Ljubljana related
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.
How to Get a Mercator Pika Card
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.
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STA, 6 March 2019 - Mercator needs to be excluded from the indebted Agrokor group and transferred to the new Fortenova Grupa as soon as possible, Agrokor's crisis manager Fabris Peruško has told the STA in an interview. The process has its own dynamics, he said, adding that it could be completed by the end of the year.
Peruško has been responsible for the winding down of Agrokor since February 2018, he will also head the new Fortenova Grupa which will be launched on 1 April to bring under one hat Agrokor's successful subsidiaries.
Meanwhile, the insolvent companies will remain part of Agrokor. The process of transformation will start with Agrokor's companies in Croatia, while those based in other countries will be included once the process is completed in Croatia.
On 1 April, 32 solvent Croatian companies will become part of the new group, while the 45 Croatia-based insolvent companies, which will remain part of Agrokor, will each get their own "mirror company", which will also be included in the Fortenova Grupa.
The names of the new companies will be made up using their original names and the word plus, said Peruško.
The third group of companies includes Croatia-based companies in which Agrokor holds less than 25% and 82 Agrokor companies based in Slovenia, Serbia and Bosnia-Herzegovina.
"Mercator is in the third group and we want a speedy transfer of assets from the company in receivership, Agrokor, to the more health company, Fortenova. This is also important for Mercator's suppliers, employees and the entire Slovenian economy."
Peruško expressed satisfaction with "fair relations" between Agrokor and Slovenia's Economic Development and Technology Minister Zdravko Počivalšek, as well as with Gregor Planteu, a government-appointed member of Mercator's board.
He believes that it would be advantageous if Planteu remained on the board of Mercator also after the retailer becomes a part of Fortenova Grupa. The transfer of Mercator to Fortenova does have its own dynamics which depends on the Slovenian legislation.
"Certain small Slovenian banks have reservations about the transfer but I believe that the plan contains rational economic arguments and that it must be green-lit as soon as possible because this is in the interest of the banks."
"If the banks fail to support the transfer, Mercator will remain a part of a company that has gone bankrupt. This is in nobody's interest," Peruško said when asked about the potential scenarios for Mercator's future.
The most imminent steps for the plan to be implemented is to get the go-ahead of the Slovenian competition watchdog and resolve issues involving minority shareholders, both of which Peruško sees as mere formalities, which do, however, take a certain amount of time.
When asked whether Mercator could become one of the leading companies of Fortenova Grupa, Peruško said that Mercator, as well as Croatian retailer Konzum, must be viewed in the scope of the group's entire retail division.
Both companies are facing challenges in different markets of the region. Their operations must be optimised to the benefit of the entire group. Peruško underlined that synergies of the two groups must finally become reality.
Peruško, who was not involved in Agrokor's takeover of Mercator in 2014, believes that the Croatian group paid a lot for Mercator. He also said that Mercator was in better condition now than it was before the takeover.
"When it was taken over by overindebted Agrokor, Mercator was not a healthy company and Agrokor provided a much-needed injection that helped it survive."
"The problems started when they failed to build a platform that would make them healthy partners for their suppliers." Peruško said that Fortenova Grupa would abolish certain limitations to allow better partnerships with suppliers.
The Agrokor boss believes that the Slovenian market is too small for Mercator. "I see Fortenova Grupa as a new and healthy platform on which Slovenian suppliers will be able to develop their business."
Fortenova Grupa will start out with a lot of debt: between EUR 1.4bn and EUR 1.5bn. The group expects to generate between EUR 320m and EUR 340m in operating profit. It will moreover sell off business operations that are not a part of its core divisions: retail, food production and agriculture.
STA, 23 November 2018 - Mercator, Slovenia's largest retailer, posted a group net profit of EUR 9m for the first nine months of 2018, which compares to a EUR 10.5m loss in the same period last year, as sales rose by 1.6% to EUR 1.62bn.
Profit before income tax, depreciation and amortisation (EBITDA) rose by a quarter to EUR 87m, with operating profit (EBIT) surging by 157% to EUR 36m, the company said in an interim financial report released on Friday.
The improvement was driven by retail sales, which rose by 5.4% to EUR 1.2bn. "A new strategy, new store concept, store refurbishments and improved competitiveness of services are driving positive results in the core business," the company said.
On its key Slovenian market, retail sales improved by 0.5% despite what the company said was a significant reduction in store surfaces.
By the end of September, the group reduced its net financial debt by a tenth to EUR 738m, with the debt-to-EBITDA ratio going from 16 to 7.2.
Investments in fixed assets were almost halved to EUR 19m.
The number of employees dropped by more than 2% at group level to 20,322.
The core company saw sales improve by less than a percent to EUR 880m, while net profit remained flat at EUR 14.7m.
The financials do not yet account for the monetisation of real estate agreed in October, when Mercator concluded a sale and leaseback agreement with Austrian developer Supernova involving ten malls and worth EUR 117m.
Related: How to get a Mercator Pika card
STA, 6 September 2018 - Mercator Group has more than doubled its operating profit in the first half of the year to EUR 16.9m, while its net profit reached EUR 1.5m, a significant improvement over the EUR 4.6m loss the group generated in the same period last year.
STA, 4 July 2018 - Outgoing Economy Minister Zdravko Počivalšek said as he commented on today's vote on a settlement between the Croatian conglomerate Agrokor and its creditors that Mercator, as a part of the group, needed a stable and strong owner which would be able to support the needed development measures at the largest Slovenian retailer.
STA, 26 April 2018 - The group around retailer Mercator recorded a EUR 184m net loss in 2017, largely due to real estate impairments resulting from a new accounting policy and amounting to EUR 145.8m. Adjusting for the negative effect of one-off events, the group wrapped up last year with a EUR 6m profit, the company's report says.
Court notes that equal treatment of creditors and protection of their interests is also a basic principle of the EU insolvency law.
