Chemical processing company Cinkarna Celje has been faring well despite the troublesome years, ending 2011 with EUR 25.5m in net profit, a nearly three-fold rise on the year before. Considering the circumstances in the past few years, the company is doing better than ever, CEO Tomaž Benčina says in an interview.
Cinkarna Celje started dealing with recession on EU markets back in 2005, when the price of titanium dioxide, its main product, dropped significantly. In a bid to stay profitable, the company has been investing extensively in production to increase its capacities and make it environmentally acceptable. Annually, the company allocates between EUR 6m and EUR 10m for investments.
»We were faced with the drop in prices highly indebted but with modern production and a good product.«
A lot of work was also invested in boosting efficiency and reducing all costs, especially of energy. Labour costs were also reduced but without any layoffs, Benčina points out. »We have also been settling our debts on time, which has now proved to be crucial.«
The company has been constantly striving to compensate the rises in energy prices with investments and search for alternative energy sources.
According to Benčina, Cinkarna Celje represents little more than 1% of world capacities and its main rivals are much bigger companies and corporations, mostly from the US, which have production facilities in Europe and around the world. In recent times China has dramatically increased its capacities and consumption there is also the highest. Cinkarna Celje has been giving out dividends for years now although the CEO says that there were years when the company was not capable of paying them out.
This year, in line with proposals by the state-owned SOD fund and insurer Modra zavarovalnica the company paid out a dividend of EUR 15 per share instead of EUR 7.39 as proposed by the management.
»This year’s dividends are of course enormous but this is understandable considering the situation in the financial sector and our owners.«
Such high dividends pose a liquidity problem for the company, which in the long run entails cuts in investments,
Benčina believes. »Our rivals are paying out moderate dividends despite similarly good results.«
Cinkarna Celje, which employs 1,050 workers, has plants in Celje and Mozirje and a small facility for the production of construction material in Tuzla, Bosnia-Herzegovina. The company is comprised of six production units and several supporting companies.
The company has been extensively criticised by local civil groups over environmental concerns, but Benčina maintains that the company has proven many times that it operates in line with legislation.
»Accusations, ungrounded and based on false arguments, overstepped the bounds of good taste…For a long time, perhaps too long, we were tolerant and tried to clarify such accusations with arguments but we weren’t too successful.«
In August 2012, the company decided to take a representative of the local civil initiatives to court and sue him for damages.