Baltika ended the third quarter with a net profit of 201 thousand euros. This is an improvement by 1,373 thousand euros on a year ago and a second quarterly profit of the year.
In the third quarter, Baltika succeeded in evening up growth in its market portfolio. The Baltic region continued to post strong results with the Latvian and Estonian markets maintaining their former growth rates. In addition the Lithuanian market, which had been slower to recover, showed very good growth rates. Third quarter sales per square metre increased in all the markets and the average increase of 15% was 1 percentage point better than the 9 month total. The 18% increase achieved in the Russian market is highly significant, as it reflects a more profitable development of the Russian market.
In addition to sales growth, which was in line with expectations, the notable improvement in Baltika’s third quarter performance was underpinned by the gross margin, which rose to 52%, three percentage points up on the comparative period. Gross profit per square metre increased in the third quarter by 20% and in 9 months total on average by 18%. The reason for the increase is strong collections and better inventory and sales discount management. Meanwhile the cost control continued and both third quarter and 9 months distribution expense increased per square metre only by 2%.
Good sales results and significantly improved gross margin helped Baltika achieve in the third quarter 728 thousand euros EBITDA (2011 third quarter EBITDA -103 thousand euros). All performance indicators including nine-month EBITDA, which was 1,851 thousand euros, show that Baltika is on track to meet its financial targets for 2012 even though the property sale, which has reduced rental income and has increased rental costs, is rendering this more complicated.
The company’s liquidity and financial position were strengthened by a property sale carried out in the third quarter. As at the end of September, net debt was 6,010 thousand euros, an 11,439 thousand euros decrease compared with 31 December 2011.
The investment loan received in third quarter provides the means for further development. As per the investment plan that foresees implementation of new store concepts, the company has remodelled the first Monton and Mosaic stores, where sales have improved rapidly. In addition, the company is making preparations for opening the first stores with a completely new concept in the first half of 2013.
Consolidated statement of financial position
| 30 Sep 2012 | 31 Dec 2011 | |
| ASSETS | ||
| Current assets | ||
| Cash and bank | 1,260 | 863 |
| Trade and other receivables | 2,579 | 2,189 |
| Inventories | 11,838 | 10,048 |
| Total current assets | 15,677 | 13,100 |
| Non-current assets | ||
| Deferred income tax asset | 838 | 838 |
| Other non-current assets | 1,196 | 629 |
| Investment property | 0 | 8,549 |
| Property, plant and equipment | 2,224 | 8,031 |
| Intangible assets | 3,522 | 3,665 |
| Total non-current assets | 7,780 | 21,712 |
| TOTAL ASSETS | 23,457 | 34,812 |
| EQUITY AND LIABILITIES | ||
| Current liabilities | ||
| Borrowings | 1,369 | 3,178 |
| Trade and other payables | 7,072 | 6,785 |
| Total current liabilities | 8,441 | 9,963 |
| Non-current liabilities | ||
| Borrowings | 5,930 | 15,144 |
| Other liabilities | 33 | 83 |
| Total non-current liabilities | 5,963 | 15,227 |
| TOTAL LIABILITIES | 14,404 | 25,190 |
| EQUITY | ||
| Share capital at par value | 7,159 | 25,056 |
| Share premium | 31 | 89 |
| Reserves | 1,182 | 2,494 |
| Retained earnings | 1,667 | -11,592 |
| Net loss for the period | -271 | -5,863 |
| Currency translation differences | -715 | -727 |
| Total equity attributable to equity holders of the parent | 9,053 | 9,457 |
| Non-controlling interest | 0 | 165 |
| TOTAL EQUITY | 9,053 | 9,622 |
| TOTAL LIABILITIES AND EQUITY | 23,457 | 34,812 |
Consolidated statement of comprehensive income
| Q3 2012 | Q3 2011 | 9M 2012 | 9M 2011 | |
| Revenue | 14,344 | 13,511 | 40,144 | 37,924 |
| Cost of goods sold | -6,906 | -6,834 | -18,506 | -18,041 |
| Gross profit | 7,438 | 6,677 | 21,638 | 19,883 |
| Distribution costs | -6,353 | -6,720 | -19,172 | -20,283 |
| Administrative and general expenses | -620 | -628 | -1,988 | -2,122 |
| Other operating income | 17 | 20 | 90 | 23 |
| Other operating expenses | -168 | -81 | -77 | -427 |
| Operating profit (loss) | 314 | -732 | 491 | -2,926 |
| Finance income | 53 | -14 | 70 | 1 |
| Finance costs | -165 | -411 | -799 | -1,030 |
| Profit (loss) before income tax | 202 | -1,158 | -238 | -3,955 |
| Income tax expense | -1 | -15 | -32 | -25 |
| Net profit (loss) | 201 | -1,172 | -270 | -3,980 |
| Profit (loss) attributable to: | ||||
| Equity holders of the parent company | 201 | -1,172 | -271 | -3,980 |
| Non-controlling interest | 0 | 0 | 1 | 0 |
| Other comprehensive income (loss) | ||||
| Currency translation differences | 128 | -156 | 12 | 50 |
| Total comprehensive income (loss) | 329 | -1,328 | -258 | -3,930 |
| Comprehensive income (loss) attributable to: | ||||
| Equity holders of the parent company | 329 | -1,328 | -259 | -3,930 |
| Non-controlling interest | 0 | 0 | 1 | 0 |
| Basic earnings per share, EUR | 0.01 | -0.03 | -0.01 | -0.13 |
| Diluted earnings per share, EUR | 0.01 | -0.03 | -0.01 | -0.13 |
Maigi Pärnik
Member of the Management Board
maigi.parnik@baltikagroup.com
