Slovenian retailer Mercator has predicted an 8% slide in net profit in 2008.
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The company has estimated net profit to reach EUR40.6m (US$55.5m), dropping a further 25% to EUR30.2m in 2009.
Net revenue is expected to increase 9% to EUR2.7bn in 2008 and 5% to reach EUR2.8bn in 2009.
“Despite planned business rationalisation, planned net profit is lower mostly due to planned investment into cutting the margins for consumers, and higher finance expenses,” Mercator said in a statement today (17 December).
Mercator plans to invest EUR159m in the business next year, which, the company said, is “consistent” with its financing capacity and would therefore not increase debt.
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By GlobalData“Economic conditions in 2008 were severely unfavourable for the company operations, as the first half of the year saw high inflation, while the second half was struck by the global financial crisis; both had a negative effect on the scope and composition of consumption, as well as on margins, business costs, and finance expenses,” Mercator said.
Due to “considerable uncertainty”, the company said it will re-evaluate the viability of the business plan each quarter.
