UPDATE 1-Slovenia food retailer Mercator posts nine-month loss

Tue Nov 13, 2012 10:08am EST

* Sales up by 0.7 pct

* Share price firms by 0.8 pct (Adds quote, details, share price)

By Marja Novak

LJUBLJANA, Nov 13 (Reuters) - Slovenia's largest food retailer Mercator said on Tuesday it made a loss of 22 million euros ($27.96 million) in the first nine months of the year due to the weak economic climate which has hit consumer spending.

The loss compares to net profit of 27 million euros in the same period of 2011.

"On all of Mercator's markets we see low or negative economic growth, high unemployment rates and consequently falling consumer purchasing power," Mercator, one of the small euro zone country's flagship companies, said in a statement.

Mercator had said in October it planned to return to profit in 2013 by cutting costs and improving productivity.

The retailer, which is planning to sell its units in Albania and Bulgaria, also operates stores in Croatia, Bosnia, Montenegro and Serbia. Depreciation of more than 8 percent this year in the Serbian dinar had a negative impact on Mercator's nine-month profit.

Total sales rose by 0.7 percent to 2.1 billion euros, but sales in Slovenia fell by 2 percent. The country, which is struggling to avoid a bailout, is in recession and battling growing bad loans at local banks and a gap in public finances.

Sales outside Mercator's domestic market rose by 4.4 percent with the biggest growth in Bosnia, where sales were up by as much as 54 percent due to a takeover of Bosnia's retailer Drvopromet at the end of 2011.

Several local banks and a food producer, which together hold a majority in Mercator, are likely to renew their attempt to sell their stakes in the retailer in the coming months.

Last year, Croatian food producer and retailer Agrokor offered 221 euros a share for Mercator, local media said, valuing the company at 832 million euros.

But the sale fell through when the previous Mercator management refused to let Agrokor perform due diligence, saying it was its biggest competitor in the region.

Shares of Mercator, which has market capitalisation of 424 million euros, closed 0.8 percent higher at 113.5 euros on Tuesday, before the result was released, while the blue-chip SBI index lost 0.71 percent.

($1 = 0.7867 euros) (Reporting By Marja Novak; Editing by Hans-Juergen Peters and Jane Merriman)

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