7 Sep 2009 17:02

Logistical problems to weigh on Dixy

MOSCOW. Sept 7 (Interfax) - Russian grocery chain Dixy group will post a net loss of $17.5 million in the first half of 2009 under IFRS according to a consensus forecast of analysts compiled by Interfax.

Dixy had a net profit of $12 million in the first six months last year.

The company plans to report financial results for the second quarter and the first half on September 8. The consensus forecast puts first-half revenue at $807.2 million and EBITDA at $33.1 million. Four of the five analysts surveyed gave the exact same revenue forecast.

The analysts said logistical problems might be one factor in the loss.

Dixy had certain problems with logistics in the first half, Metropol analyst Maria Sulima said.

"The main goal for the first half of 2009 was to centralize distribution and introduce a new system for tracking the flows of goods," she said. "If the company managed to do that, the indicators in the third and fourth quarters will improve substantially," she said.

Optimization of logistics and distribution will enable Dixy "firstly, to improve the trend in like-for-like sales and, secondly, to bring transportation and logistics expenses under control."

The analysts also expect the decline in store traffic to slow, which will also have a beneficial impact on Dixy's results going forward.

KIT Finance analyst Natalya Kolupaeva expects Dixy to get a boost in the second quarter from revaluation of external debt. It could "provide about $14.5 million, partially compensating the loss from revaluation of the external debt in the first quarter," she said.

Dixy, operated 493 stores with combined floor space of 192,000 square meters as of the end of July 2009. Since the beginning of the year the company has closed nine stores and opened 21. It also closed 12 retail locations under the Vmart brand.

Revenue totaled $1.94 billion in 2008, 36% more than in 2007.