♦ Dedeman annually declares a net profit margin of 16%, calculated as a ratio between net profit and turnover, while Leroy Merlin declares 9%, Kaufland 7%, Lidl 5%, Mega Image 4%, Hornbach 3%, Carrefour 2%, Auchan 0.5% and Cora and Profi are at a loss.
The highest net profit in Romania in 2020, a historical result for a company with fully Romanian private capital, is an indicator for the real level of profitability of the largest retailers in the Romanian economy, mostly multinational.
Pavăl Holding SRL, set up by Adrian and Dragos Paval to act as a holding company and to include companies listed in the portfolio, declared in 2020 a net profit of 3.3 billion lei (690 million euros), being the largest net profit of a company with Romanian private capital in history.
“It is about the operating profit accumulated over the years and undistributed from Dedeman, distributed as a dividend at the end of 2020 to which are added the dividends from all companies where Pavăl Holding holds shares”, says Dragoş Pavăl for ZF.
The latest data published in Finance, at the end of 2019, show that Dedeman had a turnover of 8.2 billion lei with a net profit of 1.3 billion lei, the equivalent of a profit margin of 16%, the most raised from the DIY market, valued in 2019 at about 4 billion euros. For 2020 the data are not yet published.
Among the 100 largest companies in Romania in 2019 and according to the level of profit margin, Dedeman ranks 6th, according to data from the Trade Register, after four state-owned companies, Hidroelectrica (33% net profit margin), Nuclearelectrica (22%), Romgaz (21%), Transgaz (19%) and one controlled by the Austrians, OMV Petrom (18%).
Dedeman’s profitability is a very good indicator of what real profits multinationals make, but which often “diminishes” them through transfer prices, ie those through which goods and / or services are transferred within a group of companies.
In the top of the largest retail traders, with business of over 1 billion lei in 2019, Dedeman was on the first place in profitability with 16%, followed by Pepco (Poland, 9% net profit margin), Leroy Merlin (France , 9% margin), Kaufland (Germany, 7%), Lidl (Germany, 5%), Mega Image (Belgium, 4%), Carrefour (France, 2%). Some large retailers do not even declare a profit, such as Profi or Artima (Carrefour supermarkets), being at a loss. Auchan declares a net profit of 0.03 billion lei to 5.4 billion lei turnover, ie 0.5% profit margin.
If the top 100 retailers in Romania declared a profit at the level of the Dedeman margin of 16%, the revenues from the profit tax from retailers would be four times higher.
Dedeman has had a big “problem” for several years, that is, since he reached the podium of the largest companies in Romania: where to invest from profits in the context in which the company is currently present only locally. A solution became the Bucharest Stock Exchange, where the Pavăl brothers have an aggressive investment plan, reaching holdings such as 23% of Alro Slatina, 8% of Electrica, 6.5% of Transelectrica. The Pavăl brothers have also invested heavily in office buildings in Bucharest and recently bought a network of dental clinics.
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