Published: 2018-07-19 14:00:43 CEST
Quarterly report


Baltika Group ended the second quarter with a net profit of 127 thousand euros. The result for the same period last year was a net profit of 199 thousand euros.

In the second quarter the Group’s revenue decreased 6% compared to same period last year and was 11,041 thousand euros. Revenue decreased mainly due to fall in wholesale and franchise sales related to the unstable economic situation in Russia and Ukraine. The biggest sales segment – retail revenue was 9,716 thousand euros in the second quarter, decreasing 2% i.e by 175 thousand euros compared to same period last year. Retail sales were strong in April and May, when the weather conditions, warmer than usual, were favoring sales of the summer goods. Due to successful collection of the new season, the share of full-priced sales increased and Baltic retail system earned more gross profit than in the second quarter last year. In new retail market, Finland, rental contract of the pop-up store located in Espoo Iso Omena shopping centre, was prolonged untill the end of the year and the general growth plan for Finnish market, that covers all sales channels, is in preparation.

Wholesale and franchise revenue decreased 39% compared to the second quarter last year and was 834 thousand euros. One of the reasons for the decline in the second quarter’s sales were weak sales results in Russia and Ukraine, therefore the shipments to the wholesale and franchise partners in that region have been reduced. At the end of the second quarter there were 29 franchise stores representing Baltika’s brands, forming 24% of the total stores portfolio. In six months, wholesale and franchise revenue decreased 21% and amounted to 2,536 thousand euros. In July, the contract for entering Slovenian and Croatian market was signed with one of the leading retail company in the region Montecristo SL d.o.o. First shipments for the three department stores of Montecristo are planned in August.

Baltika Group’s e-store revenue increased 2% in the second quarter compared to same period last year and was 379 thousand euros. At the same time the gross margin improved by 3.7 percentage points in the second quarter and gross profit increased 12%. Gross profit growth was attributable to better inventory management, due to that the offering of the discounted products in e‑store was more modest than last year. Mosaic formed 33% of the quarter sales, followed by Monton with 31%. Compared to the second quarter last year, sales growth was highest in Estonia +8%, in Latvia +4%, in Lithuania +3% and in Finland 3%. Half-year’s sales increase was 18% and revenue totalled 849 thousand euros.

The company’s gross profit margin in the second quarter was 54.6% that is 3.3 percentage points higher than the margin in the second quarter of last year. As the result of good sell-through of collections, the inventory level of the previous seasons had smaller share and full-priced new season goods were sold more. The gross profit for the quarter was 6,032 thousand euros, remaining at the level of the second quarter last year (II quarter 2017: 6,014 thousand euros). Half-year total gross profit amounted to 10,915 thousand euros (I half-year 2017: 11,264 thousand euros).

In the second quarter, Group’s distribution expenses increased by 2% that is related to growth of retail sales area and entering Finnish market. At the same time administrative expenses decreased by 9%. Due to decreased sales in the second quarter, the distribution and general expense ratio to revenue increased over the year by 3.6 percentage points to 52.3%.

Baltika’s revenue decreased 5% in the first half-year compared to same period last year. E-store showed revenue growth 18%, retail revenue decreased 3% and wholesale and franchise sales decreased 21%. Company ended the half-year with a loss in the amount of 855 thousand euros, the comparative result from previous year was a loss in the amount of 391 thousand euros. The main reasons of the half-year’s worse result were the first quarter’s lower sales in retail, decrease in wholesale and franchise sales in the second quarter and increased distribution expenses due to entering Finnish retail market.

Highlights of the period until the date of release of this quarterly report

  • The Annual General Meeting of AS Baltika, held on 16th of May 2018 approved the Annual report for 2017 and profit allocation to retained earnings. General meeting decided to reduce the share capital to cover prior period losses in a simplified way. In relation of the decision to change share capital, decision to make amendments to the Articles of Association were also made. Annual General Meeting approved the managers’ share option program and conditional increase of the share capital according to terms proposed by Supervisory Board. Also, the term of authorities of members of the Supervisory Council – Jaakko Sakari Mikael Salmelin, Lauri Kustaa Äimä, Valdo Kalm, Tiina Mõis and Reet Saks – were extended for the next 3 years.
  • In May, CEO of Baltika Group Meelis Milder received the Order of the Estonian Olympic Committee (EOK). The highest recognition of EOK was accredited for Baltika’s contribution to the development of Estonian Olympic and Sporting Movement. Baltika has been long-standing supporter of EOK and Monton has been designing collections for the Estonian Olympic delegation since 2004. The EOK has been giving the orders since 2006 and honoured 62 people.
  • In the second quarter, two retail network stores were closed in Estonia and two franchise stores were closed in Ukraine. 

Consolidated statement of financial position

 In thousand euros30 June 201831 Dec 2017
Current assets  
Cash and cash equivalents384704
Trade and other receivables2,8612,055
Total current assets14,73513,258
Non-current assets  
Deferred income tax asset189189
Other non-current assets461487
Property, plant and equipment2,1222,395
Intangible assets1,5011,513
Total non-current assets4,2734,584
TOTAL ASSETS19,00817,842
Current liabilities  
Trade and other payables5,9855,984
Total current liabilities9,4047,293
Non-current liabilities  
Total non-current liabilities5,2735,363
Share capital at par value4,0798,159
Share premium0496
Retained earnings0-4,872
Net profit (-loss) for the period-85558
TOTAL EQUITY4,3315,186

Consolidated statement of profit and loss and comprehensive income

 In thousand euros2 Q 20182 Q 20176M 20186M 2017
Cost of goods sold-5,009-5,718-10,469-11,225
Gross profit6,0326,01410,91511,264
Distribution costs-5,209-5,093-10,336-10,152
Administrative and general expenses-566-620-1,161-1,279
Other operating income (-expense)422-1320
Operating profit (loss)261323-595-147
Finance costs-134-124-260-244
Profit (loss) before income tax127199-855-391
Income tax expense0000
Net profit (loss) for the period127199-855-391
Total comprehensive income (loss) for the period127199-855-391
Basic earnings per share, EUR0.000.00-0.02-0.01
Diluted earnings per share, EUR0.000.00-0.02-0.01

Maigi Pärnik-Pernik
Member of the Management Board


Baltika_Interim report 2Q 2018.pdf