Feature story

Croatia's Nasicecement paves the way for growth

Subscribe to feature stories email alerts

Related links Croatia homepage Tourism homepage Nasicecement D.D. [Project Summary Document] EUR40m to boost Nasicecement as regional leader in building materials [Press Release]

Bird's-eye view of Dubrovnik

The gorgeous coastal town of Split

Town of Makarska

The beach at Bol

Croatia may have a gorgeous coastline and a sunny Mediterranean climate but if it is to join Italy, France and Spain in the big leagues of tourism, it must upgrade and expand its tourist facilities and other infrastructure. Providing the raw materials for construction of such infrastructure has created a profitable and rather large niche for Nasicecement, part of Croatia’s rapidly expanding Nexe Group and recipient of a €20 million EBRD loan.

Southern countries with particularly long coastlines, such as Greece or Spain, use almost twice as much cement as the EU average of 500 kilos per capita. This is because construction thrives near sun-soaked coasts where hotels, roads and residential apartments contribute to increased consumption of all building materials. Croatia, with its intricate coastline, already consumes as much cement as more economically-developed EU countries. This is partly due to the rapid expansion of tourism, partly due to the government’s ambitious road-building programme, and also due to overall economic growth in the Balkans. Growth rates in south-eastern Europe average at 3.9 per cent, far ahead of western European growth levels.

Nasicecement is Croatia's second-largest cement producer

Nasicecement is Croatia's second-largest cement producer. With its latest EBRD loan it aims to become a regional market leader in building materials. “Nasicecement will use the EBRD loan to expand capacity and enhance efficiency and competitiveness,” says Mark Webber, the EBRD’s operations leader on this project. “It will also enable the company to acquire other firms in the region and to finance their refurbishment and modernisation." The loan will be complemented by another from Zagrebacka Banka, Croatia's largest commercial bank.

One of three cement plants in Croatia, Nasicecement has been enjoying strong growth and rising profits. With annual capacity of over 700,000 tons of cement, it ranks as one of the largest Croatian-owned corporations. However, cement is not the only material needed in construction and the company has made acquisitions of other operations in Croatia, Serbia, and Bosnia and Herzegovina; these firms’ products range from clay roof tiles and bricks to quarries and road building.

This is EBRD's second loan to the company. The first helped Nasicecement improve corporate governance, restructure its balance sheet and expand its core cement business. This has led to particularly strong operational and financial performance over the past few years, providing a solid base for future expansion. EBRD is now supporting the next phase in Nasicecement's development.

Nasicecement is in the process of developing and refining its management structure. It is expected that Nexe Group will become the holding company with direct ownership of the main subsidiaries, which in turn will be organised into five business segments covering cement, clay products, construction, downstream businesses (concrete and aggregates) and non-core activities. This is the structure with which the Nexe Group hopes to establish itself as a potent building materials player in south-eastern Europe.

Concern for the environment

Concern for the environment is part and parcel of the project. Some companies recently acquired by the Group still use old production technologies which result in inefficiencies, waste and pollution. For example the Bank’s Energy Efficiency Team arranged for an energy audit, financed by the EBRD and the Hellenic Technical Co-operation Fund, to be carried out on a Nexe acquisition called Polet. That Serbian tile factory, which the new owners plan to modernise using the loan, consumes approximately 30 per cent more gas and electricity than an average European plant.

"Although Nasicecement's environmental track record has been very positive, it is a disbursement condition for the loan that it prepares an Environmental Action Plan for companies it is acquiring with this loan," stresses Mark Webber.

The changeover to modern facilities will have a positive impact on regional growth as Croatia's building boom affects companies domestically and in neighbouring markets. Economic interdependence, a reality among the Balkan states throughout much of history, must be strengthened if the region is to thrive and become increasingly stable. And with Croatia nowadays consuming as much cement as western European countries, it appears that paving the road to development is well under way.

Contact: EBRD Resident Office in Croatia

2 December 2003