NETHERLANDS: Sligro sees conditions worsen as profit dips
Dutch retailer Sligro Food Group today (16 July) predicted that economic conditions would continue to worsen in the remainder of the year after posted a 6% drop in first-half profits.
Profits dropped to EUR27m (US$38.2m) on relatively flat sales, which fell 0.7% to EUR1.08bn. The company said its lower profits were "due entirely to lower non-recurring book profits".
Organic sales rose 4.1% during the period despite the "extremely challenging market environment", chairman Koen Slippens emphasised.
"Sligro Food Group has achieved strong organic growth in both its foodservice and food retail businesses and some improvement in its underlying results," he said.
Like-for-like consumer sales in food retail were up 5.8% at the company's EM-TÉ format and 2.4% at the Golff banner.
However, Sligro said that it expects rising unemployment to have a greater impact on consumer spending in the second half of the year.
"The general economic conditions are expected to deteriorate further in the second half of 2009, because the sharply rising unemployment figures are bound to affect the markets we serve. The credit crisis is also affecting the finances of our customers and suppliers, giving rise to heightened debtor risk and operational disturbance," the company warned.
In response, Sligro has tightened its "already rigorous" debtor management procedures and implemented a "food retail masterplan", which focuses on rationalising the store network and optimising its formats and operations.
While the company declined to provide guidance for the full-year, due to the "uncertain market conditions", the company did say that it expected to increase investment in its market position.
"Even given these difficult market conditions, we think this is the right time to invest more heavily in our market position, because we expect the market and the competitive arena to present attractive opportunities in the coming period," Sligro said.
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