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Introduction & Market Context
Podravka Group presented its business results for the first half of 2025 on July 24, revealing a significant transformation of the company through its expansion into the agricultural sector. The Croatian food and pharmaceutical company reported substantial revenue growth of 30.4% year-over-year, largely driven by the acquisition of its new Agri segment. Despite this major business development, Podravka’s share price has remained relatively stable, trading at €150 as of July 25, 2025, slightly higher than the €147.50 reported at the end of June.
Quarterly Performance Highlights
Podravka’s total revenue reached €496 million in the first half of 2025, compared to €380 million in the same period of 2024, representing a 30.4% increase. This growth was primarily fueled by the newly acquired Agri segment, which contributed €111 million in revenue.
As shown in the following chart of revenue by segments, the company’s traditional business lines showed modest growth, with the Food segment increasing by 1.7% to €296 million and the Pharmaceutical (TADAWUL:2070) segment growing by 2.3% to €92 million:
The company’s profitability metrics showed remarkable improvement, with group EBITDA more than doubling to €142.5 million (up 116.5%) and net profit after minority interests surging by 138.6% to €96 million. These significant increases were largely attributable to the high-margin Agri segment, which reported an impressive EBITDA margin of 69.7%.
The following chart illustrates the Group’s overall profitability metrics:
Detailed Financial Analysis
Geographically, Podravka experienced varying performance across its markets. The most significant growth was seen in Croatia and Slovenia, where revenues increased by 60.7% to €285.4 million, primarily due to the inclusion of the Agri segment which operates predominantly in these markets.
The regional breakdown of operating revenues is illustrated in this chart:
The company’s business programs and categories within the Food segment showed mixed results. Notable performers included Creamy Spreads and Desserts (+11.9%), Meat Products (+12.4%), and Cereals, Snack and Beverages (+8.1%). However, some categories experienced declines, including Bakery (-6.9%), Fish (-20.2%), and Basic Food (-2.3%).
The distribution of sales by business units, categories, and sub-segments is visualized in this chart:
Strategic Initiatives
The acquisition of the Agri segment represents a significant strategic shift for Podravka. This new business line comprises three subsegments: Livestock (€45.5 million in revenue), Industrial Products (€30.6 million), and Crop Production (€8.6 million). The segment also generated €12 million in agricultural subsidies.
While highly profitable, with an EBIT margin of 60.5% and a net profit margin of 57.1%, the acquisition has substantially increased Podravka’s debt levels. Financial debt rose from €57.7 million to €418 million, a 624.9% increase, while net debt jumped from €30.5 million to €392.1 million.
The following chart illustrates the dramatic increase in the company’s indebtedness:
This significant debt increase has impacted the company’s cash flow position. Net cash from operating activities decreased by 17.7% to €37.3 million, while cash used in investing activities increased dramatically from €31.1 million to €321 million, primarily due to the acquisition.
Forward-Looking Statements
Despite the substantial increase in debt, Podravka has proposed a dividend of €3.20 per share, representing a yield of 2.2%. This suggests management’s confidence in the company’s ability to service its increased debt load while maintaining shareholder returns.
The presentation also highlighted increased investments in employee compensation, which contributed to a 20.5% rise in general and administrative expenses and a 13.7% increase in sales and distribution costs. These investments in human capital, alongside the strategic expansion into agriculture, indicate Podravka’s focus on long-term growth despite the short-term impact on expenses and debt levels.
While the core Food and Pharma segments showed modest growth, the transformative acquisition of the Agri segment has positioned Podravka for a potentially different growth trajectory. Investors will be watching closely to see how effectively the company integrates this new business line and manages its significantly higher debt load in the coming quarters.
Full presentation:
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