STA, 24 September 2020 - Mercator Group sales revenue increased by 4.4% in the first half of 2020 compared to the same period last year, to reach EUR 1.06 billion. Due to the revaluation of property and impairments of other assets, and the effects of Covid-19, the group posted a loss of EUR 69.2 million in the January-June period.
These factors excluded, the group would record a profit of EUR 86,000, reads a press release published on Thursday.
Consistently with the international accounting standards, revaluation of property on the one hand resulted in an increase of equity of EUR 23.3 million, while on the other hand it had a negative effect of EUR 69 million on the group's operating profit.
Despite the property revaluation, Mercator Group remains one of the largest property owners in Slovenia and the region with the total value of its land, buildings, and investment property amounting to EUR 1 billion.
"Despite the explicitly negative effects of the epidemic, Mercator Group succeeded in sustaining the positive trends especially in its core activity - fast-moving consumer goods retail," the group said.
Profit before tax, depreciation and amortisation (EBITDA) was up by 1.7% year on year to EUR 83.4 million, which the group says was achieved by "strictly executing the value creation plan initiatives" to offset all negative effects on its regular operations and performance.
Among the latter, the group listed higher labour costs due to the increase of minimum wage in Slovenia, payment of bonuses or allowances for employees working in extraordinary circumstances during the epidemic, as well as an increase in other costs resulting from epidemic-related restrictions and lockdowns in respective markets.
The company Poslovni Sistem Mercator, Mercator Group's largest company, saw its core activity sales revenue increase by 8.2% compared to the same period last year, while its total sales revenue rose by 4.8% to EUR 616.2 million.
The group recorded the biggest rise in revenue in the first half of the year in Bosnia and Herzegovina (by 7.8%). In Serbia, revenue was up by 5.1%, while in Montenegro it was down by 1%.
In Croatia, where Mercator is active only in the real estate business, which was strongly affected by the epidemic, revenue dropped by 14.5%.
Tomislav Čizmić, president of Mercator's management board, said that the success in the core activity was the result of a "timely, responsible, systematic and comprehensive preparation for the crisis".
He also stressed that the European Commission's giving the Croatian group Fortenova a concentration approval for Mercator earlier this week was an "extremely important step" towards the transfer of the Slovenian retailer from insolvent Agrokor to its successor Fortenova.
"The strong owner will enable Mercator's further growth and development and support Mercator's strategic projects, including a EUR 130 million investment in a new logistics centre in Ljubljana," he said.