Croatia's Podravka profit up as restructuring bears fruit

Top Croatian food group Podravka said its profitability improved even as 2013 sales were flat, showi…

Top Croatian food group Podravka said its profitability improved even as 2013 sales were flat, showing the company's cost cutting programme was paying off.

"Our business results were strongly affected by the restructuring efforts and workforce reduction. We have managed to improve profit margins at all levels," the company said in a statement on Tuesday.

The company, 25-percent owned by the state, said it had offset a 7 percent drop in sales in its domestic market, which is struggling with a prolonged recession, with higher sales abroad, particularly in the former Yugoslavia.

Podravka's sales in 2013 were 3.67 billion kuna ($654.6 million), virtually unchanged from 2012, while its net profit reached 66.6 million kuna against a net loss of 14.1 million kuna a year before.

Croatia, which became an EU member last July, has suffered five recession years in a row, with consumer spending steadily shrinking.

Podravka has food and pharmaceutical arms, while its beverage segment is slated for sale. Beyond southeast Europe, it is active in central and eastern Europe and ex-Soviet states and also aims to strengthen its presence overseas.

Chief Executive Zvonimir Mrsic told Reuters in a recent interview the company's goal was to continue improving efficiency and did not exclude possible acquisitions.