Sonae sees profits rise 33% to €210M on turnover of €5.49B in 9M22

Sonae recorded results attributable to shareholders of €210 million in the first nine months of the year, an increase of 32.6% compared to the same period last year, according to a statement.

“On a cumulative basis, net profit attributable to shareholders reached €210 million in 9M22 [nine months 2022], benefiting from the positive portfolio performance, the comparable 9M21 affected by the pandemic and the contribution to indirect profit from the revaluation of Sierra assets and Bright Pixel portfolio,” the company indicated in the same statement released on Wednesday evening.

Up to the end of September, the group had a turnover of €5.493 billion, up 10.4% on the same period last year, and an EBITDA (earnings before interest, taxes, depreciation and amortization) of €544 million, up 3.4% year-on-year.

In the third quarter, the company recorded a 4.2% drop in profits, to €92 million, “due to efforts to support inflationary costs and ensure the competitiveness of offers, as well as the capital gain from the sale of Maxmat recorded last year,” it noted.

“In a challenging macroeconomic context, the group’s businesses achieved healthy operational growth,” the company indicated, highlighting that in the third quarter its “consolidated turnover exceeded €2 billion, growing 15% year-on-year, underpinned by solid market share gains in the retail businesses.”

According to Sonae, “all businesses made a positive contribution and reinforced again their leading positions in their respective markets”, leading to an increase in turnover in the first nine months.

The company highlighted that “underlying EBITDA increased by 7.2% year-on-year in 3Q22 [Q3 2022] to €181 million, reaching €440 million in 9M22”, adding that “high energy costs and prices in production were partially borne by businesses in order to fight inflation and support households, putting pressure on the cost structure and leading to a reduction in margins”.

In the case of Sonae MC, owner of the Continente supermarket chain, among other brands, the group highlighted that during the third quarter, “the challenging macroeconomic environment, characterised by rising inflation levels and interest rates, continued to affect household purchasing power and consumer confidence”, adding that “the Portuguese food retail market continued to grow, year-on-year, due to extraordinarily high food inflation (16% in Q3 and 11% in 9M), which offset the reduction in total volumes as a result of the increased cost of living”.

MC’s sales were, in the year to September, €4.3 billion, up 10.6% year-on-year, with this segment “continuing to face strong pressures on its cost structure, given record high energy costs together with the measures implemented to protect its customers and strengthen competitiveness, bearing part of the inflationary costs”.

In turn, Worten “recorded a solid performance due to the success of its omnichannel value proposition, combining high convenience solutions with a broad portfolio of products and services”, having in cumulative terms achieved “a 4.2% year-on-year increase in turnover” to 836 million euros.

In the real estate sector, during the third quarter “Sierra recorded a strong operating performance in all business areas, particularly in its shopping centre portfolio, which posted a year-on-year sales growth of 25.2%, and 11.9% compared to 3Q19, consistently across all its asset geographies”. Net profit in this segment reached, in cumulative terms, €45 million, in the first nine months of the year.

According to Sonae, in the third quarter, “fashion retail continued to show a growth trend, with a positive contribution from all the brands in the portfolio, despite the challenging context for discretionary consumer products (lower levels of disposable income due to the evolution of inflation and interest rates)”, with Zeitreel’s total turnover growing 8% year-on-year “to €102 million, with a positive contribution from all retail operations, reaching a solid growth of 20% in 9M22, to €276 million”.

“In the last 12 months Sonae invested €579 million, with the focus on organic growth justifying the €326 million in operational capex (up 10.9%),” the statement said.

According to Sonae, “regarding the portfolio management activity, investments totalled €253 million, including the acquisition of 10% in Sierra, the additional stake in NOS and Bright Pixel’s investments both in new companies and in the strengthening of its holdings”.

According to the group, Sonae MC “invested €61 million in the third quarter” and a total of €131 million until September, “investing in the development of its digital and logistics infrastructure and in the expansion and refurbishment of its chain of shops”, and “in the quarter, MC (Modelo Continente) opened 16 new own shops representing an additional six thousand m2 of sales area”.

In the same note, Sonae revealed that “despite the high amount of investment made, the net debt of the group stood at €1.022 billion and the capital structure of the group remained solid, with very comfortable leverage ratios and liquidity levels”, with “the group being fully financed until the beginning of 2024 and with an average cost of debt of around 1%”.

Sonae also recalled that in the fourth quarter, “Bright Pixel concluded the sale of Maxive, which will have a significant impact on the group’s cash flow”, highlighting that “the sale of the 50% stake in MDS (proceeds of €100 million) is still dependent on the necessary regulatory approvals, but is expected to be concluded by the end of the year”.

Sonae also stated that it increased its support to the community by another 50% in the first nine months of the year, with support totalling over €21 million.