Segments (EURm) Q3/19 Q3/18 yoy 9m/19 9m/18 yoy
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Supermarkets 117,6 111,5 5,5% 346,4 327,6 5,7%
Department stores 23,8 22,8 4,7% 71,6 69,3 3,2%
Cars 34,9 28,1 23,8% 96,9 90,7 6,8%
Footwear 2,2 2,5 -12,1% 6,3 7,2 -13,2%
Real Estate 1,5 1,3 8,0% 4,3 4,0 6,4%
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Total sales 179,9 166,2 8,3% 525,4 498,8 5,3%
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Supermarkets 6,5 6,0 7,9% 12,5 12,9 -3,0%
Department stores 0,7 0,3 192,2% 1,2 1,0 22,1%
Cars 1,6 1,2 35,3% 3,8 3,8 0,2%
Footwear -0,3 -0,2 55,2% -0,9 -0,4 125,5%
Real Estate 2,7 2,6 4,7% 8,1 8,0 2,2%
IFRS 16 -0,4 0,0 - -1,1 0,0 -
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Total profit before tax 10,9 9,9 10,4% 23,5 25,2 -6,5%
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In the third quarter of 2019, the unaudited consolidated sales revenue of
Tallinna Kaubamaja Group was 179.9 million euros, exceeding the result of the
previous year by 8.3%. The sales revenue generated in nine months was 525.4
million euros, showing a growth of 5.3% compared to the first nine months of
2018, when the sales revenue was 498.8 million euros. In the third quarter of
2019, the Group's unaudited consolidated net profit was 10.9 million euros,
which is 10.4% higher of the profit earned in the comparable period last year.
The Group's net profit was 17.1 million euros in the first nine months of 2019,
showing a 9.7% decrease year on year, which was influenced by a higher tax cost
and calculated interest expense of IFRS 16. The pre-tax profit was 23.5 million
euros in the first nine months of 2019.
The Group's car segment showed a record high sales growth in the third quarter
of 2019 as a result of extensive fleet sales. Although fleet sales put some
pressure on the margin, the third quarter of 2019 became more profitable for the
Group's car segment than the year before. The sales revenue and the growth of
profit of other retail segments important for the Group, such as supermarkets
and Kaubamaja department stores, were also satisfactory. The growth in these
segments was supported by successful sales promotion campaigns, the growth of
sales revenue in e-commerce channels, and more efficient management of goods. A
decrease in the sales revenue earned in the Group's footwear trade segment, a
market with growing competition, slightly decelerated compared to the previous
quarter. The Group's labour costs have increased 9.2% in nine months and the
average wage in the Group has increased by 9.4%. The activities undertaken by
the Group with the intent to automate processes has enabled reducing slightly
the number of employees in the third quarter.
As an important development of the reporting period, the construction works of
the Kulinaaria central kitchen production building in Tallinn are in progress.
Plans are in place to complete the new production plant of Kulinaaria in the
first half of 2020. An additional plan is to renovate the older production
building after the completion of the new building and the entire refurbished
production complex should be finished by the end of 2020. With the extension of
the production area, new products in the ready-to-eat food category are expected
to be launched under the Estonians' beloved Selveri Köök trademark and new
interesting pastry products under the Van Kook trademark.
The construction works of the Shkoda car centre and the used cars showroom in
Riga are also underway. The business software of real estate management, the
footwear segment, and the central kitchen are being renewed and the focus is
still on the improvement of user convenience of e-stores and speed of delivery.
Earlier this year, rearrangement of all the Group's food stores was undertaken
to bring them into compliance with the amendment of law that restricted the
visibility of displayed alcohol in stores. More attention is paid to responsible
and sustainable behaviour and promotion thereof.
From 1 January 2019, the Group applies the new mandatory financial reporting
standard IFRS 16 (Leases) in lease cost accounting. Pursuant to the standard,
leased assets and liabilities are recognised in the balance sheet at the present
value of lease payments and the depreciation on the leased assets and estimated
interest costs on lease liabilities in the income statement. As at 30 September
2019, the assets leased in accordance with IFRS 16 were recognised in the
balance sheet of the Group in the present value of lease payments of 98,809
thousand euros and corresponding calculated liabilities of 99,936 thousand
euros. The impact of IFRS 16 on the income statement is as follows:
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in thousands of euros 3(rd) quarter 2019 9 month 2019
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Decrease in other operating expenses 4,243 12,740
Increase in depreciation -4,109 -12,344
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Increase in operating profit 134 396
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Calculated interest expense on lease
liabilities -512 -1 523
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Total decrease in the net profit -378 -1 127
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Selver supermarkets
The consolidated sales revenue of the supermarkets business segment was 346.4
million euros in the first nine months of 2019, increasing by 5.7% in comparison
with the same period last year. The consolidated sales revenue of the third
quarter was 117.6 million euros, growing by 5.5% in comparison with the same
period last year. At Selver stores, 30.3 million purchases were made in the
first nine months of 2019, exceeding the year-on-year result by 4.7%. In the
third quarter of 2019, both pre-tax profit and net profit of the supermarkets
segment were 6.5 million euros, exceeding last year's result by 7.9%. The
consolidated pre-tax profit of the supermarkets segment was 12.5 million euros
in the first nine months, which is 0.4 million euros lower than the result of
the previous year. The net profit was 8.5 million euros, decreasing by 3.2%
compared to the previous year. The difference between net profit and pre-tax
profit is due to income tax paid on dividends, i.e. income tax paid on dividends
was 0.1 million euros lower in 2019 compared to the previous year.
The comparison basis of the third quarter is lower by two stores that were added
in the second half of 2018 and higher due to exceptionally good summer weather
last year and a store closed for renovation in September. E-commerce shows good
results - the sales revenue grew by 39% in the third quarter. Profit earning is
influenced by the growth of sales revenue and more efficient management of
goods. Investments have a positive impact, allowing cutting administrative costs
and employees' working hours. To balance the decrease in the employees' working
hours, their wages were adjusted, which translated into a slight decrease in the
efficiency regarding labour costs. The results are also influenced by the
amendment of the Alcohol Act, due to which significant one-time expenses were
incurred during the rearrangement of sales floors.
It is planned to renovate the Selver store in Jõhvi and Pelgulinna Selver store
in Tallinn in the fourth quarter. The SelveEkspress service will also be
introduced to 52 Selver stores by the end of the year. As at the end of the
third quarter of 2019, the SelveEkspress service is available in 51 stores and
over 400,000 loyal customers have used the service. The work with the
development of e-commerce will continue to improve the capacity to service the
rapidly growing number of customers.
Department stores
In the first nine months of 2019, the department stores business segment earned
a sales revenue of 71.6 million euros, which is 3.2% more than last year in the
same period. In the third quarter, the sales revenue of the Kaubamaja department
stores was 23.8 million euros, which is 4.7% higher than the comparable result
achieved last year. The e-store of Kaubamaja grew 37% in nine months compared to
the same period in the previous year. The pre-tax profit of the Kaubamaja
department stores was 1.2 million euros in the first nine months, showing an
increase of 22.1% year on year. The pre-tax profit of the department stores was
0.7 million euros in the third quarter and the result was higher by 0.5 million
euros of the comparable period. The sales results of the department stores in
the first nine months were influenced by successful sales campaigns organised in
all three quarters. The result of the third quarter of the department stores was
influenced by a successful autumn sales campaign and the first day of the
autumnal Osturalli sales campaign, which was launched in September. The Ilu Aeg
sales campaign organised in the beginning of September was the most successful
of all time. The profit of the department stores was affected by the summer
discount campaign with a higher margin compared to the same period last year,
when traffic in the city centre was disturbed.
This year, Kaubamaja pays special attention to sustainability and especially how
packages are used in the sales houses. Starting from the beginning of 2019, all
plastic bags have to be paid for in the department stores and the goal is to
gradually replace all packages with packages manufactured from recycled
materials. At the end of June, in addition to plastic bags made from recycled
materials and paper bags, reusable bags fully manufactured from recycled plastic
bottles were added.
In the third quarter of 2019, the sales revenue of OÜ TKM Beauty Eesti, which
operates I.L.U. cosmetics stores, was 1.1 million euros, showing a growth of
8.1% compared to the same period in 2018. The loss was 0.02 million euros in the
third quarter of 2019, which was 48.7% lower than in the comparable period of
2018. The sales revenue was 3.3 million euros in the first nine months of 2019,
which was 6.5% higher than the same period in 2018. The loss earned in the first
nine months of 2019 was 0.2 million euros, which was 8.7% lower than in the
comparable period of 2018. The result of the third quarter was positively
influenced by booming e-store sales and successful changes in marketing
campaigns.
Car trade
The sales revenue of the car trade segment was 96.9 million euros in the first
nine months of 2019. The sales revenue exceeded the revenue earned in the same
period last year by 6.8%; the sales revenue of KIAs grew by 6.9%. The sales
revenue of 34.9 million euros earned in the third quarter exceeded the result of
the previous year by 23.8%; the sales revenue of KIAs grew by 31.8%. In the
first nine months of the year, a total of 4,351 new vehicles were sold in the
car trade segment of the Group, of which 1,578 vehicles in the third quarter.
The pre-tax profit of the segment was 3.8 million euros in the first nine months
of 2019, which is 0.2% higher than the profit earned in the same period last
year. The pre-tax profit earned in the third quarter of 2019 was 1.6 million
euros, exceeding the profit earned in the third quarter of 2018 by 0.4 million
euros, or 35.3%.
The sales revenue growth in 2019 was caused by the successful and increased
fleet sales of KIAs. In addition to KIAs, the sale of Peugeot vehicles and spare
parts has continued to give good results at the group's subsidiaries. In
October, there is a plan in place to open a completely new Shkoda sales and
service centre and a used cars showroom, unique in Latvia, on the Bikernieku lot
in Riga.
Footwear trade
The sales revenue of the footwear trade segment was 6.3 million euros in the
first nine months of 2019. The sales revenue dropped by 13.2% in the first nine
months of the year compared to the same period last year. The sales revenue of
the segment was 2.2 million euros in the third quarter, decreasing by 12.1% year
on year. The loss was 0.9 million euros in the first nine months of 2019. The
year-on-year loss was 0.4 million euros. In the third quarter, the loss was 0.3
million euros, which is a weaker result by 0.1 million euros compared to the
same period last year.
The sales revenue of the third quarter was influenced by tight competition on
the footwear market and aggressive discount campaigns of seasonal goods due to
the planned changes in the assortment to be effected in following seasons.
Moving to new premises disrupted business for short periods at SHU stores in
Tartu Kaubamaja and Võru Kagukeskus. At the end of September, the visual
identity and assortment principle were refreshed at the SHU store in Võru
Kagukeskus, which, if successful, will become the standard to be followed in
other SHU stores in future.?
Real estate
The sales revenue earned in the real estate segment outside the Group was 4.3
million euros in the first nine months of 2019. The sales revenue grew by 6.4%
compared to last year. The sales revenue of the segment outside the Group was
1.5 million euros. The sales revenue increased by 8.0% year on year. The pre-tax
profit of the real estate segment was 8.1 million euros in the first nine months
of 2019. The profit grew 2.2% compared to the same period last year. The pre-tax
profit of the segment earned in the third quarter of 2019 was 2.7 million euros,
which is 4.7% higher than the result achieved in the same period last year.
The sales revenue growth of the segment is still driven by the Latvian real
estate company that leased commercial space in the Ogre building to a party
outside of the group. Other companies involved in the segment showed stable
growth - the rental spaces in shopping centres are covered by rental agreements
and despite tight competition, the daily marketing activity has helped to
maintain the number of visitors of the shopping centres. The completion of Kolde
Selver at the end of last year, the growth of the sales revenue outside of the
Group, and cost cuts in the Latvian real estate company all contributed to the
profit growth. At the end of the year, the Shkoda car centre and the used cars
showroom will be completed as planned.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In thousands of euros?
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30.09.2019 31.12.2018
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ASSETS
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Current assets
Cash and cash equivalents 24,003 37,235
Trade and other receivables 14,887 16,093
Inventories 74,380 78,212
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Total current assets 113,270 131,540
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Non-current assets
Long-term trade and other receivables 113 113
Investments in associates 1,802 1,738
Investment property 59,930 59,866
Property, plant and equipment 313,966 212,687
Intangible assets 4,799 5,133
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Total non-current assets 380,610 279,537
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TOTAL ASSETS 493,880 411,077
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LIABILITIES AND EQUITY
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Current liabilities
Borrowings 27,006 26,002
Trade and other payables 77,590 90,775
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Total current liabilities 104,596 116,777
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Non-current liabilities
Borrowings 175,142 68,313
Provisions for other liabilities and charges 370 370
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Total non-current liabilities 175,512 68,683
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TOTAL LIABILITIES 280,108 185,460
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Equity
Share capital 16,292 16,292
Statutory reserve capital 2,603 2,603
Revaluation reserve 94,019 95,587
Currency translation differences -149 -149
Retained earnings 101,007 111,284
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TOTAL EQUITY 213,772 225,617
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TOTAL LIABILITIES AND EQUITY 493,880 411,077
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
In thousands of euros
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III quarter III quarter
2019 2018 9 months 2019 9 months 2018
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Revenue 179,933 166,219 525,359 498,829
Other operating
income 285 128 682 1,193
Cost of sales -134,054 -123,620 -393,788 -374,352
Other operating
expenses -9,657 -13,263 -30,482 -40,844
Staff costs -17,120 -15,932 -52,665 -48,249
Depreciation,
amortisation and
impairment losses -7,728 -3,372 -23,058 -10,199
Other expenses -71 -186 -482 -829
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Operating profit 11,588 9,974 25,566 25,549
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Finance income 1 1 1 1
Finance costs -749 -216 -2,215 -573
Finance income on
shares of associates 60 111 174 187
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Profit before tax 10,900 9,870 23,526 25,164
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Income tax expense 0 -1 -6,453 -6,250
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NET PROFIT FOR THE
FINANCIAL YEAR 10,900 9,869 17,073 18,914
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Other comprehensive
income:
Items that will not
be subsequently
reclassified to
profit or loss
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Other comprehensive
income for the
financial year 0 0 0 0
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TOTAL COMPREHENSIVE
INCOME FOR THE
FINANCIAL YEAR 10,900 9,869 17,073 18,914
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Raul Puusepp
Chairman of the Board
Phone +372 731 5000
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