HG Spot reported today a decline in net profit for the first nine months of this year to 584,000 kuna, down from 20.1 million kuna achieved in the same period last year. The financial report submitted to the Zagreb Stock Exchange shows a decrease in total revenue from last year’s 271.6 million to 254.5 million kuna.
However, revenue from sales of HG Group increased by 17 percent in the first nine months of 2008, reaching 377 million kuna. The growth at the group level is attributed to excellent results in the wholesale company SENSOmikro and the integration company SENSOplus, while HG Spot achieved sales revenue at the same level as in 2007, according to the statement. The group’s profit before tax for the first nine months amounts to 534,000 kuna, as stated in the announcement. Material costs and costs of goods sold decreased from 211.8 to 204.4 million kuna.
HG Spot completed the integration of all franchise companies into its own retail network in the first nine months of this year, increasing the number of employees from 180 in September 2007 to 270 employees as of September 30, 2008, which significantly raised personnel costs. Other costs from core operations increased from 14.1 to 18.3 million kuna, primarily due to rental costs of the integrated franchisees and all associated overhead costs related to new retail locations.
Interest and other financial expenses amount to 8.7 million kuna. In the third quarter of 2008, HG Spot issued a new tranche of commercial papers. By the end of the year, the company expects a slowdown in revenue growth from wholesale due to, as they state, a more serious approach to collections aimed at reducing the risk of illiquidity among their business partners. Given the different market situation compared to the last quarter of 2007, which was record-breaking in terms of consumption and the sense of wealth among the population, they are also cautious in forecasting revenue growth in retail.
