Emil Tedeschi: Prices Will Not Surge Next Year, but It Is Difficult to Assess the Rate of Decrease

The editor-in-chief of Lider, Miodrag Šajatović, and the owner and CEO of Atlantic Group, Emil Tedeschi engaged in a ‘one to one’ conversation during the 15th annual conference Day of Great Plans held at the Westin Hotel in Zagreb. Šajatović reminded him that Atlantic Group has evolved from a distribution company to one that predominantly generates revenue through production. Tedeschi, confirming this, noted that until recently, revenue was entirely generated in Croatia, while today it reaches 80 percent. However, he pointed out that despite the company becoming predominantly production-oriented, the distribution business has not been neglected; on the contrary, this business within Atlantic Group has tripled since 2000.

Although he admitted he is not a fan of processes, he spoke about their importance, emphasizing that the process of any segment of the company is exceptional, especially when it comes to risk management.

– Thanks to my colleagues, we have great processes. Atlantic is organized between a confederal and federal system. The reason is that Atlantic is not just me, but we believe in the competencies of our leaders, 300 extremely competent managers – said Tedeschi.

He noted that Atlantic will be cautious, conservative, but also very ambitious regarding plans for 2024.

– Risk management is the mother of all management. We already corrected the budget at the end of February this year, which is not foreign to us. We are very dependent on raw materials, geopolitics, and how the tourist season will be. But although I am an optimist, I believe we should be cautious – said Tedeschi.

Caution is based on the rise in interest rates and the fact that financial institutions are much more sensitive and selective in granting loans. Therefore, private equity funds are also available to companies. Entrepreneurs with smaller capacity should be open and consider what financing options are available.

– Atlantic has done a lot precisely because we were open to all combinations. Our company was the first in Croatia for which a private equity fund conducted due diligence. It was the first private equity fund in Croatia. True, there was no investment because the fund considered Atlantic to be a non-prospective company. I am grateful to that fund for such an assessment because we would have sold 37 percent of the company for a small amount of money, and who knows where we would be today – recounted Tedeschi.

On the other hand, Atlantic was the first limited liability company to issue commercial papers, then the first to issue a kuna bond, followed by a euro bond, and then launched a large IPO ‘probably the largest ever in the Balkans’, and collaborated with secondary funds, making the company a leader on the Zagreb Stock Exchange today.

– I think that our openness to options is what I would recommend to entrepreneurs – said Tedeschi.

Responsible to Everyone

When it comes to prices, he believes they will not surge next year, but it is difficult to assess the rate of decrease. Regarding Atlantic’s pricing policy, he says that the company is always oriented towards long-term sustainability. During the pandemic, full employment was maintained, and everyone received salaries regardless of whether they worked and how much or not.

– We are the largest donor in the surrounding countries related to COVID with five million euros paid out. At that time, we also paid the highest dividend. This means that as CEO, I have strived to be responsible to employees, to the wider community, but also to investors. The same goes for prices. We passed part of it onto the market, but a significant portion of the cost increase was absorbed by the company, primarily because it was not realistic to pass such a shock on inputs onto consumers. On the other hand, we did not want to create panic considering that in the last three years, including this one, the gross margin has decreased, and we have succeeded in that. But what is much more important is that we have maintained market share, we have not reduced production; on the contrary, we are recording growth – said Tedeschi.

When Šajatović asked about his personal plans, the head of Atlantic Group said he had worked for four years with his personal advisors on establishing a family office.

– The company is called Myberg, and I believe it is one of the first family offices in this region. In this way, I tried to solve the problem of succession and ownership for the next generation, but also through it, we want to invest outside of Atlantic. This company holds 50.2 percent of Atlantic Group, but it has also started other investments. I believe that succession is the most sensitive task for every business person; I have been working on it for four years, I invested over 300 thousand euros of my own money, and in the end, I made a decision about a very simple structure that I registered in Zagreb. This company has professional management – said Tedeschi.

He does not think about stepping down as CEO of Atlantic Group, although he is aware that even without him in that position, Atlantic Group would at least be just as good a company. In support of this claim, he reminded that the company has very high-quality management and that its members could also be competent for the position of CEO.