BALTIKA’S UNAUDITED FINANCIAL RESULTS, SECOND QUARTER AND 6 MONTHS OF 2022
Baltika Group ended the second quarter with a net loss of 1,001 thousand euros. Last year, the Group ended the second quarter with a net profit of 37 thousand euros. Compared to the same period last year, the Group’s result weakened by 1,038 thousand euros.
The sales revenue of the Group in the second quarter was 2,308 thousand euros, decreasing by 28% compared to the same period last year. The reason for the decrease in sales revenue were as follows:
- The unpredictable war situation between Russia and Ukraine negatively affected the Group’s sales revenue. Although the situation in the Baltics had improved by the end of the first quarter and the number of visitors was gradually recovering, the impact of the war on consumer behaviour was also felt during the beginning of the second quarter.
- The Group has continued with the plan to close unprofitable stores. Within six months, we have closed six unprofitable stores (5 stores in the first quarter and 1 store in the second quarter). In the case of Estonia, as the market with the largest number of stores, the planned closure of unprofitable stores will continue during 2022. The closing of unprofitable stores is planned to be finalised by the end of 2022. The reduced sales revenue will be compensated by the three new Ivo Nikkolo concept stores opened this year.
- The sales revenue of the second quarter of last year included the sales revenue of the discontinued brands Monton, Mosaic, Baltman and Bastion. The sales result for the second quarter of this year includes only minimal income from the sale of discontinued brands.
E-com sales revenue for the second quarter was 171 thousand euros, decreasing by 56% compared to the same period last year. The result of the e-store in the second quarter of 2021 is not fully comparable, because in the comparable period the Group had two e-stores, Monton and Ivo Nikkolo, therefore the result of the e-store in the second quarter of last year included the sale of discounted products of the discontinued brands Baltman and Monton through the Monton e-store shop. The Monton e-shop was finally closed in September 2021.
The gross profit for the second quarter was 1,188 thousand euros, decreasing by 28% compared to the same period last year (Q2 2021: 1,656 thousand euros). The Group’s gross profit margin was 51% in the second quarter, i.e., at a similar level to the same period last year (Q2 2021: 52%).
The distribution and administrative expenses of the Group were 2,074 thousand euros in the second quarter, remaining at a similar level to the same period last year (Q2 2021: 2,036 thousand euros). The result of the comparable period is not fully comparable because:
- Payroll costs for the second quarter of last year include cost reductions due to the government’s decision to support people and businesses in sectors affected by the COVID-19 restrictions.
- In the second quarter of the previous year, a reduction of rental cost in the amount of 266 thousand euros was recorded, as the rental discounts received from shopping centres and government subsidies for the rent paid were recorded.
Therefore, although the Group’s distribution and administrative expenses have remained at a similar level to the same period of last year, the Group has continued general cost savings and closing unprofitable stores. In addition to the above, the Group’s general administrative expenses have decreased by 69 thousand euros compared to the same period last year.
The Group ended the quarter with cash and cash equivalents of 406 thousand euros, using the bank’s overdraft facility in the amount of 2,871 thousand euros (out of the limit of 3,000 thousand euros) at the end of the quarter. Baltika continues to implement its strategy:
- We develop modern, high-quality products in our women’s fashion brand Ivo Nikkolo, which is available in Estonia, Latvia and Lithuania and in our e-store.
- We are developing a newer, more modern and customer-friendly Ivo Nikkolo e-shop.
- We continue to open new Ivo Nikkolo concept stores in the Baltics.
Consolidated statement of financial position
| 30 June 2022 | 31 Dec 2021 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 406 | 614 |
| Trade and other receivables | 197 | 696 |
| Inventories | 2,044 | 2,491 |
| Total current assets | 2,647 | 3,801 |
| Non-current assets | ||
| Deferred income tax asset | 80 | 80 |
| Other non-current assets | 162 | 172 |
| Property, plant and equipment | 1,303 | 855 |
| Right-of-use assets | 5,548 | 5,956 |
| Intangible assets | 616 | 631 |
| Total non-current assets | 7,709 | 7,694 |
| TOTAL ASSETS | 10,356 | 11,495 |
| LIABILITIES AND EQUITY | ||
| Current liabilities | ||
| Borrowings | 356 | 364 |
| Lease liabilities | 1,834 | 1,692 |
| Trade and other payables | 2,378 | 2,438 |
| Total current liabilities | 4,568 | 4,494 |
| Non-current liabilities | ||
| Borrowings | 4,120 | 2,425 |
| Lease liabilities | 3,703 | 4,264 |
| Total non-current liabilities | 7,823 | 6,689 |
| TOTAL LIABILITIES | 12,391 | 11,183 |
| EQUITY | ||
| Share capital at par value | 5,408 | 5,408 |
| Reserves | 4,431 | 4,431 |
| Retained earnings | -9,527 | -6,627 |
| Net profit (loss) for the period | -2,347 | -2,900 |
| TOTAL EQUITY | -2,035 | 312 |
| TOTAL LIABILITIES AND EQUITY | 10,356 | 11,495 |
Consolidated statement of profit and loss and comprehensive income
| 2Q 2022 | 2Q 2021 | 6m 2022 | 6m 2021 | |
| Revenue | 2,308 | 3,208 | 4,383 | 5,339 |
| Cost of goods sold | -1,120 | -1,552 | -2,346 | -2,811 |
| Gross profit | 1,188 | 1,656 | 2,037 | 2,528 |
| Distribution costs | -1,803 | -1,696 | -3,634 | -3,837 |
| Administrative and general expenses | -271 | -340 | -633 | -835 |
| Other operating income (-expense) | -34 | 451 | 48 | 685 |
| Operating profit (loss) | -920 | 71 | -2,182 | -1,459 |
| Finance costs | -81 | -34 | -165 | -159 |
| Profit (loss) before income tax | -1,001 | 37 | -2,347 | -1,618 |
| Income tax expense | 0 | 0 | 0 | 0 |
| Net profit (loss) for the period | -1,001 | 37 | -2,347 | -1,618 |
| Total comprehensive income (loss) for the period | -1,001 | 37 | -2,347 | -1,618 |
| Basic earnings per share from net profit (loss) for the period, EUR | -0,02 | -0,03 | -0,04 | -0,01 |
| Diluted earnings per share from net profit (loss) for the period, EUR | -0,02 | -0,03 | -0,04 | -0,01 |
Brigitta Kippak
Member of the Management Board, CEO
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