Although Heureka’s sales rose slightly from two to 2.2 billion crowns year-on-year, the company is in an operating loss and had to carry out extensive write-downs of the value of its assets. According to current data, in the last financial year (end of March 2024) it reported a consolidated loss after taxation of 787.5 million crowns (534.4 million crowns the year before).
But the company itself sees the situation positively. “From the point of view of EBITDA (earnings before interest, taxes and depreciation), which better reflects the group’s performance, Heureka Group improved year-on-year. At the same time, the group further optimized the cost structure over the course of the year, which will have a positive impact on EBITDA in future years,” Heureka spokesman Martin Žabka told SZ Byznys.
The high losses are due to the cooling of the market, higher operating costs, investments in new products, and above all, write-offs of bad investments from 2019 in the amount of 750 million crowns. This year, Heureka bought the Ceneje Group, which includes price comparison operators in several Balkan countries, including Slovenia, Croatia and Serbia.
This acquisition strengthened Heureka’s position as a dominant player in the field of e-commerce in Central and Eastern Europe. However, after covid subsided, the market slowed significantly and losses began to accumulate.
In the first half of this year, the company laid off a hundred people and, according to Žabka, “further optimized the cost structure”.
Financial assistance
Nevertheless, both shareholders had to come to the rescue and each added capital to Heureka in the amount of 1.134 billion crowns this summer. “The funds will be used for the further development of the Heureka Group. The group regularly invests in product development and improving the customer experience,” adds Žabka.
Bonak (owned by Renáta Kellnerová and her family) and EC Investments (owned by Daniel Křetínský) have also pledged to support the company for at least the next 12 months, i.e. until March 2025. This is good news for Heureka bondholders. In 2020, the company issued bonds worth 3.2 billion crowns, which are to be repaid in February 2025.
After breaking records in sales and traffic of the entire e-commerce market during the covid-19 pandemic, a sobering came in 2022 in the form of a 12 percent year-on-year decline, which continued into 2023. Customers stopped spending mainly due to the conflict in Ukraine, rising energy prices and sharply rising inflation. At the same time, the costs of transporting goods have increased significantly for e-shops.
Heureka’s Financial Rollercoaster: A Comedy of Errors or Just a Cold Reality?
Ah, Heureka! A name that once rang through the virtual aisles of e-commerce like a triumphant fanfare, now resonates more like a disgruntled shopkeeper’s cough. Picture this – the company’s sales ticked up slightly from two billion crowns to a modest 2.2 billion year-on-year. You’d think they’d broken into the champagne, right? But hold your horses; with an operating loss and hefty write-downs, it seems the only thing popping around there is the sound of accountants auditing their dreams!
In the grand tradition of corporate optimism, Heureka spokesman Martin Žabka has taken the stage, waving the EBITDA banner with glee. “Look!” he proclaims, “from the point of view of EBITDA, which is essentially our version of showing off our holiday photos while ignoring the fact we forgot to pack any swimwear, we improved year-on-year!” It’s like saying, “Sure, I crashed the family car, but at least I didn’t scratch the bumper!”
Now, let’s dig into the losses, shall we? A staggering 787.5 million crowns in consolidated losses after taxation. Last year it was 534.4 million – a mere trifle. It’s as if this financial report walked out of a horror movie: ‘I see dead investments…’ And by dead, we mean those disastrous write-offs of 750 million crowns from 2019’s escapades, the kind that would make any investor clutch their pearls.
The Acquisitions and Other Bad Ideas
But hang on! What’s this? Heureka decided to invest in the Ceneje Group, operators in Slovenia, Croatia, and Serbia. Talk about expanding the family! It’s like inviting your estranged relatives to a dinner party, only to find out they’ve brought the bad cheese and a penchant for discussing politics. Although it has strengthened Heureka’s e-commerce throne in Central and Eastern Europe, did anyone get the memo that after COVID, the party’s over and guests are now reluctant to spend their cash? Can’t buy love (or groceries) without the dough!
A Costly Optimize
And just to make sure their fiscal woes aren’t just a fleeting hiccup, Heureka has decided to lay off a hundred employees. Now, that’s what they call efficient cost optimization! It’s like running a marathon and deciding the best way to lighten the load is to leave your leg behind. Cheer up, folks, it’s all in the name of improving the cost structure! Spin that PR wheel! You’d think there was a prize for the best corporate double-talk.
The Rescue Mission
Fortunately, there’s always a superhero (or two) waiting in the wings. Shareholders Bonak and EC Investments swoop in like the cavalry, pouring a combined 1.134 billion crowns into the Heureka rescue fund. Ah! The sweet smell of capital! This is like someone dropping a new Netflix series just as you were getting bored of the last one. “Don’t worry, we’re here for at least another twelve months!” claims Žabka. Great news for bondholders, too – let’s just pray that investors and the broader economy aren’t stuck in a soap opera of drama over the next few fiscal quarters.
The Post-Pandemic Hangover
Recapping the e-commerce escapade, during the COVID-19 pandemic, sales figures soared. Remember when online shopping was like finding out your crush likes you back? Now, a sobering 12 percent decline in 2022 and further dips in 2023 are hitting customers like a hangover after that first victorious round of shots. Turns out, when the world says “lockdown,” spending drops faster than you can say “inflation.” Throw in a conflict in Ukraine and the skyrocketing energy prices, and you have a recipe for disaster. Even the transport costs are rising, leaving e-shops wallowing in financial despair.
In conclusion, dear readers, Heureka’s current situation is a mix of theatrical despair and optimistic play-acting. As with any compelling narrative filled with highs and lows, perhaps all they need is a plot twist – or at least a stronger caffeine fix before the next financial report. If their long-term strategy is anything like their short-term performance, let’s just say we could be in for a few more wild performances on the financial stage!
Heureka’s sales experienced a modest increase, climbing from 2 billion to 2.2 billion crowns year-on-year. However, despite this slight growth, the company is grappling with significant operating losses and has been compelled to undertake substantial write-downs on its assets. Recent financial disclosures indicate that for the fiscal year ending in March 2024, Heureka reported a consolidated post-tax loss of 787.5 million crowns, a steep rise from the 534.4 million crowns loss recorded the previous year.
Despite these dismal numbers, Heureka maintains an optimistic outlook. “From the perspective of EBITDA (earnings before interest, taxes, depreciation, and amortization), which offers a clearer picture of the group’s operational performance, Heureka Group has shown improvement year-on-year. Moreover, throughout the year, our team has been actively refining the cost structure, which we believe will favorably influence EBITDA in the years ahead,” Heureka spokesperson Martin Žabka stated in an interview with SZ Byznys.
This year, Heureka completed the acquisition of the Ceneje Group, which encompasses price comparison services across multiple Balkan nations, including Slovenia, Croatia, and Serbia. This strategic acquisition has fortified Heureka’s position as a leading entity in the e-commerce sector throughout Central and Eastern Europe. Nevertheless, following the decline of the COVID-19 pandemic, the market has notably slowed, resulting in mounting losses for the company.
In a bid to address its financial challenges, the company trimmed its workforce by a hundred employees in the first half of this year, and according to Žabka, “further optimized the cost structure.” The downturn in the e-commerce landscape can largely be attributed to a cooling market, increased operational expenses, significant investments in innovative products, and the burdensome write-offs linked to past misinvestments totaling 750 million crowns from 2019, exacerbating financial strains.
This summer, both shareholders stepped in with a financial lifeline, contributing 1.134 billion crowns in new capital to Heureka. “These funds are earmarked for the continued growth and development of the Heureka Group, as we consistently invest in product innovation and enhancing the customer experience,” Žabka elaborated.
Bonak, owned by Renáta Kellnerová and her family, along with EC Investments, led by Daniel Křetínský, have committed to backing the company for a minimum of the next year, ensuring support through March 2025. This assurance is a positive sign for Heureka’s bondholders, especially considering the firm’s 3.2 billion crown bond issue in 2020, which is set to mature in February 2025.
After experiencing record-breaking sales and website traffic throughout the e-commerce sector during the COVID-19 crisis, the company faced a stark contrast in 2022, marked by a 12 percent year-on-year decline that has persisted into 2023. Consumer spending has significantly dropped, attributed primarily to the ongoing conflict in Ukraine, soaring energy prices, and sharply escalating inflation. Concurrently, e-commerce firms have seen a marked rise in shipping costs, further straining their operations.
What strategies can Heureka employ to enhance financial stability after recent layoffs and significant losses?
Financial stability, Heureka was forced to implement cost-reduction measures, leading to the layoff of a hundred employees. However, in a show of resilience and support, shareholders Bonak and EC Investments stepped in by contributing 1.134 billion crowns this summer to shore up the company’s finances. This funding is primarily aimed at driving further growth and enhancing customer experience amid challenging market conditions.
Despite a slight uptick in sales figures, Heureka’s substantial consolidated post-tax loss of 787.5 million crowns starkly contrasts the modest growth, with the previous year’s loss being 534.4 million crowns. Martin Žabka, the company’s spokesperson, insists on an optimistic take, highlighting improvements in EBITDA and ongoing efforts to refine the cost structure.
Heureka’s recent acquisition of the Ceneje Group, a move that aims to expand its footprint in Central and Eastern Europe, is seemingly overshadowed by the post-pandemic market slowdown. The e-commerce sector has faced significant headwinds including rising energy prices, inflation, and shifting consumer spending behaviors, which have all contributed to a decrease in overall sales.
Looking ahead, Heureka appears to be navigating a rocky road but remains hopeful for a turnaround with the infusion of capital from its shareholders and the strategic initiatives it plans to pursue. As the company continues to adjust to the current landscape, the journey to regain profitability and stabilize operations will be closely watched by stakeholders and industry observers alike.
