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Mercator Gets New Strategy, Plans Turn to Profit in 2013

Ljubljana, 19 October (STA) - The supervisors of retailer Mercator adopted on Thursday a new strategy for the group around Slovenia's biggest retailer and a business plan for 2013-2016. The group plans to turn its negative results to a net profit of EUR 3m on EUR 2.9bn in sales revenues in 2013.

The strategy for Mercator Group envisages more focus on its basic activity on five most important markets, while aiming at optimisation, profitability and growth, according to the company's press release.

In 2016, the group expects a 4% yield of its net revenue, which is above the average recorded among its rivals in the recent years. With the average annual revenue growth of 3.5%, the group plans to reach a EUR 77m net profit on EUR 3.3bn in sales revenue in 2016.

Following the growth of business, the number of employees of Mercator Group is to increase from 2014 on and is to reach 24,118 by the end of 2016. However, the group also plans to increase employee productivity by at least 3% a year.

Mercator, one of the biggest enterprises in the region, generated a EUR 16.5m loss in the first half of 2012. Chairman Toni Balažič attributes this mostly to negative currency differences, which he says accounted for EUR 11m of the loss, while another reason are also the poor results in Croatia, Bulgaria and Albania.

Several measures have already been taken to improve the situation, boosting cost efficiency and allowing optimisation of business, especially cutting overhead costs. Effects are expected in 2014, partly already next year.

The group's investments in 2013-2016 - estimated at EUR 280m - will be limited to those with greatest growth and profit potential.

Moreover, the group plans to reduce its debts by around EUR 300m in 2013 and 2014 through disinvestment and monetisation.

The group expects Croatia's EU accession in the second half of 2013 to have positive effects on its business, allowing much synergy, especially in reducing fixed and overhead costs.

In 2013, the group is to consolidate the operations of affiliated companies on the markets of Slovenia, Serbia, Croatia and Bosnia-Herzegovina.

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