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<title>Welcome to PLIVA d.d. Zagreb Croatia</title> |
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<p><br> |
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<td width="100%"><font FACE="Arial" size="3"><b><a name="PLIVAS SHARES VALUE MUST RETURN TO 600 KUNA">PLIVAS SHARES VALUE MUST RETURN |
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TO 600 KUNA</a></b><p></font><font FACE="Arial" size="2">Vecernji list, Wednesday, |
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09/09/1998 </p> |
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<p>Our share price has drastically decreased, but not due to incompetent business |
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activities, but because of the global market crisis. *Because of the Russian crisis, |
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almost all foreign investors have withdrawn from Croatia, and the Zagreb Stock Exchange is |
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practically out of business. *Almost all expert analysts estimate that the PLIVAS share |
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price must increase from its present 350 kuna to some 600 kuna. *We shall continue |
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supplying hospitals, but large scale drug-dealers will be cut off until they pay their |
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debts, totalling some 400 million kuna. </p> |
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<p> </p> |
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<p>Reporter: Diana Glavina, Vecernji list</p> |
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<p>The President of the Croatian multinational company PLIVA, Zeljko Covic, M.Sc., is |
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extremely pleased. The reasons are, above all, the excellent six-month results, high rates |
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of increase, which are the best proof of PLIVAs steady growth. In comparison to the |
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same period last year, the PLIVAs total income increased by as much as 31.1%, amounting |
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to 1.8 billion kuna. EBIT increased almost 30% (615.4 million kuna, representing 80% of |
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1997 totals). Net profit increased 7.7% to 407.7 million kuna. </p> |
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<b><p>How do you explain these extremely high sales growth rates?</b></p> |
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<p>- PLIVAs goal the internationalisation of business activities has from the |
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very beginning been marked with our endeavours towards an increase of our profit from the |
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international market. And today, for the first time, the international market profit |
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share, which amounts to 57.6%, is for the first time larger than the profit share from the |
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domestic market. Our short-term goal is 60%, in order to ensure the additional stability |
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of the company. Furthermore, PLIVA has an optimal export structure in certain regions, so |
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that immediately after Croatia and its 42% share of total income are the countries of |
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Central and Eastern Europe with a 25% share, and this amounts to an 147% sales increase in |
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comparison with the first six months of last year. This is partially a result of our |
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acquisition of Polfa Krakow, but even without that, our profits in the region have been |
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constantly increasing. I would like to point out that only three years ago, our profit |
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from the above mentioned countries amounted to three or four percent. Then followed |
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Western Europe with eight percent of income, which means that sales increased by 69% |
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there. America accounts for 18 percent of PLIVAs income, and Russia four percent.</p> |
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<p>Income in Croatia has grown around 8.9 percent, which only proves our thesis that the |
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possibilities for a more meaningful growth in Croatia are limited by the size of the |
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market. </p> |
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<b><p>Despite the outstanding financial results, PLIVAs share price has decreased |
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considerably. What is your explanation of such a contradictory situation?</b></p> |
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<p>- It is a fact that the price of shares has dropped considerably. But this is merely |
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the result of international market trends, the result of the crises which have shaken up |
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the global economy and finances. At the moment, Russia is at the centre of all the crises, |
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but let us not forget that the complete effects of the Asian crisis are not yet known. And |
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it is a well-known fact that in such moments of crisis, investors react with panic and |
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make irrational decisions. These may be non-selective decisions whose repercussions may be |
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felt throughout the whole region, not differentiating between the companies and countries |
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which are and which are not in crisis. </p> |
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<p>And this is why at the moment Croatia is being connected with the Russian crisis. </p> |
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<p><b>What is your position as a successful company in such circumstances are you |
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powerless or are you going to be able to make certain moves?</b></p> |
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<b><p>- </b>We have just published our financial results, and as usual, we are going on |
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the road show with an aim of explaining to the shareholders and foreign investors |
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the difference between the Croatian market and PLIVA and all the latest events in Russia. </p> |
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<p>Due to the Russian crisis, all foreign investors have withdrawn from Croatia. The |
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Zagreb Stock Exchange is practically out of business, and the situation in the countries |
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of Central and Eastern Europe, including Russia of course, is very much alike. As I said, |
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our income from Russia is four percent, so even if we calculate all the possible risks |
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which PLIVA might take due to the devaluation of the Ruble and the crisis on the whole, |
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our losses would be practically non-existent. On the other hand, we hold as our advantage |
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the fact that PLIVAs income from the stable parts of the world drastically decreases |
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the risk of investments in PLIVA. </p> |
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<b><p>Have you got expert estimations regarding the PLIVAs share price in the future?</b></p> |
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<p>- All the serious analysts are predicting a speedy recovery of PLIVAs shares, and |
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according to their estimations the share price should increase to around 600 kuna. The |
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Russian tornado has passed over our country too, but I repeat, we are going to use firm |
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arguments to ensure the investors that the risk of investing in PLIVA truly is minimal. |
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For example, sales of Azithromycin alone represent 30 percent of our income and is |
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virtually risk-free. This allows us to give a strong argument to investors and |
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shareholders and ask them not to put us in the same basket with Russian companies, which |
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rely exclusively on their domestic market and which are over-burdened with massive debts. </p> |
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<b><p>Still, according to some analysts, investment banks are saturated with PLIVAs |
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shares and this is why they are selling them now.</b></p> |
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<p>- This is only partially true, or insufficiently explained: when investors are |
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withdrawing from a certain market, they sell whole packages of shares, and among them |
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could be a Russian company, a Latin-American company and PLIVA. This is the so-called |
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cleaning of the portfolio for the purpose of fast withdrawal from so-called emerging |
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markets, in order to invest elsewhere. Besides, many funds have orders not to invest in |
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emerging markets. Therefore, it is very important for us too to see the end of the Russian |
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crisis and the beginning of a period of political tranquillity. </p> |
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<b><p>Have you got any receivables from Russia?</b></p> |
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<p>- Our relatively conservative policy towards Russia has proven itself a very reasonable |
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one today, even though at the time there had been some foreign investors who held our |
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policy against us. However, luckily we know the Russian market and we know that |
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investments in Russia involve a lot of risk. Our receivables from Russia amount only to |
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around 50 million kuna, and we received around USD 9 million over the period of the last |
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eight months. Receivables are dispersed among more than 40 clients, so even if the worst |
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case of their bankruptcy came true we would not be affected very much. </p> |
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<b><p>Are you planning any new acquisitions after those in Poland and Slovakia? </b></p> |
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<p>- Today PLIVA is already the absolute leader in the pharmaceutical industry in this |
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part of Europe. We intend to increase our market share in this region, and are therefore |
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analysing all the possibilities of growth, development and, of course, further investment |
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in the countries of Central and Eastern Europe, and we shall even invest in Russia.</font></p> |
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<p> </td> |
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