Croatia's Atlantic Grupa sees almost 8 pct sales growth

ZAGREB, April 11 Fri Apr 11, 2014 9:05am EDT

ZAGREB, April 11 (Reuters) - Atlantic Grupa, one of Croatia's largest food firms, expects total sales growth to increase to almost 8 percent this year, helped by demand in Western Europe and distribution deals, its chief executive said.

Atlantic, a rare successful exporter in the battered Croatian economy, is present in more than 30 markets, mostly in western Europe, the Balkans and Russia. It has production facilities in five Balkan countries and Germany.

The second-largest food company in Croatia behind privately owned Agrokor, Atlantic produces protein bars, soft drinks, coffee and sweets.

It is also the main regional distributor of products from international giants Nestle, Johnson&Johnson and Unilever.

"Our strongest market in terms of growth is Russia, but the current situation in Ukraine does not help. We expect to continue growing above average in some countries in western Europe, like Germany, Sweden and Spain," CEO Emil Tedeschi told Reuters in an interview on Friday.

The company expects total sales growth of almost 8 percent this year compared with 2.5 percent last year. Tedeschi said Atlantic's own sales should rise 3-4 percent. The company did not give a comparable figure for last year.

Its overall sales rose to 5.05 billion kuna ($918.9 million) in 2013, while net profit jumped 77 percent to 199 million.

Croatia joined the European Union last July but its economy, still dominated by an inefficient public sector, was largely unprepared.

The country has had no growth since 2008 and has lost around 13 percent of output since then. For this year most analysts expect another mild decline.

In contrast, Tedeschi said Atlantic was now reaping benefits from having spent a decade preparing for EU membership.

"We've become ready to compete at home and abroad, that's why we're confident in good future performance."

Tedeschi said Atlantic plans to start building a new factory in Croatia worth 120 million kuna this month, which would produce almost exclusively for the EU markets and the United States, probably from December.

"After assessing whether to start new production in Germany, Slovenia or Croatia, we concluded that the local investment would be the best option in terms of costs," Tedeschi said.

But he acknowledged Croatia's business climate was generally unfriendly for investors, because of excessive bureaucracy, inefficient administration and frequently changing rules.

"Also, Croatia lacks people with good managerial skills, both in the private and public sector," he said. ($1 = 5.4960 Croatian Kunas) (Reporting by Igor Ilic; Editing by Zoran Radosavljevic and Erica Billingham)