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Sonae - Key takeaways from 2Q18 results

23 Aug 2018

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Sonae reported yesterday after market close its 2Q18 results. The equity accounted businesses (Sonae Sierra and NOS) had already reported their results. A conference call to discuss 2Q18 results with analysts and investors will take place today at 3pm local time.

Sonae reported an 4.5% y/y rise in 2Q18 consolidated sales to €1,337mn (+6.6% y/y to €2,680mn in 1H18), reflecting the 4.7% y/y (to €965mn) increase at its food division (Sonae MC), while Worten turnover rose by 4.8% y/y (to €232mn). Underlying EBITDA increased by 2.9% y/y to €73mn in 2Q18 (+6.3% y/y in 1H18 to €130mn), on the back of an improved performance at Sonae MC (+4.1% y/y to €52mn). 2Q18 net profit stood at €78mn, +20.6% y/y.

LfL sales growth performance in the food retail division stood at 0.2% in 2Q18 (2.7% in 1H18), after 5.3% in 1Q18, reflecting the adverse calendar effect of Easter. Total revenues rose by 4.7% y/y in 2Q18 to €965mn, helped by the continued expansion of the Continente Bom Dia network. The group said that Sonae MC reinforced its market share during the period.

Sonae MC’s 2Q18 underlying EBITDA stood at €52mn, +4.1% y/y (+€6mn y/y to €87mn in 1H18). Food retail underlying EBITDA margin reached 5.4% in 2Q18, down by 10bps in y/y terms (4.6% in 1H18, flat y/y), due to the impact of the store network expansion and the competitive environment.

Regarding the Worten division, total sales rose by 4.8% y/y in 2Q18 to €232mn (+7.1% y/y to €474mn in 1H18), on the back of the e-commerce operation growth, which kept the positive trend seen in previous quarters. LfL sales growth stood at 2.7% for Worten in 2Q18 (5.8% in 1H18), after 8.8% in 1Q18, despite lower seasonal product sales as a result of abnormally low temperatures felt in May and June in Spain.

In Sports & Fashion, turnover reached €73mn in 2Q18, broadly stable y/y (+0.9% y/y to €168mn in 1H18, reflecting the positive evolution of international and online sales). LfL sales growth stood at -4.3% in 2Q18 (-0.3% in 1H18), after 3.7% in 1Q18, on the back of the unusual weather conditions and an early Easter that impacted performance.

Worten’s underlying EBITDA fell by 17.6% y/y to €3mn in 2Q18 (+1.9% y/y in 1H18 to €6.1mn), with a weaker underlying EBITDA margin y/y (-0.3pp). 2Q18 underlying EBITDA in Sports & Fashion reached -€6mn (vs. -€1mn in 2Q17).

Iberian Sports Retail Group recorded turnover growth of 7.8% y/y to €116mn in the period 1st February - 5th May. EBITDA improved by €2.7mn y/y. Equity method results included in Sonae accounts reached -€1.4mn.

Net debt reached €1,324mn in 2Q18: Net debt stood at €1,324mn at the end of June 2018 (up by €58mn since March 2018, or +4.6% q/q) vs. €1,112mn in December 2017. Net financial results improved by 19.3% y/y in 2Q18.

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