Agrokor will have new owners in 2018

Date : 10 January 2018

In December 2017, Agrokor announced it will move its headquarters from its well-known Cibona business tower to a smaller office location to accommodate the reduced number of employees. This reflects some of the major changes the state-administered company will face in 2018, the key one being the new ownership of the company by its creditors as announced by the state appointed administrator for Agrokor, Ante Ramljak.

Agrokor’s Konzum to restructure ownership in 2018

Agrokor estimates that is still owes around EUR 5.5bn in debt from around 5,700 creditors including banks, investment funds and suppliers. Under Ante Ramljak’s plan, the creditors will see their debts being converted into ownership stakes in Agrokor and with full operational control. The aim to complete the restructuring by end of 2018, but this requires approval from the courts.

Agrokor will shut unprofitable business segments

In line with the group's viability plans, the focus of its business segments has shifted from increasing revenues to generating more profit. The plan will support debt repayment for Agrokor’s possible new owners by shutting down the unprofitable parts of the business and investing in profitable ones, so to increase share pay out.

Focus will be on sales network optimisation of Konzum

Agrokor announced that in 2018 it will focus on shutting down units with inadequate traffic or profitability. Earlier in 2017 Agrokor announced the closure of around 100 stores, and more is expected in 2018 as part of a network optimisation plan. Closure of Konzum’s largest store after 12 years of operation signifies the gravity of the additional closures in 2018. Focus will also be on store refurbishment that optimise sales space, remove non-profitable assortments, and rearrange category ratios to boost profitability mostly in medium-sized unit to 3,500 sq. m.

Konzum rebuilds relationship with local suppliers

Konzum will rebuild its relationship with local suppliers by offering favourable trade contracts. Konzum already offered more than 60 small Croatian manufacturers to stock 500-plus local products as part of the ‘Iz domacih krajeva’ – ‘from domestic regions’ – project. These products will have a dedicated sales space and local suppliers will have a say on the in-store presentation of the range, as well as the supply logistics.

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Amin Alkhatib, Retail Analyst CEE, IGD International: based in London, UK, Amin is responsible for shaping IGD's research in Central and Eastern Europe; as well as contributing to IGD's broader European research programme. Follow me on Twitter @Amin_IGD for further insight on the region’s retail landscape.