Ljubljana, 16 May (STA) - Mercator will seek out purchasing synergies, potentially with a major foreign retailer, if the ongoing sale of a majority stake in fails, the company's boss Toni Balažič told the STA. Such a tie-up would involve a retailer not present in the region.
"Mercator purchases EUR 2.3bn of goods and services. A one percentage point saving would mean EUR 23m, which was Mercator's profit in the good years. This segment of optimisation is crucial for us," he said.
His comments come after Mercator reported a EUR 8.6m loss for the first fiscal quarter on sales that fell 2.6% year-on-year to EUR 658.4m.
The company must improve pre-tax profit (EBITDA) to "about EUR 80m by 2015 or 2016". "Since demand has been declining, costs are an area on which we need to work harder in the future," he said.
Asked about the success of cost-cutting so far, Balažič said costs were trimmed by EUR 5m in the first quarter, with the end-year target being EUR 20m. "We've got costs under control, but we have to be more aggressive".
Apart from cost-cutting, Mercator will focus on its core business and key markets, and it plans to grow, though Balažič said that is being hampered by uncertainty over the sale.
"Mercator could have been a bigger player in consolidation in the region, but it cannot be since there is major uncertainty over ownership among potential partners," he said.
Balažič was tight-lipped when asked whether he thinks the 53% stake in the company will be sold in what is now the ninth attempt by banks and beverage group Pivovarna Laško to divest.
"We want stable ownership, but we also realize this is a very challenging time...For the company it is vital that a decision is made fast, as the process is weighing down on Mercator and hampering its performance."
If the shareholders decide not to sell, Balažič expects that they will give the company more time to restructure. "Mercator needs time for restructuring that is measured in years," he said, adding that this would also allow the sellers to maximise the price.
Unofficial information indicates that Croatia's Agrokor and the private equity fund Mid Europa Partners submitted bids for the majority stake, but Balažič would not venture to assess which one might be better.
"I don't know the details well enough. Both have their weaknesses and benefits. I believe comments are premature at this point."