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THE YEAR 2017 – ANOTHER ONE IN A SERIES OF CHALLENGING AND UNCERTAIN YEARS FOR PETROKEMIJA'S D.D. BUSINESS

The 2017 business year for Petrokemija was marked by the process of extensive preparations for recapitalization and the struggle to maintain system stability, the continuity of production and the continuity of customer supply with Petrokemija's products. In these circumstances, numerous positive business moves have been made, which will ultimately contribute to the positive end of the recapitalization process in 2018.

Significant positive effects were achieved in the course of 2017 - fertilizer production was 11.5% higher than in the previous year, domestic sales increased by 10.1% and exports by 6.6%, imports of mineral fertilizers to Croatia decreased by 33 %, sales on the price-wise more attractive markets in the region increased by 16.4% and as much as seven thousand tons of new product, Petroblue, was put on the market.

Despite all the difficulties, Petrokemija invested over HRK 100 million in technology development and for meeting environmental requirements.

Operating in a challenging business environment and in the time of natural gas price growth, the fall in mineral fertilizer prices and high cost of interest on loans, in 2017, Petrokemija d.d. managed to improve its operations through production and sales and bring its annual loss to HRK 146.8 million, of which as much as half accounts for the increased natural gas price (HRK 72 million compared to 2016) and extremely high costs of gas transport in Croatia (HRK 86 million to Plinacro).

Petrokemija d.d. has clearly defined four key issues in the process of realizing positive business results, namely: increased natural gas price, lower average selling price, increased interest rates and increased greenhouse gas fees (CO2).

In the coming period, the Company's objective is to revise the existing contracts and address at least two of the four key issues, which, with the completion of the recapitalization process and the implementation of the Company's full restructuring, would give positive business result at the end of 2018.

Petrokemija, d.d. its Management Board and the employees of the company strongly believe in the final decision on capitalization by the majority owner, which would ensure the survival of Petrokemija as a key company for the City of ​​Kutina, Sisak-Moslavina County and the Republic of Croatia.

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