Performance of Ukrainian retailer Karavan unsteady

Profitability of Ukrainian retailer, Karavan Ltd., plunged dramatically during fiscal year 2006, the company said in its annual 2006 report released Tuesday. While net profit came in at UAH 1.688 million (€254,297), gross profit during the review period added 41.4% to UAH 30.172 million (€4,545,403).

Karavan Ltd. runs a hypermarket in a Kiev -based shopping and entertainment complex of the same name. The hypermarket, covering 46,800 m2, has been operational since October 2003. Karavan forms part of a diversified group of companies. According to Karavan’s management, they built the hypermarket in order to sell it to international operators, (supposedly to Auchan or Tesco), should they enter the Ukrainian market. 

The group is now planning to sell a 20% stake through a private placement. Profit from the placement will be used to construct 11 shopping centers in Ukrainian regions, increasing the number of its shopping centres to 15 by 2010.

The foreign chains Billa (Austria), Metro Cash and Carry (Germany), Perekrestok (Russia) and SPAR (the Netherlands, sold to Russian Perekrestok in 2005) entered the Ukrainian market during 2001-2005. Initially they opened outlets in Kiev but later began to expand to other large cities. Russian Pyaterochka (with Karusel brand) had planned to open supermarkets chain by mid 2006. However, earlier this year, X5 Retail Group N.V., Russia's largest food retailer, began talks to sell Karusel to Wal-Mart.