We have introduced a public procedure for the selection of suppliers of all-Bulgarian milk, the Minister pointed out
LB Bulgaricum has been losing tens of thousands of leva per month from unfavourable contracts concluded during the previous management. This became clear after the appointed audit of the management of the state enterprise. ‘This was announced by the Minister of Economy and Industry Bogdan Bogdanov in response to a question about the state of LB Bulgaricum and the checks he appointed on the activities of the previous management.
In his words, among the unfavourable contracts there were also those for legal services, which were awarded to one company, were paid, the contract was terminated and a new one was concluded with another company for the same activity, which constituted double payment for the same service. ‘Unfavourable contracts have already been terminated or renegotiated,’ Bogdanov said.
The Minister informed that the new management of the company has set a trend of gradual decrease in the quantity of raw milk purchased in the period January to September 2023. In this situation, the company’s production utilisation was below 65 per cent. The new management also found empty warehouses for finished products and almost complete lack of products in the commercial network.
The audit revealed that the reason for the reduced quantities of raw milk purchased were rules established by the previous management, according to which the company started buying from suppliers within 500 km of the production bases instead of, as before, from those close to the factory. This has led to a further appreciation of production.
‘We have introduced a public procedure for the selection of suppliers of all-Bulgarian milk, currently the production capacity has already reached 100 percent,’ the minister said. He added that the unjustified reduction in the prices of the products of LB Bulgaricum between January and March 2023 was also one of the serious problems that the current management had caught.
The minister said the company’s financial results as of the third quarter of 2023 showed a 26% rise in raw material costs and only an 11% increase in revenue. The figures show a 92.5% commutative decline in the company’s pre-tax profit.
Minister Bogdanov also said that the prosecutor’s office had been informed about the unfavourable contracts. He confirmed that the contract between LB Bulgaricum and the Japanese company Meiji for a joint research centre would be finalised any moment, which would allow the state-owned company to generate additional profits.