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INI-1226/17

MERCATOR, d.d., Ljubljana

Mercator Group plans for growth and business efficiency

Pursuant to the Rules and Regulations of the Ljubljana Stock Exchange, d.d, and the relevant legislation, the company Poslovni sistem Mercator, d.d., Ljubljana, hereby announces the following:

 

Mercator Group remains focused on its core activity, and sees improvement of profitability as its key goal. According to its business Plan, approved today by the company Supervisory Board, Mercator Group sales revenue is budgeted at EUR 2.4 billion for 2018 and at EUR 2.5 billion for 2021. Performance improvement will also be evident in the improvement of gross cash flow from operating activities (EBITDA) which will amount to EUR 97 million in 2018.

 

Higher budgeted revenue

Mercator Group revenue in 2018 is budgeted at EUR 2.4 billion. By 2021, revenue will increase by 3% to EUR 2.5 billion. Next year, Mercator will continue to update its stores, while a new concept of assortment that places even more stress on fresh food departments will remain Mercator's policy to consumers and its competitive edge. Thus, Mercator will continue to pursue the mission of being the best local retailer in every market of its operations.

Performance improvement to continue

Mercator remains focused on satisfying the needs of modern consumers and offering well-priced shopping. Therefore, it will continue with activities for improving its price perception while offering its customers a wide assortment of quality and local products. Particular focus will remain on introduction of new technologies and modern shopping services. The new strategy pursued by Mercator through most of 2017, has already had a positive effect on operations and performance, and Mercator is determined to sustain this trend in the future.

Adapting human resources to the needs of the market and recent changes

Employees are the key to better efficiency in the pursuit of business goals. They are one of Mercator's competitive advantages as most customers recognize their friendly and professional attitude. Mercator's human resource policy will continue to adapt to the changes in the market, circumstances in the labour market, regional needs and characteristics, and possibilities or operational implementation at the local level.

Successful operations in the market of Bosnia and Herzegovina

Mercator has re-entered the market of Bosnia and Herzegovina and is now successfully managing 83 stores that offer customers in that market a broad assortment of products and quality services. With an ear for the need for diversity and specially tailored offer, Mercator will return to business success in this market, while its work with local supplier will also be a key contribution for its further development.

EUR 37.7 million earmarked for investment in 2018

In 2018, Mercator Group investment will amount to EUR 37.7 million, of which 47% will be used for expansion of new retail area; good 20% will be used for updates and investment maintenance of the existing stores; nearly 17% will be dedicated to IT investments; good 5% to logistics investments; and 11% will be invested in non-trade operations. Investments in Slovenia will account for 64.5% of total investment funds.

Divestment of business assets under way

In 2018, Mercator Group will actively continue the procedures to divest its business assets. This will involve several steps. Divestment proceeds will be used primarily for repayment of borrowings from banks, which will also allow new investments, especially into the new logistics and distribution centre in Ljubljana.

 

Business plan of the Mercator Group and the company Poslovni sistem Mercator, d.d., for the year 2018 is attached herewith.

 

As of December 13, 2017, this announcement will also be posted on the company website at www.mercatorgroup.si where it shall remain available for a period of no less than 5 years.

Poslovni sistem Mercator, d.d.
Management Board
Date: 13.12.2017