Friday, 11 November 2022

New Turkish Owners of Petrokemija, a Troubled Croatian Fertilizer Company

November 11, 2022 - After two years of speculation, gossip and due diligence, on Thursday it was finally confirmed that the Turkish conglomerate Yildirim will buy a majority stake in Petrokemija

The only major Croatian petrochemical company produces mineral fertilizers, at such a rate that their production consumes a fifth of the total amount of gas consumed in Croatia. The Turkish company took over the Terra mineral fertilizers company from its previous owners, INA and PPD. That company owns 54 per cent of Petrokemija's shares. How much Ina and PPD earned from the sale to the Turks was not made public.

It was not easy sailing for the Petrokemija companies even before the Russian invasion of Ukraine, which started the global energy crisis. Just three months ago, the CEO of Petrokemija Davor Žmegač told Bloomberg TV that the problems started since the earthquake, the supply chain crisis and the increase in gas prices, and that it is not economically profitable for them to do business at all because their monthly gas bills reach one hundred million euros.

How the new Turkish owners will deal with all of these problems remains to be seen. Local farmers will wait to see if they're still able to count on the fertilizers produced domestically, without which there is no sowing or harvest. The good news is that Yildirim has a rich experience in everything the Kutina company might need at this point.

Although Petrokemija operates with an annual income of around 300 million euros and has 1,250 employees, it will be only a small part of Yildirim Holding, whose annual income is reported to be around two billion euros and employs more than 16,000 people. Yildirim has companies operating in various industries, where the most profitable ones are mining, ports, petrochemicals, logistics and energy. The company was founded in 1963 as a construction business by Garip Yildirim, but has been the fastest-growing Turkish industrial group since 2005. Its current owners are the sons of Garip Yildirim, Ali Riza and Robert, who entered international trade outside the borders of Turkey in 1993 by importing coal from Russia. 15 years ago, they made their first foreign acquisition by taking over the metals company Vargön Alloys in Sweden, and today they have companies in 53 countries on five continents. 

Their annual production capacity of all types of fertilizers exceeds two million tons, and Petrokemija produced one million tons of fertilizer in 2020. Given that Petrokemija's production capacity is respectable compared to that of the Turkish owner, serious investments in Kutina and the continuation of operations can be expected. We will soon see what the first steps of the Turkish owners will be and how the integration into the Yildirim group will proceed, but Petrokemija could be on the verge of a renaissance, especially if its plants are able to get some cheap gas, which is probably something new owners have already looked at, and which might be an ace up their sleeve.

Thursday, 28 October 2021

Petrokemija Sees Net Profit Plunge By 94%

ZAGREB, 28 Oct 2021 - Fertilizer manufacturer Petrokemija generated a net profit of HRK 19 million in the first nine months of 2021, down from HRK 315 million in the same period of 2020, the company's financial statement shows.

Petrokemija's result for the first nine months of this year was affected by increased prices of natural gas, higher carbon emission allowance prices, and lower demand. The negative effects were partly offset by higher selling prices of mineral fertilizers and the efficiency measures implemented, CEO Davor Žmegač said in a comment.

Operating revenue totaled HRK 1.5 billion, up by 7.0% over the same period of 2020. Sales revenue rose by 6.0% to HRK 1.49 billion, fuelled by the increase in prices of mineral fertilizers, which in turn was due to higher prices of natural gas on the European markets.

The company said that prices of natural gas on the European markets had gone up by 249 percent on average, while carbon emission allowance prices had increased by 129 percent following a new EU directive aimed at further reducing CO2 emissions.

Operating expenditure rose by 38% to HRK 1.49 billion. EBITDA without one-off items was HRK 141 million, down by 65 percent, and net profit fell by 94 percent to HRK 19 million. Capital investment rose by 217 percent to HRK 91 million.

(€1 = HRK 7.521247)

For more, make sure to check out our dedicated business section.


Monday, 11 October 2021

Petrokemija Fixes Glitch At Its Production Plants

ZAGREB, 11 Oct 2021 - Petrokemija, a leading producer of artificial fertilizers in Croatia, reported on Monday morning that it had fixed a glitch that had appeared in two of it units -- Urea and Amonijak-- however, the production in these Kutina-based plants would still not restart.

The relaunch of the production cannot be expected for the time being due to the optimization of business operations and record-high prices of natural gas and CO2 in Europe," Petrokemija says in a press release issued on the Zagreb Stock Exchange on Monday morning.

"The technical failure at Urea and Ammonia production plants has been successfully repaired," reads the press release.

"The plants will remain shut down until further notice in order to optimize and align business
operations to the conditions on the gas market and the record-high prices of natural gas and
CO2 in Europe. Pursuant to the regulations, the Company will report on the trends and further
adjustments to its business operations, as well as the duration of production downtime.

"Sufficient mineral fertilizer quantities have been secured to maintain the supply of domestic
and regional markets during downtime," the company says.

On 30 June, Petrokemija posted a net profit of HRK 48 million in the first half of 2021, which was 80% less than in the same period of 2020, according to the company's financial statement.

Total operating revenue fell by 3.0% to HRK 936 million, with sales revenue declining by 5.0% to HRK 918 million. Operating expenditure increased by 23% to HRK 888 million.

Davor Žmegač, President of the Management Board, was then quoted as saying that the results were affected by increased prices of natural gas, higher CO2 emission charges, and lower sales, mostly as a result of the planned overhaul early in the year.

Negative effects were partly offset by higher selling prices of mineral fertilizers and the business efficiency measures implemented, Žmegač said then.

For more, check out our business section.

Friday, 30 July 2021

Petrokemija Posts H1 Net Profit of HRK 48m

ZAGREB, 30 July 2021 - Fertiliser manufacturer Petrokemija generated a net profit of HRK 48 million in the first half of 2021, which is 80% less than in the same period of 2020, according to the company's financial statement released on Friday.

Total operating revenue fell by 3.0% to HRK 936 million, with sales revenue declining by 5.0% to HRK 918 million. Operating expenditure increased by 23% to HRK 888 million.

Davor Žmegač, President of the Management Board, said that the results were affected by increased prices of natural gas, higher CO2 emission charges and lower sales, mostly as a result of the planned overhaul early in the year.

Negative effects were partly offset by higher selling prices of mineral fertilisers and the business efficiency measures implemented, Žmegač said.

For more on business in Croatia, CLICK HERE.

Thursday, 2 May 2019

Petrokemija to Lay Off 350 Employees This Year

ZAGREB, May 2, 2019 - The Kutina-based artificial fertiliser producer Petrokemija said on Thursday that at the meeting held on 30 April 2019, its Supervisory Board gave its approval on the implementation of the Severance Plan for 2019.

According to the Plan, and communication with social partners, about 350 employees will leave the company by the end of this year.

The optimisation of business processes in the Company and Petrokemija Group, which includes optimization and management of human resources, is one of the prerequisites for ensuring a sustainable business model of the Company. Petrokemija did not specify the amount of severance pays.

The company has successfully completed the recapitalisation process – investors have paid for 45 million of new stocks which helped the company collect 450 million kuna. The stock capital was raised to 550.287 million kuna.

According to recently published figures, in the first three months of 2019, Petrokemija made net income of 22 million kuna, compared to 79 million kuna net loss in the same period last year.

The sales volume and sales structure are the main promotors of better results compared to the same period of 2018. Total sales volume rose by 31 percent and revenue grew by 44 percent, thanks to good results in Croatia and in regional markets, the company said on its website.

More Petrokemija news can be found in the Business section.

Wednesday, 31 October 2018

Petrokemija Recapitalisation Successfully Concluded

ZAGREB, October 31, 2018 - The oil company INA and the Prvo Plinarsko Društvo gas supplier have signed an agreement with the Restructuring and Sales Centre (CERP) for the recapitalisation of the Petrokemija artificial fertiliser manufacturer, paying a total of 300 million kuna of fresh capital for the Kutina-based company, which will make them its majority owners, the two companies said in a statement on Wednesday.

"The investors INA and PPD have signed with CERP, the representative of the Republic of Croatia, an agreement on Petrokemija's recapitalisation. The two companies have paid a total of 300 million kuna for 30 million Petrokemija shares, each giving 150 million kuna, which will make them Petrokemija's majority owners, with a stake of more than 50% and the related management rights," INA and PPD said in the joint statement.

The two companies have carried out the transaction through a company they have jointly set up - Terra Mineralna Gnojiva d.d. (TGM), which will operate in line with the signed shareholders' agreement.

The latest developments have prevented the company's bankruptcy and the decision was unanimously supported by representatives of the two biggest shareholders on INA's Supervisory Board, the statement said.

"The purpose of the investment is to ensure the continuation and development of artificial fertiliser production at Petrokemija. The partners will cooperate in good faith and make effort to enable Petrokemija to continue with its activities. INA and PPD will therefore focus on improving Petrokemija's current financial situation by improving its product portfolio, making its operating costs sustainable, refinancing inherited debts and further optimising the business process," the statement said.

It also quoted INA Management Board chair Sandor Fasimon as saying that INA had once again proven to be a stable and reliable partner to the company as well as the entire Croatian economy and local community.

Petrokemija on Monday published a public invitation to subscribe for a minimum 40 and a maximum 45 million new shares, whereby it plans to collect at least 400 and a maximum of 450 million kuna of fresh capital. The subscription for shares lasts until 4.30 pm, October 31.

Economy Minister Darko Horvat said on Wednesday that the recapitalisation of mineral fertiliser producer Petrokemija was successful. "This is a third attempt at recapitalisation or privatisation and I dare say that we've made it," Horvat said in response to questions from the press.

Horvat noted that the involvement of different government departments and Prime Minister Andrej Plenković's determination to bring this process to a close paved the way for the transformation of Petrokemija into a privately owned company.

Davor Žmegac, who until now was a member of the management board, replaced Đuro Popijač as chairman of the management board.

Read more about Petrokemija here.

Monday, 29 October 2018

Petrokemija Restructuring to Go Forward

ZAGREB, October 29, 2018 - During a conference call on Monday, the government adopted a decision enabling the completion of the process of recapitalisation by a strategic partner to the Kutina-based Petrokemija artificial fertiliser plant.

The government thus issued approval for the transformation of the state's receivables into Petrokemija's equity capital, and for the acquisition of a stake on behalf of the government in the Petrokemija Agro Trade company and the cabinet also gave a green-light for the conclusion of a contract for the injection of fresh capital and the company's restructuring. The government also adopted a decision authorising the general assembly of the HEP electricity provider to reschedule Petrokemija's debt for gas supplies.

"By adopting this decision the government has fulfilled all the commitments agreed to for the conclusion of transactions and has created the prerequisites for the successful recapitalisation by a strategic partner," the government said in a press release.

The recapitalisation process was launched mid-2017, however, this year "activities have intensified to implement the process through talks and communication with potential strategic partners and the European Commission with regard to confirming that the entire process is in compliance with the EC Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty" the government said in its statement.

Petrokemija issues call for recapitalisation

Kutina-based mineral fertiliser manufacturer Petrokemija on Monday issued a call for subscription of not fewer than 40 million and not more than 45 million new shares in a bid to raise up to 450 million kuna of fresh capital.

The purpose of the recapitalisation is to raise funds for investment that will ensure and improve production, restructuring and the funding of day-to-day business, shareholders said at a meeting on July 9 when the decision to increase the equity was made.

Each investor may subscribe a minimum of one million new shares in the amount of 10 million kuna, while the maximum amount is limited to 45 million shares in the amount of 450 million kuna. The share subscription will take place from 8.30am on October 29 until 4.30pm on October 31.

A general shareholders meeting will be held on October 31 after the previous one scheduled for October 15 failed to take place due to a lack of quorum.

Want to know more about Petrokemija developments? Click here.

Saturday, 1 September 2018

Finance Minister Wants Long-Term Solution for Companies in Trouble

ZAGREB, September 1, 2018 - Finance Minister Zdravko Marić told Večernji List on Saturday that the state budget would withstand the payment of costs related to the ailing Uljanik shipbuilding group and the Petrokemija artificial fertiliser producer and that there would be no corrections on its revenue side or an increase in taxes, however, he did call for long-term solutions "so that we stop financing and salvaging always the same loss-making companies."

Tuesday, 31 July 2018

Petrokemija, Rijeka Shipyard Report Dismal Business Results

ZAGREB, July 31, 2018 - Mineral fertiliser maker Petrokemija ended the first half of 2018 with a loss of 176 million kuna, considerably higher than at the same time in 2017 when the loss was 40.3 million kuna, the Kutina-based company said in a financial statement on Tuesday.

Monday, 28 May 2018

New Economy Minister Hopeful for Agrokor Settlement Agreement

ZAGREB, May 28, 2018 - Economy Minister Darko Horvat said on Monday that he expected an agreement on a settlement with Agrokor's creditors to be reached by July 10 as only that way would creditors' losses be reduced, adding that there could not be an ideal, win-win situation in Agrokor.

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