MERCATOR, d.d., Ljubljana
Mercator Group nearly triples its operating profit in the period 1–9 2015
Pursuant to the Rules and Regulations of the Ljubljana Stock Exchange and the relevant legislation, the company Poslovni sistem Mercator, d.d., Ljubljana, hereby announces the following:
In the first nine months of the year, Mercator Group generated EUR 1.95 billion of net sales revenue. While the figure is 2% lower than in the last year's corresponding period, Mercator's performance has improved significantly in comparison to the same period of last year. Operating profit reached EUR 61.2 million, which is a nearly threefold improvement over the same period of last year. The bottom line for the period is a net profit of EUR 31 million.
In the period 1–9 2015, Mercator Group generated EUR 1.95 billion of net revenue, which is 2% less than in the corresponding period of the year before. Revenue is not comparable to last year due to the change in the structure of revenue due to the consolidation of trade operations in respective markets following Agrokor's acquisition of Mercator. In Serbia, revenue was increased considerably due to the transfer of retail units of the company Idea, d.d., to the company Mercator - S, d.o.o. On the other hand revenue in Croatia and Bosnia and Herzegovina dropped substantially due to the transfer of Mercator retail units to the company Konzum, d.d., in Croatia, and to Konzum, d.o.o., in Bosnia and Herzegovina. Most of Mercator revenue in these two markets was generated at the Modiana and Intersport units, and in real estate management operations.
Mercator's performance has been improving for the third consecutive quarter; this is also reflected in the operating profit which has improved nearly threefold. At the Mercator Group level, it stands at EUR 61.2 million for the period 1–9 2015. The improvement is a result of focus on the core trade activity in the markets of Slovenia, Serbia, and Montenegro, better performance in our non-core activities, considerable cost cuts resulting from our cost rationalization efforts, and divestment of some non-strategic operations. In the period 1–9 2015, Mercator Group net profit reached EUR 31 million. Comparing to the equivalent period of last year, this points to a notable performance improvement after the bottom line for the period 1–9 2014, was negative at EUR -12 million. Significant progress is also evident in financing as net finance expenses are lower by 35.3% as a result of successful financial restructuring.
In the period 1–9 2015, Mercator Group investments amounted to EUR 47.4 million, which is nearly three times the amount invested in the equivalent period of 2014. Of this amount, 57% was used for investments in Slovenia, which is a 2.4-fold increase over the same period of the year before. Consistently with the investment plan, Mercator Group was focused in the first nine months of the year primarily on refurbishments and extensions to individual retail units. Moreover, the Group opened 37 new stores and two distribution centres, and sought and evaluated new potential locations for expansion of retail network for all Mercator programs, as well as for a new logistics and distribution center in Slovenia.
Thus, Mercator Group mapped out in the period 1–9 2015, new directions of positive performance after several years of intensive business restructuring, as it looks to provide the best value for its customers while maintaining successful Group development in the long run.
In order to boost the wholesale operations and focus on the core activity, several important agreements were concluded in the first nine months of this year. Mercator took over the wholesale operations of the company Era Good, d.o.o. The acquisition is expected to increase the volume and scope of FMCG wholesale offer and improvement of business efficiency. In April this year, the company Poslovni sistem Mercator, d.d., and the company Don don, d.o.o., signed a sale and purchase agreement for Pekarna Grosuplje (the Grosuplje Bakery). As of October 1, 2015, ownership of the Pekarna Grosuplje was transferred to the company Don don, d.o.o. At the end of June, the company Ivero Trade, d.o.o. – an associated company of Franck, d.d. – and the company Mercator–Emba, d.d., signed a sale and purchase agreement on the acquisition of the ground coffee brands Santana and Loka. With this transaction, Mercator got a strategic partner who will enable further development of this product category.
Business Report of the Mercator Group and the company Poslovni sistem Mercator, d.d., for the period 1–9 2015 is attached herewith.
This announcement shall also be published as of November 17, 2015, on the company website at www.mercatorgroup.si, for a period of no less than five years.
Poslovni sistem Mercator, d.d.