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Eurocash grows faster than Biedronka. But the benefits are disappointed



In the fourth quarter, customers left 6.8 percent in small stores in the abc network. more than a year earlier and 6.4% year-over-year. – gives Eurocash, who supplies these products with merchandise. Speech of so-called Similar Sales (LFL), that is to say, the opening of new establishments is not considered.

This is a good result, considering that Biedronka grew at the end of the year at a rate of only 1.2 percent (2.8 percent in 2018), Carrefour by 2.1 percent (1.6 percent one hundred in 2018) and sales Tesco LFL fell by 2.4 percent. – Eurocash reported in the comment to the annual report.

See also: The effect of a commercial ban. Billing in the store is 8 times larger

This means that customers have found the proximity of small stores or prices, or both subjects at the same time attractive enough so that they do not want to look further away from home. These stores are now gaining the market.
Last year, the Eko network (LFL + 5.9% in relation to the fourth quarter) and Range (+ 4.3%) also registered a high growth; These are all chains of small stores that Eurocash delivers merchandise.

(Press materials)

In total, Eurocash, through a network of 180 wholesalers throughout the country, supplies 8708 independent abc shops, 5024 franchises established by subsidiaries (Groszek, Euro Sklep, Lewiatan, PSD) and 1539 own stores. The last year was 1326.

Worse it was the network of Eurocash, or the Delicatessen Center. In spite of the intense television advertising campaign (Price Engineer), LFL sales have grown at the slowest pace of the Eurocash group, which means 2 percent. year-to-year and only 0.9 percent throughout the year. This will probably give you a lot of direction to think about putting the brand.

The portfolio also includes the Mila brand, which has carried 187 Eurocash stores in May last year. In the fourth quarter, Delikatesy Centrum achieved sales of PLN 392 million, on a scale similar to the Mila network (PLN 369 million). In Warsaw, Bemowo is already in the store, which changed from the brand Delikatesy Centrum to Mila. The company reported that it was a test, to compare the results obtained.

The results are much better, but … disappointed

Eurocash recorded PLN 52.25 million net consolidated profit in the fourth quarter of 2018 versus the only 8.75 million PLN for the previous year. It is an increase of up to 497 percent, but it must be borne in mind that the result was particularly weak last year. Analysts now expected it would be much better. Its forecasts, collected by PAP, spoke more than 85 million PLN by the end of the year.

He did not like the market. Eurocash shares fall 1% on Thursday, despite the WIG20 earning 0.4%.

The result of EBITDA, the adjusted result for financial expenses and increased by depreciation, amounted to PLN 157 million compared to PLN 101 million in the previous year. If we had to clear this result with specific events (sales of PayUp and the purchase of the Mila network), then the increase is much more modest, up to 109 million zł in comparison to PLN 101 million a year earlier.

Consolidated sales revenues reached PLN 5,801 million in the fourth quarter of 2018, compared to the PLN 5,194.94 million in the previous year, which was adjusted to market forecasts and even slightly exceeded.

Throughout 2018, the Eurocash group obtained a consolidated profit of PLN 109.64 million compared to PLN 33.31 million a year earlier, with sales revenue of 22.8 billion zł, compared to PLN 20.8 billion a year earlier.

The success of small stores has become a wholesale major. In 2018, wholesale revenues reached 17,700 million zlotys, that is, almost 6 percent. higher than a year earlier. The Group significantly improved the efficiency of its largest operations, thanks to which the EBITDA of this segment increased by more than 18% last year.

– In the wholesale segment, the most notable is the increase in similar sales in Eurocargo Cash & Carry, which in the last quarter of last year amounted to almost 7%. This is the best result of this format from the first quarter of 2013, or almost six years, – commented Jacek Owczarek, member of the board and financial director of the Eurocash Group.

He added that the very good sales results of the wholesale segment in 2018 also included more than 10%. Growth in the active distribution format, including Sales to associate customers in franchise networks and partners, such as Lewiatan, Euro Sklep, Groszek and PSD (Gama).

Sales of the retail segment (Delikatesy Centrum, Mila, Kiosks Inmedio) exceeded the 4.3 million PLN in the past year and were 26%. more than a year earlier, mainly due to the acquisition of Mili. EBITDA of the retail segment amounted to PLN 107 million compared to PLN 153 million in 2017. The decline in profitability in this segment was mainly related to the costs of integration of the supermarkets chain acquired EKO and Mila with the chain Delikatesy Centrum, "said the company.

– Small format stores, which are the main customers of the Eurocash Group, have achieved better than the entire FMCG sector last year, despite the difficult conditions in which they had to operate. Total sales of calls The small format increased in 2018 by 6.5 percent. compared to the growth of the entire market by 5.4 percent. Also in terms of similar sales, especially in the fourth quarter of last year, the networks of partners and franchises that collaborated with us have registered a greater growth dynamics than the large hypermarkets and discount chains, "said Owczarek.

source:

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