In July, Citycon Oyj published its updated strategy, presenting the company’s objectives for the next five years. At its Capital Market Day event on 15 September 2011, Citycon’s management elaborated on the practical measures it intends to employ to achieve the targets specified in the strategy. Citycon’s immediate focus is on marked improvement in profitability and operational efficiency. The long-term objective for the next five years is to grow into the shopping centre industry leader in the Nordic and Baltic countries.
Programme to improve operational efficiency – Project Now
Citycon has launched an internal business improvement programme, targeted to both revenue increase and improvement of operational efficiency. The project entails a critical review of all business sectors, as well as group operations. In practical terms, the programme covers a number of issues, big and small. Among other issues, the waste generation and energy consumption of all real properties will be reviewed – for instance a minor additional investment in lighting adjustment, or replacement, can often achieve significant savings in power consumption. Also administration cost items will undergo a thorough review.
More efforts will be focused on leasing premises and on shopping centre marketing. Minor measures to improve the commercial image will be implemented rapidly, whenever required to enhance the competitive edge of a property. So-called speciality leasing operations, i.e. special advertising space and temporary retail premises, have major potential. Major efforts will be targeted at exploiting these in future. Citycon also intends to scrutinise all acquisitions and consultancy services, while assessing each need critically.
“We aim to improve the direct result per share of the current property portfolio by one cent, both in 2012 and 2013”, explains Marcel Kokkeel, CEO.
Prerequisites for growth are in place
Citycon’s objective is to double its portfolio in the next five years in the Nordic and Baltic countries. Another key objective is diversification of the tenant base: every year, the company strives to attract two to four new international retailers to establish themselves in Citycon’s operating region. It also seeks to encourage chains already in business in these countries to venture into new countries in the region.
Mr Kokkeel emphasises that, at present, the company’s primary focus is on profitability. However, property acquisitions are possible if suitable targets present themselves. Whatever the case, all potential acquisitions will be critically assessed, since Citycon’s focus is on premium properties in leading cities. Property portfolio optimisation is integral to Citycon’s programme to enhance operational performance.
Citycon’s focus is on shopping centres in particular, whose value the company can enhance through its shopping centre management and retail industry expertise. For this reason, super markets and other properties occupied by one user, or certain smaller shopping centre properties, are not covered by the company strategy. Mr Kokkeel says that the intention is to divest the non-core properties. However, Mr Kokkeel emphasises that there is no hurry. “We will sell when the time is right.”
Based on Citycon’s strong financial standing, there is positive potential for growth. The share issue implemented in July, further strengthened the capital base. Citycon´s balance sheet is strong and we have good access to cash, comments Eero Sihvonen, Chief Financial Officer and Executive Vice President. He emphasises Citycon’s excellent relationships with the strongest, most solvent Nordic banks. Mr Sihvonen assesses that additional loans can be arranged if required, even if an economic recession were to place a strain on the banks’ ability to provide credit.
Capital market day material: presentations and a webcast of the event are available on Citycon’s website at www.citycon.fi.
Further information, please contact:
Eero Sihvonen, CFO, Executive Vice President, tel. +358 50 5579 137
Hanna Jaakkola, Vice President, IR and Communications, tel. +358 40 5666 070