Slovenian Paloma, the oldest regional producer of hygienic paper, has officially marked the completion of an investment cycle worth 138 million euros. The major investments began in 2016 when Paloma was acquired by the Czech investment holding Eco-Investment, as reported by Poslovni.hr.

Since then, the Slovenian company has operated under the Slovak SHP Group (known in Croatia for the toilet paper brand Harmony), which is also majority-owned by the Czech holding led by Milan Fil’o.

The refurbished factory now boasts a new paper production machine, two new converting lines, accelerated and advanced palletizing, and a new automated warehouse. Production capacities have been increased by 20,000 tons.

However, that’s not all. Milan Fil’o, Chairman of the Supervisory Board of Eco-Investment, announced at the ceremonial marking of the investment cycle in Sladki Vrh, attended by the Slovenian political elite, that a new investment of 11 million euros in a new production line is expected next year. Simultaneously, they are developing an energy plant project based on renewable energy sources, which together is expected to cost an additional 50 million euros.

Fil’o has kept his promise
"With the investments made, we have ensured greater profitability, efficiency, and ultimately the competitiveness of Paloma, which exports 80% of its products. Additionally, thanks to all the investments, we have a much higher quality product today," said Fil’o.

These investments are a necessary commitment for the future, as the paper industry, including Paloma, has been struggling with profitability for some time. It has been hit by the energy crisis and large fluctuations in cellulose prices, the two most important cost components in this industry. The company, acquired by Eco-Investment seven years ago, is expected to return to success thanks to technological improvements. Last year, their revenues amounted to 130 million euros, and EBITDA was 10 million.

"It could have been better, but we are on the right track," says Richard Žigmund, CEO of the Slovak SHP Group. He is optimistic due to market trends showing increased demand for paper tissues and the expected economic recovery.

New investments will not increase the number of employees. In fact, the number of people in the factory in Sladki Vrh, near the Austrian border, has decreased from over 600 to the current 412. This is not surprising given the new and modern production facilities. The entire hygienic paper process at Paloma is now automated and robotized. The greatest human value is to oversee the machines.

The Slovenian government is also aware of the importance of continuous investments. Robert Golob, Prime Minister of Slovenia, thanked Fil’o for fulfilling the investment promises he made when he bought the company in 2016.

"All Paloma’s investments are in line with what the Slovenian government supports," said Golob, who, along with the Slovenian Minister of Economy, visited the renovated production facilities. He promised that they could count on government support in realizing new plans. They had this support in all previous investments, amounting to 8 million euros.

Investments are necessary, as Paloma faces serious competitors. One of them is the Bosnian-Herzegovinian Violeta, whose revenues exceeded 200 million euros last year and, like Eco-Investment, is continuously expanding through acquisitions and production diversification. Additionally, SHP Group owns the Banja Luka-based Celex. According to Žigmund, a 100 million euro investment is planned for the Bosnian factory.

"We will build a new plant next to the old one, but it is a project divided into several phases. We will start by setting up a converting line, which should be operational next year," says Žigmund.

We were curious if the Group and the holding company they own plan new acquisitions in the region, possibly even in Croatia. We did not receive a concrete answer.

"We are growing precisely through acquisitions and always looking for and evaluating new 'targets.' We are certainly interested in increasing our presence in Central and Eastern Europe. I cannot say more than that," says Žigmund.

His boss, Fil’o, however, answers the same question: "That is a business secret." His investment holding operates in several sectors, primarily in hygienic paper and food.

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