Croatian distributor Atlantic Grupa reported a 5.5% decline in net profit for the first half of 2023, citing rising costs as the key factor. The company’s net profit fell to €20.9 million ($23 million) during this period, primarily due to increased prices of raw materials, packaging, energy, logistics, and higher staff costs, which affected profitability. However, Atlantic Grupa saw a surge in sales, with a 15.8% increase to €459.7 million compared to the first half of 2022.
Despite the decrease in net profit, Atlantic Grupa’s earnings before interest, taxes, depreciation, and amortization (EBITDA) remained steady at €44.4 million, matching the level of the first six months of the previous year. The group achieved strong growth across all units and markets, driving the significant increase in sales. The snacks manufacturing unit witnessed the most notable sales growth, recording a 32.2% increase. This growth was attributed to optimization efforts, intensified marketing activities, and the successful launch of new products.
Atlantic Grupa’s own brands accounted for 63.3% of total sales, while principal brands contributed 27.5%. Moreover, the company’s pharmacy chain, Farmacia, made up 9.2% of the total sales. Among individual categories, coffee stood out as the largest, representing 20.4% of total sales.
While trading in Atlantic Grupa’s shares didn’t commence on Tuesday morning at the Zagreb bourse, the previous day saw them closing 0.80% lower at €49.60.
The rise in costs has affected many industries globally, as businesses grapple with the economic impact of the ongoing pandemic. Atlantic Grupa’s experience reflects the challenges faced by companies in managing increased expenses. However, the company’s ability to achieve significant sales growth demonstrates its resilience and successful strategies in navigating these difficulties.
It is worth noting that Atlantic Grupa’s net profit decline is offset by the positive sales performance, indicating that while costs have increased, the company continues to generate strong revenue. The successful launch of new products within the snacks manufacturing unit has also contributed to overall growth. Atlantic Grupa’s emphasis on its own brands has proven successful, as they account for the majority of its sales.
As Atlantic Grupa deals with rising costs, it remains to be seen how the company will address this challenge moving forward. However, their ability to adapt and maintain a strong sales performance suggests that they are well-positioned to weather these cost pressures.
