Estonian Baltika posts EUR 1.07 mln profit in Q4

Photo: Jelena Rudi

The listed Estonian apparel group Baltika earned a net profit of 1.07 million euros in the final quarter of last year compared to the year-earlier loss of 1.88 million euros.

Net profit for the full year was 805,000 euros. In 2011 Baltika reported a loss of 5.86 million euros.

Sales revenue was 16.19 million euros in the fourth quarter and totaled 56.33 million euros in the 12 months of 2012. A year earlier fourth-quarter sales reached 15.49 million euros and annual sales came in at 53.41 million euros.

Profit before tax was 1.29 million euros in the fourth quarter and 1.06 million euros for the full year. Baltika exceeded the financial targets set for 2012, ending the year with 3.73 million euros in EBITDA, 24 percent above the target of three million euros, the company said.

The company's performance surpassed targets due to strong growth in sales efficiency, which rose 14 percent compared to the projected 10 percent, and a substantial improvement in the gross margin. Gross margin in 2012 was 54.5 percent, up by 1.4 percentage points in annual comparison.

Strong sales results and the rise in the gross margin were underpinned by sales growth in the Baltic countries and Russia, Baltika said. The best results were achieved in Latvia and Russia where sales per square meter surged 21 percent and 15 percent, respectively. Effective cost control also had a positive effect: the ratio of operating expenses to revenue improved by five percentage points, one percentage point more than targeted.

Year 2012 was pivotal in both returning to profit and strengthening the financial position, Baltika said. By divesting real estate, sharply reducing the loan burden and improving investment capabilities, the company created a solid basis and opened up new opportunities for future development.

In November Baltika signed an agreement for the acquisition of the Bastion trademark and retail stores operated under the Bastion trade name. Six Bastion stores in Estonia were taken over by Baltika subsidiary Baltman and one Bastion store in Latvia, by the Latvian subsidiary Baltika Latvija.

Baltika's goals in 2013 are expansion and profitable growth. To achieve this, the group will continue implementing its investment plan according to which 25 new stores are to be opened and five million euros invested in the retail system in the next few years. Around three million euros is to be invested in 2013.

The management's target is to lift sales by more than 10 percent and at least double the net profit in 2013. The targets are in line with the budget approved by Baltika's supervisory board on February 13.