- Eurocash Group's revenues in the first half of the year amounted to PLN 15.8 billion and were 1 percent lower than in the first half of 2023. In turn, in Q2 2024 they amounted to PLN 8.2 billion and were 2.5 percent lower than in Q2 2023.
- The EBITDA margin decreased by 0.4 percentage points, which translated into PLN 226 million of EBITDA profit.
- In a more difficult environment, the Group is focusing on its savings programme, strengthening its balance sheet and financial stability.
- Improvement of net debt to EBITDA ratio (pre-IFRS16): from 1.09 in Q2 2023 to 0.87 at the end of Q2 2024
- Cash conversion cycle improved by 2 days YoY. Financial costs in Q2 2024 amounted to PLN 61.2 million and have remained at a similar level since the beginning of the year.
Eurocash Group has announced its financial results for the first half of 2024. How does it describe the economic environment in which it operates?
– The Polish economy is emerging from the crisis at a slower pace than economists and analysts had expected. This directly translates into consumer behavior, which, although they are spending more, is still cautious. This situation is reflected in the Group's results – the management board reports.
Decrease in profitability of Eurocash Group
From April to June 2024, the Group recorded nearly PLN 8.2 billion in revenue (compared to PLN 8.4 billion in Q2 2023), and EBITDA profit amounted to PLN 226 million. Sales in the first half of the year amounted to PLN 15.8 billion (compared to nearly PLN 16 billion year-on-year), and EBITDA profit – PLN 365 million.
The decline in profitability in the first half of the year was significantly influenced by one-off restructuring costs and the operating costs of the second Frisco warehouse opened at the end of last year, whose efficiency has been gradually increasing in parallel with the acquisition of new customers.
– Restructuring and optimization activities that we have been conducting since the fall of last year partially protect our profitability, but the entire market is under strong pressure from a very high increase in the minimum wage, low consumer optimism, and a price war. We are focusing primarily on keeping costs in check. In line with previous assumptions, we are working to balance the increase in the minimum wage by increasing efficiency – says Paweł Surówka, CEO of Eurocash Group.
– Eurocash Group is devoting 2024 to strengthening its financial stability. The effects are already visible in the improvement of the net debt to EBITDA ratio (before IFRS16), which at the end of Q2 2024 is 0.87, compared to 1.09 a year earlier – the company reports.
Net loss for H1 amounted to PLN 87,158,481 compared to PLN 1,046,358 profit in H1 2023.
Eurocash is monitoring costs, dividend will be paid later
The Group maintains financial cost discipline. In Q2 2024, they amounted to PLN 61 million and have remained at a similar level since the beginning of the year. Shareholders also decided to pay dividends only in November to optimize the Group's financial management.
– Consumer sentiment has been falling slightly in recent months, but the leading consumer confidence indicator rose in August. This is a good sign, although we are cautious in expecting a quick improvement – it is clear that the entire industry is under great pressure. The current priority is to strengthen the Group's stability and resilience in order to safely get through the second half of the year – announces Paweł Surówka.
The Group continues key projects to integrate wholesale businesses and modernize the Delikatesy Centrum store model, which was already adapted in 30 locations at the end of the first half of the year. The Group is introducing it to other stores to improve the shopping experience for customers, better adapt prices and assortment to their needs and improve the efficiency of space use.
– In line with the assumptions, the refreshed stores are achieving better results. The increase in the number of transactions in these stores is approx. 7% higher than in the stores before the implementation of the new model. We believe that thanks to changes in the assortment and increasingly precise analysis of consumer needs, Delikatesy Centrum will become the number one brand in the proximity supermarket segment and the most consumer-oriented chain on the market. This is the goal of the DC 2.0 strategy – says Paweł Surówka.
What segments are growing in Eurocash?
The Group's growth projects, primarily the Frisco online store and the Duży Ben alcohol store, recorded another high sales growth, with the segment's sales increasing by 14% in Q2 2024. Frisco's sales increased by 21%, with high customer acquisition (+22% YTY), which brings the Group closer to achieving optimal filling of the second warehouse near Warsaw. In turn, Duży Ben recorded another quarter in a row of high LFL sales growth results at 5%, increasing sales by 16%. The EBITDA result in the projects segment is still negative (-4.7 million PLN), but the loss is significantly lower than a year earlier, when the segment brought -9.2 million PLN.
