STA, 31 May - Mercator, Slovenia's largest retailer, posted a group net loss of EUR 3.7 million for the first quarter of 2019 compared to a net profit of EUR 1.9 million for the same period last year, as sales declined by 3.1% to just under EUR 500 million, according to preliminary results released on Friday.
Group operating profit (EBIT) rose 5.6% to EUR 9.6 million, with normalised profit before interest, tax, depreciation and amortisation (EBITDA) up 75% to EUR 39.7 million.
The core Slovenian company saw net profit rising marginally to EUR 4.8 million on sales that topped EUR 281 million, an increase of less than a million euro from the same period last year.
Mercator said the year-on-year results were not entirely comparable as a new international accounting standard came into effect on 1 January affecting how rents are booked.
The sales decline is also partially attributed to the Easter shopping season falling into March last year and April this year, and stiffer competition in Serbia, which accounts for about a third of overall sales.
The release comes a day after Mercator revealed it had signed an EUR 80 million agreement with VTB bank of Russia to refinance its super senior loan facility, seen as paving the way for the next phase of financial restructuring.
Owned by bankrupt Croatian conglomerate Agrokor, Mercator is officially still part of the Agrokor group but is slated for transfer to Fortenova Grupa onto which healthy Agrokor assets have been shifted.
The company said today that the transfer is conditional on approval by Mercator's creditor banks, approval by competent anti-trust institutions, and successfully completed takeover bid for the shares of the core company Poslovni sistem Mercator.
Net financial expenditure almost doubled to EUR 11.55 million at the level of the group, increasing by 15.7% to EUR 4.95 million at the core company.
The group's debt-to-equity ratio as of December 2018 stood at 1:2.08. The report notes that through financial restructuring in recent years the group improved the composition of financial liabilities by maturity.
Slovenia remains the most important market, while the strongest growth in revenue was posted in Bosnia-Herzegovina, mainly as a result of stabilisation and establishment of partner relationships with the suppliers, and transfer of best practice from Mercator's other markets.
Mercator finalised the sale of ten shopping centres in Slovenia and some other smaller divestments, divesting a total of EUR 122.8 million in the first quarter of the year. Most went toward meeting financial liabilities.
Nearly EUR 3.5 million was reinvested in fixed assets. In all markets, a total of five new retail units were leased, comprising 3,000 gross square metres of new store space.
Mercator has also launched a process to collect bids for project documentation development for the construction of a new logistics and distribution hub in Ljubljana. The building designer is to be chosen by the end of June.
The new logistics and distribution centre is expected to reduce the costs of logistics, and improve efficiency, profitability and business processes.
The group employed 20,242 people at the end of March, 1.9% fewer than a year ago.