Mercator Group performance in the 1st nine months consistent with plans
Mercator Group revenue in the first nine months of the year was just short of EUR 2 billion. Third quarter performance was the best so far in this year and with positive performance the gap relative to last year's results, generated mainly in first and partly in second quarter, is persistently closing. Operating profit at EUR 26 million was 31.8% higher than in the equivalent period of last year, and on track with respect to the plan. Lower revenue is a result of closing down of underperforming market program (FMCG), technical consumer goods, and textile units; transfer of a part of the retail units in the markets of Croatia and Bosnia and Herzegovina to Konzum, d.d., as a part of the integration processes; divestment of hospitality service activities to a third party; and persistence of the changes in consumer behaviour. Mercator also continued to successfully introduce cost optimization measures in the first nine months of the year. Completion of financial restructuring and acquisition process has resulted in financial stability and stability of ownership. Integration of the two companies following the acquisition process is in progress as planned.
In the period 1-9, 2014, Mercator Group generated EUR 1.99 billion of net revenue, which is 3.6% less than in the corresponding period of the year before. The gap relative to last year's results is reliably closing despite the persistence of harsh conditions in the retail industry. Lower revenue is a result of the withdrawal from the Bulgarian and Albanian market, closing down of some underperforming units of M Tehnika and Modiana, and divestment of hospitality services to a third-party partner. Revenue was negatively affected in part by highly stringent competition and harsh economic conditions which have already had a strong impact on the consumers' shopping behaviour. To some extent, the drop in revenue is also a result of the transfer of operations of retail units in Croatia and Bosnia and Herzegovina to Konzum, although the effects of these changes will be more acutely felt in the coming months. Nevertheless, revenue was consistent with the plans as the targets were reached in all key markets except for Croatia and Banja Luka.
Mercator Group operating profit in the period 1-9 2014, amounted to EUR 26 million, of which a major part – as much as EUR 14 million – was generated in the third quarter. Relative to the period 1-9, 2013, results from operating activities soared by 31.8%.
Mercator Group cost savings in the period 1-9 2014 totalled at EUR 20.4 million, which exceeds the planned figure.
Mercator Group investments in the period 1-9 2014, amounted to EUR 15.9 million, which is on a par with the last year's figure for the equivalent period. Majority of the funds were invested into retail network update. A total of five stores were refurbished, which has already yielded positive results.
In the period 1-9 2014, Mercator Group also successfully completed its long-term financial restructuring process. Accordingly, finance expenses were decreased notably in the third quarter of 2014 as a result of refinancing of Mercator Group's financial liabilities.
The acquisition process was also completed in the period at hand, stabilizing the Mercator, d.d., ownership structure. In addition, a capital increase was carried out in November 2014 with the companies Agrokor, d.d., and Agrokor Investments B.V., contributing EUR 200 million and increasing their shareholding of the company to 88.1%. Integration of the companies following the acquisition process is in progress as planned.
Poslovni sistem Mercator, d.d.
Management Board
