Atlantic Grupa has booked higher first-quarter earnings but saw its sales fall in the first three months of the year due to a slump in sales of sports nutrition and functional food products, the Croatia-based food and beverage company’s largest division.
The business reported a 15.4% rise in net income to HRK52.3m (US$7.7m) for the first three months of 2017. The growth in Atlantic Grupa’s operating growth was more muted, with its EBIT inching up 0.6% to HRK70.3m.
Atlantic Grupa’s sales fell 2.9% to HRK1.12bn. The company said sales from its sports nutrition and functional food arm slid by more than a third to HRK98.9m. It pointed to the end of a contract last year with an unnamed “major buyer” of private-label products. Atlantic Grupa reported sales growth from each of its other divisions.
The company’s management reflected on the issues facing Agrokor, the Croatia-based food manufacturer and retailer, now under the control of the country’s government as it looks to restructure a debt-laden balance sheet. During the quarter, Atlantic Grupa scaled back its deliveries due to Agrokor, which has reportedly struggled to pay suppliers on time.
“In the first quarter of 2017, in the majority of business segments and on the majority of markets, Atlantic Grupa recorded great sales results, with improved profitability and a further decrease in debt. The recorded results would have been even better if the controlled decrease in the volume of operations with the members of the Agrokor concern, the largest individual customer of Atlantic Grupa, had not occurred, in relation to their problems with liquidity and inability to settle their liabilities,” Atlantic Grupa CEO Emil Tedeschi said. “Despite this and due to good sales results of other retail partners, we managed to fully compensate for this shortage of revenue.”