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SAR-32/18

MERCATOR, d.d., Ljubljana

Mercator more than doubles its first-half operating profit

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 informs the shareholders and the public of the following:

 

Mercator Group more than doubled its operating profit in the first half of 2018, as it reached EUR 16.9 million. The Group's revenue from retail rose by 6.6% relative to the equivalent period of the preceding year, while normalized EBITDA amounted to EUR 48.1 million, which is EUR 6.1 million, or 14.6%, more than in the equivalent period of the year before. Mercator Group's net profit in the period at hand amounted to EUR 1.5 million, exceeding the comparable figure from the same period of the year before by EUR 6.1 million. The parent company Poslovni sistem Mercator d.d. wrapped up the first half of the year with a net profit of EUR 9.3 million. First-half performance presented at the Supervisory Board session; appointment of new Supervisory Board chair was not discussed.

 

Mercator Group's result from operating activities double relative to the comparable result from the same period last year

In the first half of 2018, Mercator Group improved its business performance and operating efficiency, which is reflected in higher operating profit, higher net profit, and higher EBITDA. Mercator Group's operating profit in the first half of 2018 amounted to EUR 16.9 million, which is more than double relative to the comparable result from the same period of the previous year. Mercator Group's net profit in this period exceeded the comparable figure from the same period of the year before by EUR 6.1 million, as it reached EUR 1.5 million; in the equivalent period of the year before, Mercator Group's bottom line was a loss of EUR 4.6 million.

Mercator Group EBITDA in the first half of 2018 amounted to EUR 50.5 million; in the equivalent period of the preceding year it was at EUR 44.6 million. Improved performance is also evident in higher EBITDA margin which rose by 0.5 percentage point. Normalized Mercator Group EBITDA in the first half of 2018 amounted to EUR 48.1 million, which is EUR 6.1 million more than the comparable figure from the same period last year, while normalized EBITDA margin of 4.5% represents an increase of 0.5 percentage point.

EBITDA was also higher for the company Poslovni sistem Mercator d.d., amounting to EUR 36.9 million, or 4.7% more than in the equivalent period of the year before. Normalized EBITDA rose by EUR 3.4 million in the first half of 2018 and amounted to EUR 38.3 million compared to the equivalent period of the previous year, while normalized EBITDA margin of 6.7% represents an increase of 0.7 percentage point. Mercator Group's parent company wrapped up the first half of 2018 with a net profit of EUR 9.3 million.

"The new strategy and Mercator's drive to be the best local retailer in all markets of its operations have evidently yielded positive results. Efficiency will be further improved by deleveraging and implementation of strategic development projects that of course include the new logistics and distribution centre in Ljubljana," stressed Tomislav Čizmić, Mercator Group's President of the Management Board.

Positive trends persist in the retail industry

The new strategy, new store concept, store refurbishments, and improved competitiveness of services have been yielding positive results in Mercator's core activity of retail. Slovenia, where the Group recorded revenue growth of 0.8 percent, and Serbia, where revenue from retail operations grew by 1.1 percent relative to the same period of the year before, remain the most important markets of Mercator Group operations.

Deleveraging and care for long-term sustainability of financial structure

Mercator Group's net financial debt as at June 30, 2018, amounted to EUR 771.1 million, which is EUR 80.8 million less than as at June 30, 2017. In 2018, Mercator continues to settle all of its liabilities to financial and business partners in compliance with the agreed terms and deadlines.

Higher profitability remains the key goal

Mercator Group remains focused on its core activity, and further improvement of profitability remains its key goal. At the same time, care for customers, which includes offering the best products and services that they wish for and need on a daily basis, and creating a modern shopping environment in its stores, featuring extended and enriched offer of fast-moving consumer goods, remains at the core of Mercator's efforts.

 

This announcement will be published on the company’s website at www.mercatorgroup.si as of September 6, 2018, and will remain posted for a period of at least ten years.

Poslovni sistem Mercator, d.d.
Management Board
Date: 06.09.2018