Bijuk HPC: A Beautiful Story with Few Flaws

Well, that company is a gem! – said our interlocutor when we asked what he thinks about the Samobor company Bijuk HPC, owned by Petar Bijuk (who is also the director) and Silver Fox Holding, an Italian fund that entered the ownership structure in 2021. The company performed excellently last year, reaching the threshold of Lider’s 1000 largest by revenue.

It is difficult to say whether it will make it into this year’s 1000 largest, as revenues in the first eight months are at last year’s level, but this year it is certainly continuing to achieve excellent business results. As Bijuk says, in the first eight months, a revenue of 13.1 million euros and a net profit of 1.7 million euros were achieved. However, he expects that this year’s revenue will be slightly lower than last year’s because production input prices have decreased, which has led the market to react with a reduction in final product prices. Nevertheless, thanks to cost reductions, an increase in net profit is expected compared to last year.

And 2022 was indeed an excellent year, as is this one, but also a year of net profit growth. Total revenue amounted to 18.9 million euros, which was 36 percent higher than in 2021, when it was 13.2 million euros. However, last year, costs also increased to 16.9 million euros, which is a 26 percent increase compared to the previous year when they amounted to 13.9 million euros. Last year’s net profit was 2.1 million euros, which makes it sound convincing when the company expects profit growth considering that in the first eight months, a profit of 1.7 million euros was achieved.

Satisfied Partners

This prediction is further supported by the data on the decline in production costs. As Bijuk explains, the prices of input raw materials in the production process have decreased by about 40 percent this year.

– If we were to look at the ratio of raw material prices before the onset of the global crisis caused by the war in Ukraine, the summary would be as follows: the initial price increase was around 120 percent, so by the end of last year, raw material prices were about 80 percent higher compared to the pre-crisis period, and in the last few months, they have dropped by an additional 40 percent – explains Bijuk.

The company’s largest suppliers are from abroad, including Valbruna Edel Inox, Vitillo, Ibero Stahl, Rodacciai, while domestic suppliers include M.I. Hršak, Omnimerkur, Iscar tools, HEP Elektra… Including other suppliers, Bijuk HPC has been cooperating with most of them for years, which shows that business partners are satisfied.

It is, by the way, an export-oriented company that primarily sells hydraulic pipe components, various types of fittings, flanges, pipes, valves, and all products made of stainless steel, brass, and steel at the customer’s request.

– The goal and mission of our company is to be a leader in the production of hydraulic components and pipe fittings made of noble materials in Croatia and Eastern Europe, with an emphasis on environmental preservation and socially responsible business – says Bijuk.

Last year, 70 percent of total revenue was generated from exports, primarily to Sweden, Germany, Norway, Switzerland, and Austria. By the way, exports have also been growing in recent years. For example, in 2019, it amounted to 8.97 million euros, and then last year it rose to 13.2 million euros, which was an increase of 48 percent. Is inflation influencing this, we ask somewhat provocatively, but Bijuk claims that inflation has not significantly affected the increase in foreign revenues, but rather the company’s long-term investment and focus on export markets.

The largest foreign customers are Parker Hannifin Emea, Haberkorn, Aloe AB, and Hydra Pipe, Gates Tube, while domestic customers include Same Deutz-Fahr Žetelice, Đuro Đaković Special Vehicles, Končar Electric Vehicles, 3. maj shipyard, Impol-TLM, PPC Buzet, Fasek…

Lack of Workers

The manufacturer from Vrbovec Samoborski (the company’s headquarters) currently has eight production-service centers across Croatia (Vukovar, Zagreb, Samobor, Dugopolje, Pula, Rijeka, Dubrovnik, and Perušić) where it can independently carry out any repairs and produce new hydraulic connections. All connections and assemblies are produced on CNC lathes in state-of-the-art processing centers. However, the company could benefit from more qualified workers. Bijuk says they would immediately hire about fifteen. Over the past three years, the number of employees has grown from 146 (in 2020) to 181, which is the current number. They primarily need CNC operators and their assistants. Additionally, by opening service centers across Croatia, they are looking for skilled workers from smaller communities for hydraulic jobs. They also cooperate with subcontractors.

The most sought-after services are metal welding, heat treatment, and metal protection, as well as finishing work during the installation of our products. These are some services for which we need subcontractors, but reliable ones when it comes to quality and deadlines. We have been cooperating with subcontractors for years, and we can rely on them for both – emphasizes Bijuk.

Lider’s analyst Nikola Nikšić, owner of Konter consulting, emphasizes that the average salaries at Bijuk HPC (1394 euros) are higher compared to the average of a group of 24 manufacturers of large and medium-sized companies in the industry (to which Bijuk HPC belongs), which amounts to 1094 euros.

This is a company that, in accordance with its financial capabilities, takes care to materially motivate employees, keeping in mind the significant limitations that exist in the labor market in its industry, such as fluctuations to other EU countries, a lack of interest among young people in manufacturing professions, demographics, i.e., aging, and a shortage of qualified and competent labor force… – says Nikšić.

A Beautiful Story

Bijuk HPC is a beautiful story, as one of our interlocutors said. The opportunity for this company lies in automation (Industry 4.0), improving internal communications, and the high demand for suppliers/manufacturers in Europe instead of China. Threats include the difficulty of finding staff, an unstable geopolitical situation, and potential increases in raw material/energy prices. The strength lies in long-term market positioning, state-of-the-art CNC machines, customer/market sector diversification, and know-how. However, like any company, it has weaknesses: internal procedures, delivery deadlines to customers are quite short, which is why the company invests additional effort. Also, a relatively large share of production is based on customer designs, which slows down the production process (when they work according to their designs, it goes much faster), and the level of automation in some parts of production is relatively low.

Such healthy companies certainly need support, and there is no doubt that there will be interested investors in the coming years. Of course, mutual interest is necessary.

Read the entire company story in the digital or printed edition of the business weekly Lider.