Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sonae SGPS SA (STU:YSON) reported a consolidated turnover growth of 15.4% year-on-year, reaching EUR 7 billion, driven by retail operations and new acquisitions.

• The company successfully integrated Mosti, a leading pet care retailer in the Nordics, and Bruni, a health, wellness, and beauty retail platform in Spain, enhancing its market position.

• MC, the largest retail business of Sonae, achieved a year-to-date revenue increase of 12.2% to EUR 5.4 billion, with a like-for-like growth of 4.9%, and improved profitability.

• Vartan showed strong top-line growth with a 7% increase in turnover and a 15.4% growth in e-commerce sales, accounting for 16% of total turnover.

• Sierra's European shopping center portfolio maintained high occupancy rates at 98% and achieved a net result increase of about 20%, driven by strong performance and asset valuations.

Negative Points

• Mosti faced a challenging consumer environment in the Nordics, with discretionary consumption decreasing, particularly in Finland, impacting gross margins.

• Vartan's profitability was affected by intense promotional activities and inflationary pressures, maintaining an underlying EBITDA margin of 4.9%.

• The company's net debt increased by EUR 676 million over the last 12 months due to significant acquisitions, slightly surpassing the prudent threshold of 15% for holding LTV.

• Bright Pixel's investment activity slowed down compared to the previous year, with uncertainty in the market affecting asset valuations.

• Sonae SGPS SA (STU:YSON) does not expect any major new acquisitions in the near future, focusing instead on integrating recent acquisitions and organic growth.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with STU:YSON.

Q: Can you update us on Sierra's expansion plans, particularly in Spain, and the expected returns from these investments? A: (Unidentified_5) Sierra is expanding its portfolio into new segments, including a residential project in Spain. We are leveraging our integrated platform for operations in the real estate market. While we are not disclosing exact investment figures, this expansion is a strategic priority.

Q: Regarding Mosti, do you see opportunities to improve gross margins in the short term, or will you continue investing in prices to drive demand? A: (Unidentified_2) We expect gross margins to improve in the next 3 to 6 months, although not to the highest levels seen in the past 18 months. We aim to sustain our competitive position in the market.