Economy 2 June 2023, 4:47pm

There's a first time for everything: Penny Market incurs loss in 2022

Portfolio

Revenues of Penny-Market Ltd. increased in line with food inflation, as did the value of goods purchased. But for the first time in many years, the discount retailer failed to make a profit in Hungary.

Penny Market's turnover was HUF 404.6 billion in 2022, up 25.8% from HUF 321.6 billion in the previous year. More than 98% of the revenue comes from retail sales themselves.

The largest item of expenditure is, unsurprisingly, the purchase value of goods sold, which increased by 26.2% in 2022, i.e. its share of turnover remained unchanged at 76%. This is an important figure because it shows whether or not a firm has increased its margins (realised 'extra profit') by taking advantage of the consumer 'confusion' caused by the high inflation environment.

The revenue growth at Penny Market was in line with the increase in food prices. This may mean that the volume of sales did not increase, but it also cannot be excluded that Penny's raised prices by less than the 26% average food price increase and that the growth related to people putting more products in their shopping basket. What is certain, however, is that in last year's and this year's inflationary environment, a company's revenue performance is much less indicative of how it actually fared than in previous years.

The value of services used at Penny went up by 21% to HUF 35.6 billion. The largest items on this line were

rental fees (HUF 8.9 billion),
transport (7.3 billion)
advertising (5.9 billion)
repair and maintenance (3.1 billion) and
security services(2.7 billion).

Penny paid HUF13.1 billion in sectoral levies last year, an almost 2.5-fold increase compared to the 2021 tax liability.

The company's personnel expenses rose by 10%, but average salaries based on wage bill increased more for manual workers and less for white-collar employees.

Last year, Penny employed 1 027 full-time clerical and 2 947 full-time manual workers and a further 557 part-time manual workers. The number of employees in intellectual jobs increased by only one and the number of employees in physical jobs by 134.

Key figures of Penny
	2021	2022	Change
Net sales	321.6	404.6	26%
Purchases of goods sold	240.2	303	26%
Services required	29.4	35.6	21%
Personnel expenses	26.9	29.6	10%
After-tax profit	4.4	-0.15	-103%
Source: company report

From the wage bill it can be calculated that among full-time employees

an average manual worker could earn net HUF 259,000, excluding bouses, which marks a 13.1% growth over net HUF 229,000 available in 2021; and

a white-collar worker could take home an ex-bonus net pay of HUF 455,000 a month, up 7.3% from HUF 424,000 last year.

The company paid HUF 477.4 million in corporate tax, which resulted in a loss of HUF 155 million in 2022, which compares with a profit of HUF 4.4 billion in 2021 (-103.52% yr/yr).