Mercator Posts Full-Year Loss as Recession Stalls Demand

Mercator Poslovni Sistem d.d. reported its first full-year loss in fifteen years as the largest supermarket chain’s sales in the Balkans last year suffered during the recession.

The 2012 net loss was 104 million euros ($140.2 million), the first since 1997, compared with net income of 21 million euros a year earlier, the Ljubljana-based retailer said in a report distributed at its headquarters in the Slovenian capital, Ljubljana, today. Revenue was little changed from 2011 at 2.87 billion euros.

“The macroeconomic situation in the region is very demanding,” Chief Executive Officer Toni Balazic told reporters today. “Competition in the region is increasing and the fight for consumers intensifies.”

The Slovenian retailer, which has been expanding in the Balkans to increase sales, has been hit by the economic downturn in Slovenia, Croatia and Serbia as consumers spend less and the jobless rates in the region rise.

Mercator’s owners, including Nova Ljubljanska Banka d.d., formed a consortium in December to try and sell a majority of the company again after Croatian rival Agrokor d.d. pulled out of the process a year ago.

Impairment Charges

“The new management board decided to book huge impairment charges, mostly against the value of real estate and probably past acquisitions,” Jernej Kozlevcar, who helps manage 480 million euros at Triglav Asset Management Co. in Ljubljana, said in an e-mail after the report.

The loss represents “a lot of money for the company” and “it will be interesting to see the market reaction tomorrow, especially because share price in recent days gained some momentum,” Kozlevcar wrote.

Mercator was little changed in Ljubljana today, closing at 140 euros after climbing 3.7 percent yesterday. That gives the company a market value of 527 million euros. The stock has advanced 23 percent from the start of the year.

Before it's here, it's on the Bloomberg Terminal.