Baltika Group’s second quarter resulted in net profit in the amount of 346 thousand euros. The result of last year same period was profit of 67 thousand euros and comparative figure of continued operations was profit of 127 thousand euros.
In connection with Baltika Group’s exit from the Russian retail business, which represented a major line of business of the Group, the 2015 results of the Russian companies’ retail are presented as discontinued operation.
In the second quarter of 2016 Group’s revenue was 11,818 thousand euros, decreasing 261 thousand euros i.e. 2% compared to the same period last year. Wholesale and franchise increased 6% in the second quarter. Increase in revenue is mainly due to Russian retail market transition over to franchise partner and Monton women’s collection entrance to German department store chain Peek & Cloppenburg. Monton cooperation with the European top department store chain started at the end of 2015 and the 2016 spring-summer collection was available in three Peek & Cloppenburg department stores in Germany. In this July the number of Monton collection selling Peek & Cloppenburg departments stores increase to 13 and in 2017 Monton women’s spring-summer collection will be available in 25 Peek & Cloppenburg department stores in Germany, Austria, Czech Republic, Bulgaria, Croatia, Poland, Hungary and Romania.
E-store andmorefashion.com that sells Baltika Group’s fashion brands revenue increased 12% in the second quarter and was 252 thousand euros.
In second quarter Baltika Group retail revenue in three retail markets: Estonia, Latvia and Lithuania decreased 4% compared to same period last year and was 10,290 thousand euros. However due to more effective intake margin management process and lower mark-downs the retail gross profit has increased and the gross profit margin has increased as well by 2.8 percentage points from 55.2% to 58.0%. In addition to retail’s gross profit margin e-com, wholesale and franchise gross profit margin has increased as well.
Company gross profit margin in second quarter was 52.3%, which is 1.3 percentage points higher than last year same period margin 51.0%.
In the first half-year Baltika retail revenue totalled 22,323 thousand euros, which is 4% less than in the same period last year. Baltika ended the first half-year with net loss in the amount of 147 thousand euros. The result of last year same period was net loss of 1,069 thousand euros and comparative figure of continued operations was loss of 656 thousand euros.
In addition to exiting from Ukrainian and Russian retail market and more effective gross profit margin management the results have improved as well due to costs control. Distribution, administrative and general expense has decreased almost 3% compared to last year.
Highlights of the period until the date of release of this quarterly report
- On April 18th 2016 Monton presented its Rio Olympics special collection for the first time to public in Lennusadam.
- From May 2nd 2016 Kristel Sooaru started working as Sales and Marketing Director. Kristel has previously occupied different management positions at Baltika for 19 years, last position was the head of menswear collections and before that she was the head of Baltman brand. Before returning to Baltika Kristel was the purchase manager of TKM King, which is the holding company of Tallinna Kaubamaja Group’s footwear trade store chains ABC King and SHU.
- The Annual General Meeting of AS Baltika, held on 2 May 2016, approved the Annual report for 2015 and covering net loss from retained earnings. Meeting also approved the amendments of the Articles of Association.
- On 21th of May 2016 new Monton-Mosaic brand store in Tartu Kvartal shopping centre was opened. The store is special for its playful interior design which is inspired by one of the biggest interior trends in the world – upcycling. New Monton-Mosaic brand store is the 10th Baltika Group shop opened in Tartu.
- Baltika was chosen as one of the leading brands in Estonia. The Estonian Chamber of Commerce and Industry is preparing the book "Leading Brands of Estonia", which contains 60 leading brands of Estonia. Baltika was chosen in top fifty most widely known and internationally operating companies in Estonia. In 2016 published first edition will be presented in this fall. The criterions of choosing the leading Estonian companies and brands were: created in Estonia and recognisable Estonian heritage, widely known in Estonia, brand is positioned as Estonian brand, has an export potential or operates internationally.
- On 27th of July 2016 AS Swedbank and AS Baltika signed an agreement amendment according to which Baltika will get during one-year period investment loan in the amount of 2 million euros with a repayment period of 4 years. Agreement amendment also contains 20 month extension for the repayment of the existing loan in the amount of 1 million euros. Loan interest margin remained same.
Consolidated statement of financial position
| 30 June 2016 | 31 Dec 2015 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 254 | 398 |
| Trade and other receivables | 1,983 | 1,607 |
| Inventories | 11,859 | 10,424 |
| Total current assets | 14,096 | 12,429 |
| Non-current assets | ||
| Deferred income tax asset | 234 | 234 |
| Other non-current assets | 299 | 584 |
| Property, plant and equipment | 3,027 | 2,910 |
| Intangible assets | 1,786 | 1,944 |
| Total non-current assets | 5,346 | 5,672 |
| TOTAL ASSETS | 19,442 | 18,101 |
| EQUITY AND LIABILITIES | ||
| Current liabilities | ||
| Borrowings | 4,182 | 3,009 |
| Trade and other payables | 7,009 | 6,709 |
| Total current liabilities | 11,191 | 9,718 |
| Non-current liabilities | ||
| Borrowings | 3,223 | 3,312 |
| Other liabilities | 387 | 283 |
| Total non-current liabilities | 3,610 | 3,595 |
| TOTAL LIABILITIES | 14,801 | 13,313 |
| EQUITY | ||
| Share capital at par value | 8,159 | 8,159 |
| Share premium | 496 | 496 |
| Reserves | 1,182 | 1,182 |
| Retained earnings | -5,049 | 1,310 |
| Net loss for the period | -147 | -6,359 |
| TOTAL EQUITY | 4,641 | 4,788 |
| TOTAL LIABILITIES AND EQUITY | 19,442 | 18,101 |
Consolidated statement of profit and loss
| 2 Q 2016 | 2 Q 2015 | 6M 2016 | 6M 2015 | |
| Continuing operations | ||||
| Revenue | 11,818 | 12,079 | 22,323 | 23,299 |
| Cost of goods sold | -5,639 | -5,919 | -10,833 | -12,050 |
| Gross profit | 6,179 | 6,160 | 11,490 | 11,249 |
| Distribution costs | -5,108 | -5,271 | -10,109 | -10,283 |
| Administrative and general expenses | -600 | -607 | -1,269 | -1,343 |
| Other operating income (-expense) | -12 | -33 | -37 | -40 |
| Operating profit (loss) | 459 | 249 | 75 | -417 |
| Finance costs | -113 | -122 | -222 | -239 |
| Profit (loss) before income tax | 346 | 127 | -147 | -656 |
| Income tax expense | 0 | 0 | 0 | 0 |
| Net profit (loss) from continuing operations | 346 | 127 | -147 | -656 |
| Net loss for the period from discontinued operations | 0 | -60 | 0 | -413 |
| Net profit (loss) for the period | 346 | 67 | -147 | -1,069 |
| Basic earnings per share from net loss for the period, EUR | 0.01 | 0.00 | 0.00 | -0.03 |
| From continuing operations | 0.01 | 0.00 | 0.00 | -0.02 |
| From discontinued operations | - | 0.00 | - | -0.01 |
| Diluted earnings per share from net loss for the period, EUR | 0.01 | 0.00 | 0.00 | -0.03 |
| From continuing operations | 0.01 | 0.00 | 0.00 | -0.02 |
| From discontinued operations | - | 0.00 | - | -0.01 |
Maigi Pärnik-Pernik Member of the Management Board maigi.parnik@baltikagroup.com
