Release Date: March 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- B&S Group SA (LTS:0A90, Financial) reported a turnover growth of 9%, slightly above expectations.
- All segments, except for liquors, delivered growth between 10% and 24%, with strong performances in beauty, food, and personal care.
- The company is focusing on building autonomous and accountable segments to maximize value creation.
- B&S Group SA (LTS:0A90) is investing in digitization to strengthen relationships with clients and suppliers, enhancing operational excellence.
- The company has implemented HR, logistical, and sustainability KPIs to ensure staff performance and business alignment.
Negative Points
- The Liquor segment faced challenges due to geopolitical tensions, resulting in a EUR9 million one-off related to inventory.
- Gross profit margins decreased from 15.5% to 15.0%, impacted by provisions on inventory and one-off cancellation fees in the Liquor segment.
- Operating expenses increased by approximately EUR10 million, driven by global inflation and a tight labor market.
- Net debt increased to EUR380.8 million, with a net debt to EBITDA leverage ratio of 3.0, raising concerns about financial stability.
- The Travel Retail segment has not yet returned to pre-2019 levels, with revenue still EUR10 million below and EBITDA significantly lower.
Q & A Highlights
Q: Can you explain the adjustments made between reported EBITDA and adjusted EBITDA, particularly regarding the interest coverage ratio?
A: The reported ratios are based on figures in the financial statements and the banking governance report. Adjustments include full-year figures for acquisitions and some one-offs. The interest coverage ratio is set at 4.0 throughout the year, differing from the leverage ratio, which changes due to inventory positions for peak seasons.
Q: What is your view on interest costs for next year considering higher net debt and interest rates?
A: We project a slight decrease in interest costs due to cash generation and hedging a significant part of our interest exposure. However, we remain exposed to variable interest rates, which are harder to predict now compared to six months ago.
Q: Regarding the Liquor division, should we expect flattish revenue for 2025?
A: Flattish revenue for the Liquor division in 2025 would be too optimistic. The market is currently very volatile, and we expect a decline in revenue.
Q: Are there any further scheduled cash outs related to minority buyouts?
A: Yes, we have scheduled payments for minority buyouts, including a EUR6.4 million payment in Q1 2025 and another in Q1 2026. There are no further scheduled options until 2028, except for a potential option on 50% of a French company mid-year.
Q: What are your expectations for the Liquor segment in the midterm, and what is needed for EBITDA to return to previous levels?
A: We are integrating European wholesale, reducing SKUs for the Asian market, and focusing on products that can be sold in multiple markets. These measures aim to improve margins and EBITDA levels, making the segment less sensitive to geopolitical issues.
Q: Can you provide an update on the cash outs expected this year from previous buyouts?
A: The second portion of the Personal Care buyout was paid in January 2025. The remaining deferred payment for Personal Care is EUR12.8 million, and the GND contracts have deferred payments due in July 2025.
Q: What is your strategic view on the Travel Retail division, given its current performance compared to 2019?
A: We are optimizing locations like Abu Dhabi and Qatar and considering the impact of ongoing refurbishments at Schiphol. We are evaluating strategic options but want to see how these developments unfold before making any decisions.
Q: How does the company plan to address its net debt position in the coming year?
A: We aim to optimize working capital and generate strong cash flow, reducing net debt without asset sales. We expect positive cash flow from working capital improvements, especially in the second half of the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
