Coronavirus Who? Pevex Plans to Enter Autumn with Investments

Lauren Simmonds

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The ongoing coronavirus pandemic has seen many a planned investment grind to a halt or even be flushed down the proverbial toilet, but Pevex (formerly Pevec) is steaming ahead with its investment plans for autumn, regardless of the economic threat the pandemic continues to pose.

As Poslovni Dnevnik/Suzana Varosanec writes on the 21st of August, 2020, Pevex has big plans for the cooler months, and the virus isn’t going to get in its way.

”The coronavirus pandemic has taught us that we need to act quickly, so we’re stepping up the momentum in which we’re continuing one of our main business determinants – investing in expanding the retail network with two new sales centres per year in places with more than 15,000 inhabitants, but we’re not going to just stop there,” said Jurica Lovrincevic, the President of the Management Board of Pevex in conversation with Poslovni dnevnik.

In order to be more accessible to an even larger number of consumers at no additional cost, they are launching, he added, a business model with delivery centres modeled on those of the wildly popular Ikea, which involves some leased space at Pevex’s centre in Pula. However, Pevex’s model is different, and developed solely for its needs.

Two such centres are planned to open by the end of the year – one will cover up to to 500 m2 and the other will cover up to 1000 m2, and the others will open throughout 2021 in a number of Croatian cities. Gospic, Ogulin, Otocac, Zabok, Krapina and Knin are the first announced locations in which Pevex looking for landlords, but other locations are also possible, according to the main man of Pevex.

Due to such and similar investment activities, regardless of the ongoing coronavirus crisis, Pevex’s new projects are welcomed across all local communities and among potential partners with whom they’re negotiating. It could therefore be concluded that many want Pevex as an investor to come to them in one way or another with any type of centre and develop a business at their location, pay local taxes and most importantly – employ local people.

In this sense, the project that Lovrincevic says is considered the crown of the new development phase of Pevex – a large logistics and distribution centre near Zagreb, stands out.

He says that many mayors and other such individuals in the Zagreb area want to attract this mega investment. As things stand, strong competition in the background is evolving in the real estate market, apparently further fueled by reduced demand due to the coronavirus crisis, which Pevex didn’t expect.

“We received about 20 calls in a week from a number of local self-government units, as well as from private investors. All of them are offering us space for the construction of a unique logistics centre which will cover more than 60,000 m2, the investment value of which is 300 million kuna, while for the total realisation, we’re looking for land covering 200,000 m2.

The investment study was made by Deloitte and shows how construction within the 30-kilometre ring in Zagreb is possible, provided it is connected to the motorway network,” explained Lovrincevic, adding that the best offer will be selected by the end of the year.

The number of centres where Pevex operates has already grown significantly when compared to the situation when financial and ownership restructuring was carried out. With 8 centres before bankruptcy, and with a new one set to open in Vinkovci, the number rose to 26 centres, and this data confirms that the coronavirus, as well as the significant loss of revenue of about 100 million kuna they suffered during lockdown, failed to slow down Pevex’s investments, nor did it manage to reshape the company’s investment plans.

The expansion plan on both the continent and on the Adriatic includes two new centres next year – in Pozega and Porec, and the company is benefiting from a special circumstance in which they have developed their own capacities to quickly implement new projects.

“Two new projects that we’ve realised this year in regard to property actually owned by us are the centres in Vinkovci and Slavonski Brod. We’ll organise the opening of the Vinkovci centre in the first week of September, while in Slavonski Brod, where we’re leaving the leased space and opening a new centre in our own property, we’ll open exactly a month later,” announced Lovrincevic.

When asked what the predictions are regarding business risks, especially taking into account the dark forecasts of the deepening economic crisis, layoffs and reduced employment, with a negative impact on the personal consumption factor, the Pevex boss responded:

“If a severe crisis comes, it will be at the expense of our profits, not at the expense of Pevex’s development. We’ve accumulated reserves that are the basis and the answer, so we’re ready for all scenarios.”

Pevex’s investments this year also include an investment in the coastal town of Makarska which will take place this autumn. Pevex is moving to a leased space in a shopping centre that was owned by the former Agrokor (now Fortenova), but was sold to a Dutch fund and has been used by Konzum and Velpro so far.

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