Eurocash completes integration of Mila retail stores, expects profit to improve

Poland’s leading wholesale group Eurocash expects its profit excluding one-offs to improve this year as it completes the integration of Mila’s retail stores, Chief Financial Officer Jacek Owczarek said.

Eurocash, which used to be a part of Portuguese Jeronimo Martins in the past, said earlier on Thursday it had made a net profit of 110 million zlotys ($29.16 million) in 2018 compared to a tax-related loss of 33 million a year earlier.

The group’s adjusted net profit, excluding one-offs, fell to 67 million zlotys from 85 million in 2017 as rising financial costs and costs in the retail segment overshadowed a 10 percent rise in revenues to 22.8 billion zlotys.

“I think that the adjusted net profit should improve this year with the completion of the integration process in retail,” Owczarek said.

Eurocash, which prefers to expand via takeovers, completed the acquisition of the Mila stores in May.

“A big part of the Eurocash group was built through acquisitions, so analysing the opportunities that come up on the market is in our DNA,” Owczarek said.

“However, I do not see big acquisition targets…at the moment which would be worth a deeper focus. Smaller transactions are more probable,” he added, saying he did not expect a major shift in market trends this year.

A partial Sunday trading ban introduced by the ruling Law and Justice party (PiS) last year turned out to be neutral for mid-size supermarkets and positive for small family shops, which are both supplied by Eurocash.

Poland prohibited trade on some Sundays in a month but small stores, pharmacies and petrol stations were exempt. As a result, many customers are doing their shopping more often on Saturdays or in small stores nearby.

PiS planned to ban trading on every Sunday by 2020 but the prime minister signalled earlier this year that the party might take a step back.

Owczarek said that pressure on the labour market has slightly eased compared to last year although the group is still hiring many workers from Ukraine due to manpower shortages in Poland.

He also said that Eurocash plans to pay out dividend for 2018, but has not yet decided on the amount. ($1 = 3.7726 zlotys) (Reporting by Agnieszka Barteczko)

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