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Fotex profit sinks on selling assets, closing stores

Fotex, a Hungarian retailer turned property manager, reported Q3 profit plunged 85% because of the cost of selling units and closing stores.

Net income of Fotex Nyrt was Ft 50 million (€194,8000) in the three months ended September 30 compared with Ft 338 million a year before, based on the Budapest-based company's nine-month earnings statement. Sales dropped 17% in the quarter. Fotex Chairman and founder Gábor Várszegi, Hungary's fourth-richest man, turned to real estate after competition among retailers increased following the country's 2004 European Union accession.

The company, which started as a chain of photo developers, has sold assets and unprofitable units and rented space to Subway Restaurants and Tesco Plc. The shares are the second-best performers in Hungary's benchmark BUX index this year, gaining 72% and giving the company a market value of Ft 42.2 billion. They closed down 1% at Ft 606 in Budapest yesterday.

The net loss for the nine months ended September 30 was Ft 216.3 million, compared with profit of 126.1 million a year earlier, Fotex said in a statement to the stock exchange yesterday. One-time costs amounted to Ft 223.7 million. Sales dropped 35% to Ft 13.35 billion after Fotex sold a chain of opticians a year earlier and closed some stores, the company said yesterday. Bloomberg calculated Q3 earnings by deducting H1 results from the nine-month data. (Bloomberg)