus on business as usual. However, anyone who momentarily took off their rose-colored glasses could see that there are many more new challenges in the world affecting all of us, wherever we are. Problems in the Chinese economy, disruptions in logistics chains, the energy crisis, the war in Ukraine, and on top of all that, inflation, which we had completely forgotten about. Markets reacted to all this more or less rationally, but in accordance with their laws of supply and demand. On one hand, when it comes to supply from the Far East, companies began to buy more than they needed, respecting delivery deadlines. The skyrocketing prices of raw materials contributed to the accumulation of inventories, as what is not bought today will be more expensive tomorrow. It was only a matter of days before the cycle would break. In the inflation race, there are very, very few winners – explains the reasons for the increase in inventories Saša Muminović, the president and CEO of AquafilCRO, who is also a member of the management board of AquafilSLO, and it should also be noted that he is the president of the SLO-CRO business club.

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