Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales grew by 3.8% to reach EUR8.4 billion, despite a negative calendar effect.
- EBITDA increased by 3.8% with a stable margin of 6.3%, showcasing effective cost management.
- Biedronka gained 0.3 percentage points of market share, reflecting strong competitive positioning.
- The group ended the quarter with a positive cash position of EUR332 million, indicating strong financial health.
- Expansion efforts continued with Biedronka opening 56 stores and Ara opening nine stores, contributing to top-line growth.
Negative Points
- Like-for-like sales were down by 2.2%, impacted by calendar effects and tough comparables.
- Cash flow for the period was an outflow of EUR398 million, reflecting business seasonality and the timing of Easter.
- The competitive environment in Poland remains intense, with significant pressure on margins.
- HeBe's EBITDA margin was pressured by significant deflation and increased competition in the health and beauty market.
- The company faces ongoing challenges from high labor costs and a volatile consumer environment.
Q & A Highlights
Q: Can we assume that Biedronka's gross margin increased in line with the 30 basis points increase at the consolidated level? Also, can you provide insights on OpEx drivers and costs in Slovakia?
A: Biedronka's gross margin improved compared to last year due to a more favorable mix and slight inflation, without compromising market competitiveness. OpEx was managed tightly, benefiting from cost savings in fuel and temporary labor. Regarding Slovakia, costs are controlled but not disclosed to avoid aiding competitors.
Q: Could you elaborate on the margin mix benefit at Biedronka this quarter? Do you expect margin improvement in Q2 and Q3?
A: The margin mix benefit was due to a more favorable market dynamic compared to last year's deflationary pressures. While Q2 and Q3 margins could improve, it depends on market competitiveness and consumer behavior. The environment remains competitive, and Biedronka continues to invest in price competitiveness.
Q: How did consumer behavior evolve during the quarter, and what was the basket inflation at Biedronka?
A: Consumers remained cautious, particularly in food spending, despite increased disposable income. Basket inflation at Biedronka was very low single digits, around 1%. The company is focused on maintaining competitiveness and managing costs to protect margins.
Q: Can you comment on the impact of VAT changes on gross margin and the competitive environment in Poland?
A: The reintroduction of VAT on staples last year pressured margins, but this year provides an easier comparison. The Polish market remains competitive, with slight inflation easing some pressure. The company continues to focus on maintaining competitiveness without engaging in a price war.
Q: Is it reasonable to assume that Q1 was the toughest point for Biedronka's margins this year? What is the outlook for Q2 gross margins?
A: Q1 is typically challenging due to fixed costs and calendar effects. While Q2 may see pressure from Easter promotions, the company aims to protect profitability without losing competitiveness. The outlook depends on consumer behavior and market dynamics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
