Žiga Debeljak, President of Executive Board of "Mercator" – We will set aside 11m EUR to lower margins

Ži­ga De­be­ljak may be replaced. That news brought about confusion in Slovenian business circles, exactly on the day when De­be­ljak was expected to announce the information on successful operations of company "Mer­ca­tor" in 2008 and the package of measures for alleviation of the global economic crisis in 2009.

– We are well-prepared for the crisis and we have achieved good results, so that there is no reason for us to leave our positions –De­be­ljak said at the press conference, commenting on the speculations about changes in managerial administration of "Mer­ca­to­r".

On the same day, the supervisory board confirmed the management’s annual report on the company’s operations. The profit amounted to 41m EUR, which is 0.5% above the projected one, and the stockowners were paid the dividend of 4.5 EUR per stock. The plan for this year includes modest growth, but it is important that there will be some.

Big changes in the ownership of "Mer­ca­to­r" are in the pipeline. About 48% of "Mer­ca­to­r" will be offered for sale, and the key concern of the management is how to prevent important business information from being misused. It would be bad if the competition was allowed the insight into Mercator’s business papers and information it could misuse later. The access to the confidential data may be forbidden or limited to the potential buyers from the trade business.

In the interview for "Po­li­ti­ka", the President of the Administration of "Mer­ca­to­r", Ži­ga De­be­ljak, said the following:

– I assure you that the access to the confidential information of “Mercator” won’t be allowed to everybody. I don’t know who will be interested in takeover of stocks of "Mer­ca­to­r", but I can say that there is no “black list” of unwanted buyers.

In addition to the changes in ownership, "Mer­ca­tor” also has a very difficult business year ahead?

I want to be an optimist, but, in this situation, I am not, because the situation is really very serious. However, I can say that "Mer­ca­tor" neither plans nor will reduce number of workers, which represents a great achievement in these circumstances.

All the countries in which "Mer­ca­tor" is present are trying to solve the problem of insolvency by helping the banking sector. If banks do not want to support the growth of economy and enterprises, then practically no company can do the business successfully.

You will improve your competitiveness by reducing margins. And what are the business rationalization measures that should help you survive the crisis?

We have been doing the optimization of operations for two years within the scope of the project for general rationalization, and that is why we managed to increase the business profit by 10% in 2008 in spite of the fact that we lowered margins by 0.4% at the level of the group.

Certain businessmen in Serbia estimate that market chains spread insolvency by extending the deadlines for payment to suppliers. Is "Mer­ca­tor" one of such chains?

We do not do that because we think that the respecting of payment deadlines is fair to suppliers. We have not extended any payment deadline in any of the markets, and we stick to the contracts that we sign with the suppliers. We do the completely opposite thing – we pay the obligations before the deadline to the suppliers that ask so.

You said that you had already warned the suppliers that they should not raise the prices in 2009. Does that apply to the suppliers in Serbia?

Yes, we have very strict agreements. We said to all suppliers that we were going to set aside 11m EUR from our pocket to lower margins in order to satisfy the consumers at the time of the economic crisis. Therefore, we expect our suppliers to have that in mind.

One economist said that it might happen that only one bank existed in the world. Is it possible that only one market chain exists in the region?

I do not believe so. Competition is good thing because the offer gets better every day thanks to it. In spite of the fact that "Mer­ca­tor" is the largest trader in the region, we are still small in broader European context. Therefore, I believe in such consolidation, and not in monopolization.

Does that broader European context dictate possible merger of Slovenian "Mer­ca­to­r", Serbian "Del­ta” and Croatian "Kon­zu­m”?

That idea is already present for some time. From the business point of view, every growth of business is positive. The size is the most important element of long-term competitiveness of each trader. Therefore, every merger of regional markets, from the business point of view, would be smart and it would bring positive synergy. But, I do not know whether that is going to happen and if anybody thinks about that.

(Note: the complete text is taken from newspaper Politika of February 28, 2009)