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TALLINNA KAUBAMAJA GROUP UNAUDITED CONSOLIDATED ACCOUNTS FOR TWELVE MONTHS OF 2019

TALLINN, 23.01.2020, www.nasdaqbaltic.com - The unaudited consolidated sales revenue of Tallinna Kaubamaja Group of twelve months of 2019 was 717.2 million euros, showing a growth of 5.3%.

In the fourth quarter of 2019, the unaudited consolidated sales revenue of Tallinna Kaubamaja Group was 192.6 million euros, exceeding the results of the previous year by 5.6%. The sales revenue of twelve months was 717.2 million euros, showing a growth of 5.3% compared to the result of 2018, when the comparable sales revenue was 681.2 million euros. In the fourth quarter of 2019, the Group’s unaudited consolidated net profit was 14.1 million euros, which was 22.0% higher than the profit of the comparable period in the previous year. The Group’s net profit was 31.1 million euros in 2019, which is 2.3% higher than the previous year. The pre-tax profit earned in twelve months was 37.7 million euros, showing a 2.5% increase compared to last year. The net profit was influenced by a dividend payment, on which income tax in the amount of 6.3 million euros was calculated in the first quarter of 2019, compared to the income tax of 6.7 million euros calculated a year earlier. Accounting for leases in compliance with IFRS 16 (Leases) was first introduced in 2019, which resulted in net profit reduction by 1.5 million euros.

The sales revenue growth slightly accelerated compared to the annual average in the last quarter of 2019. In the fourth quarter, the Group’s car segment greatly contributed to the sales revenue (38.2%), driven by the sale of KIAs as well as the successful sale of Peugeots. In November, Verte Auto, the Latvian company belonging to the car trade segment, opened a completely new and fully functional showroom in Riga and started to sell Škodas, a suitable addition to the brand selection of the Group’s car segment. The continued strong growth of 40% of e-stores compared to 2018 gives a reason to rejoice. In 2019, no new stores were opened in the supermarkets segment; however, two Selver stores were refurbished in the fourth quarter. Due to temporary closing of the stores for refurbishing, the quarterly growth number of supermarkets was lower compared to the previous quarters. One-off investments in developments intended to generate income in the future – the refurbishing of Selver stores in the supermarkets segment, opening a Škoda showroom in the car segment, and the development of the cash collection service in Viking Security in the department store segment – caused a slight decrease of the pre-tax profit in these segments compared to the period a year earlier. In 2019, the supermarkets and the Kaubamaja department stores improved their gross profit margin, although redirecting the business model to more extensive fleet sales in the car segment, which has a significant weight in the Group’s business, also influenced the margin on the Group’s consolidated level. The labour costs of the Group increased by 8.0% in the year, keeping up with the growth of the average wage in Estonia.

In the fourth quarter, Pelgulinna and Jõhvi Selver underwent extensive renovations. The SelveEkspress service was made available in 52 Selver stores. The service area of e-Selver expanded twice in 2019 and by the end of 2019, the service covered the entire city of Tallinn and Harju County, Rapla and part of Rapla County, and the city of Pärnu and its close proximity. From the beginning of 2020, the e-Selver service is offered in Tartu, which has turned e-Selver into the e-store with the largest assortment of foodstuffs and the largest service area in Estonia. In addition, the aforementioned new fully functional Škoda showroom in Riga was completed. As an important development of the reporting period, the construction works of the Kulinaaria central kitchen production building in Tallinn are in progress. The completion of the new Kulinaaria production plant and the exchange of the business software of the central kitchen is planned for 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. In 2019, the business software of real estate management and the footwear segment were renewed and the focus was on the improvement of user convenience of e-stores and speed of delivery. In the footwear segment, the SHU stores in Kristiine Keskus, Võru Kagukeskus, and Tartu Kaubamaja were renovated. In the first half of 2019, 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 in the companies of the Group. Special attention was paid in 2019 to reducing the use of packaging, especially plastic bags, in stores. During the year, more than 1 million less plastic bags have been circulated from the Group's stores than in 2018. In addition to reducing the amount of packaging, we also consider it important that the packaging in circulation is environmentally friendly, also preferably made from recycled materials. In 2020, Selver plans to replace existing food boxes with new, greener ones made from recycled and biodegradable materials in all 53 stores across Estonia.

Raul Puusepp
Chairman of the Board