Release Date: March 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sonae SGPS SA (STU:YSON, Financial) reported a strong financial performance in 2024, with consolidated figures reaching nearly EUR10 billion, marking an 18% increase from 2023.
- The company successfully expanded its portfolio through significant acquisitions, including a majority stake in Musti, a leading pet care retailer in the Nordics, and the merger of Adenal with Druni, enhancing its position in the health, wellness, and beauty sector.
- MC, Sonae's food retail segment, achieved record turnover, growing by 15% to EUR7.6 billion, with an increased EBITDA margin from 9.7% to 10%.
- Worten, Sonae's electronics retail segment, experienced an 8% growth in total sales, with a strong performance in both core electronics and extended ranges.
- Sonae's real estate business, Sierra, showed strong momentum with a 9.8% increase in net results and a 4.5% growth in NAV, driven by tenant sales and asset revaluations.
Negative Points
- The competitive landscape in the Portuguese food retail market remains intense, with increased promotional activities and price investments putting pressure on margins.
- Musti faced challenges in the Nordics due to a tough macroeconomic environment, resulting in a pressured EBITDA margin of 14.1%.
- Sonae's balance sheet saw an increase in debt by EUR160 million, primarily due to the EUR1.1 billion spent on M&A activities.
- The company experienced a slight decline in grocery retail margins in Q4 2024 due to extraordinary costs.
- Bright Pixel, Sonae's investment arm, faced a closed exit market, with limited opportunities for M&A exits and IPOs, impacting its ability to realize returns from its portfolio.
Q & A Highlights
Q: Regarding food retail, how is the competitive backdrop evolving in terms of promotion intensity? Do you see any margin risk into 2025? And how many stores do you plan to open in 2025?
A: The Portuguese food retail market is highly competitive, with stable but slightly increased promotion levels. MC has been performing well in sales despite aggressive price investments by competitors. We aim to maintain our EBITDA margin in 2025 despite cost pressures. We plan to open a similar number of stores as in 2024, with 25 in food retail and similar numbers in health, wellness, and beauty.
Q: Are you seeing any signs of demand rebound for Musti, and what are your targets for store openings in 2025?
A: Yes, we are seeing improved demand and growth, with like-for-like growth moving from low to high single digits. While we don't provide specific guidance, we opened about five to six stores in each main geography last year, excluding Finland, and expect similar numbers in 2025.
Q: Sonae MC's depreciations and tax provisions increased significantly. Can you explain these changes?
A: The increase in depreciation is mainly due to the acquisition of Druni, impacting fixed assets and lease liabilities. The tax provisions increased due to Druni's inclusion, improved operational performance, and accounting adjustments.
Q: How do you view capital allocation, particularly in terms of selling listed assets to buy back shares?
A: We currently have no plans to sell listed assets or conduct share buybacks. We are comfortable with our portfolio and prefer to invest in opportunities that generate superior returns.
Q: For Bright Pixel, how is the exit market, and is the bid-ask spread narrowing?
A: The exit market remains closed, with modest IPO activity and lower M&A levels. We are not pressured to sell assets and are waiting for better market conditions to execute exits. We have achieved successful exits this year and hope to continue this trend.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
