First Business Results of 2023: Foreign Companies Announce a Significantly Modest Year for Croatia Compared to Record 2022

As snowdrops, violets, and primroses herald spring, so too do the first estimates of how companies performed in the past year begin around this time. Of course, everyone knows how they fared, whether their revenues grew faster than inflation, whether they made a profit (and how much)… There is speculation about how sectors performed, but the real comparison (and assessment of the year) comes only when the results of competitors are seen. Companies listed on the stock exchange are obliged to publish last year’s business results by the end of February, while others must do so by the end of April.

However, by this Tuesday, 2,317 annual financial reports for 2023 had already arrived at Fina. To be fair, most do not pertain to the entire calendar year but to the so-called business year. A number of companies (especially foreign ones) align their ‘commercial year’ with seasonal fluctuations in business. Thus, most of these companies sent reports on their business up to the end of the first half of the year or until the end of August. All of them will submit a new report by April 30, which will differ from this one and will describe business for the entire 2023. Until then, let’s take a look at the first sample.

A Year of Slowing

From the analysis, we excluded companies that did not operate for the entire year and were merged with their parent companies after ownership changes and were removed from the Court Register (Nova hrvatska banka, former Sberbank, merged into HPB; Studenac ‘swallowed’ Lonia trade, Strahinjčica, Spar trade…; Ivamil was merged with VMD standard; Salami Aurea and Copadio Žitu…). We also limited ourselves to companies with revenues exceeding 10 million euros, arriving at a list of 31 companies.

When we excluded three more domestically owned companies (Agroland, Meneghetti, and Algebra), we arrived at a sample of 28 foreign-owned companies. They achieved an 11 percent revenue growth, but this needs to be adjusted for inflation of 4.5 percent, so the real growth is around 6.5 percent. Additionally, they reported an eight percent decrease in profit and reduced the number of employees by three percent compared to the previous year.

Using the same criteria, we made the first estimate a year ago. At that time, 30 comparable companies achieved a staggering 40 percent revenue growth (realistically 27 percent), and when the results of all entrepreneurs were summed up, it amounted to a 24 percent growth (realistically 11 percent). Therefore, the current results should be viewed in this light, as foreign-owned companies suggest that the Croatian economy only slightly increased revenues above inflation last year. The slowdown from last year is also evidenced by the larger number of companies that reduced revenues – eight of them (five the previous year).

Axereal’s Loss

It is clear that 2023 was significantly weaker than the record year of 2022, when all entrepreneurs doubled their profits. A slightly smaller number of employees in the observed companies contributed jointly to digitalization (with productivity growth) and the labor force crisis. However, according to current statistical reports, at the end of last year, there were still 1.2 percent more employees than at the end of 2022 (about 17,000 more jobs). The highest revenues last year (actually in the period from the beginning of July 2022 to the end of June 2023) were achieved by ABS Sisak – 143 million euros.

This is 6.3 percent less than in the previous period, but the loss was reduced from 9.2 million euros to 3.5 million. However, the biggest minus was reported by Axereal Croatia – 3.6 million euros, which is surprising as this barley producer from Nova Gradiška had previously operated positively, and in 2022 reported a record profit of 6.5 million euros, but despite last year’s revenue increase of 15 percent, it fell into a significant loss. A small consolation is that the neighboring sister company Slavonija Slad, which produces malt from barley, increased revenues by 46 percent and profit by 61 percent (to 4.7 million euros), so this French complex was cumulatively still in the plus.

Nobel Factory

The highest profit among the reports published so far this year was also reported by Jysk – 17.6 million euros, which is 19 percent more than the previous year, and exactly in line with revenue growth. Following it is Maxam Detines from Martinska Vesi. This manufacturer of civil explosives is little known to the public, although it has one of the most famous founders – Alfred Nobel, who founded the company in 1872 under the name SED – Spanish Dynamite Factory.

The company, which has been operating in Croatia for about twenty years and exports more than 80 percent of its production with revenues of 30 million euros, is not even among the 500 – 600 largest in Croatia, but it is convincingly the largest in that underdeveloped municipality of upper Posavina and with its 65 employees is also the largest employer. By the way, the most employees among the analyzed foreign companies are Jysk (535), TEDi business (484), and Genera (330).

Thus, judging by this sample of foreign business ‘primroses’, the record business year of 2022 remains unparalleled, and it will only be seen how much the second half of the year with poor results from major foreign trade partners further slowed growth.