Slovenian retailer Mercator has warned of rising raw materials costs and "profound recession" in many of its key markets after swinging to a net loss in the first half of 2012.
For the six months to the end of June, Mercator reported net losses of EUR16.5m (US$20.7m), versus profits of EUR18.5m in the same period of 2011. Its move into the red comes amid challenging market conditions. EBITDA dropped 27% to EUR64.2m.
Of its native market, Mercator said: "Household consumption is low and consumer confidence has suffered another blow in the recent months." It added: "The drop in confidence in the entire eurozone resulted in the rise of year-on-year prices of fuels and unprocessed food."
Despite problems at the bottom line, Mercator reported a 1% increase in net sales for the half-year period, to EUR1.4bn. Sales fell by 1.6% in Slovenia, but rose by 4.9% in the firm's international business, partly helped by the acquisition of Drvopromet in Bosnia and Herzegovina.
Mercator Group revenue in the first half of 2012 remains the same as in the corresponding period last year; revenue growth in international markets just under 5 percent
Pursuant to the Rules and Regulations of the Ljubljana Stock Exchange, d.d, and the relevant legislation, the company Poslovni sistem Mercator, d.d., hereby informs the shareholders and the public of the following:
In the first half of 2012, Mercator Group revenue exceeded EUR 1.4 billion which is approximately the same as in the corresponding period last year. Revenue in Slovenia dropped by 1.6 percent while in international markets, it rose by 4.9 percent.
Greatly challenged economic recovery, mounting uncertainty, increase in fuel prices, and changes in exchange rates had a strong and pronouncedly negative effect on Mercator Group operations and performance. This resulted in negative Mercator Group income in the amount of EUR 16.5 million.
The Management Board of Poslovni sistem Mercator, d.d., launched upon the start of its term a series of measures to rationalize the operations and adopted three sets of counter-crisis measures to proactively hedge the risks related to the hostile market situation. We are aware that fast and decisive short-term measures as well as preparation of strategic changes for successful company operations and performance in the long run are urgent.
Attached you can find the Business Report of the Mercator Group and the company Poslovni sistem Mercator, d.d., for the period 1-6 2012.
This announcement will be published on the company’s website at www.mercator.si as of August 23, 2012, and will remain posted for a period of at least five years.
