1. HIGHLIGHTS OF FIRST HALF OF 2017:
2. GIVING BACK TO THE COMMUNITY
- Consolidated turnover increases by 8% to €2,603 M, as all businesses posted a positive top line trend. Growth accelerates in the second quarter with a 10% increase
- Profitability improves consistently, with a 9.2% increase in underlying EBITDA to €116 M
- Net results grow 39.7% in the second quarter, to €65 M
- Sonae consolidates its multinational positon, being present in over 80 countries through its businesses
Ângelo Paupério, Co-CEO of Sonae, says:
"The second quarter progressed according to our expectations, with positive contributions from all activities, which led to significant turnover growth (+8%) and an increase in recurrent profitability (+12%) in the first semester when compared to the previous year.
Increased competition in different business areas has demanded aggressive productivity increases, along with high levels of investment that have resulted in the reinforcement of competitive positions in our main sectors.
The strong focus on the digital transformation of our companies and the improvement of their online value proposition was also evidenced by the achieved results.
In addition to positive operational developments and progress in strategic execution, once again we improved our balance sheet, which is now financed by equity close to 60%.”
3. CONSOLIDATED ANALYSIS
- SUPPORT TO THE COMMUNITY
In the first six months of the year, Sonae continued focused on its commitment to the community and sustainability by implementing and developing projects in the areas of social solidarity, health and sports, environmental awareness, culture, education and science and innovation. Sonae sought to create and distribute value, supporting more than 850 institutions with a contribution that surpassed €3.75 M as a whole, involving material goods, skills and financial and human resources.
Very recently, Sonae brands came together to fight the impacts of the fire in Pedrógão Grande among the several local communities that were affected, providing support with donations from the different Group insignias and mobilising over 100 employees to volunteering actions on the field.
Investment in innovation also allowed for Continente to launch the very first range of circular economy products, made from end-of-life food products. This range includes jams and chutneys made of fruits and vegetables from the stores, constituting an important instrument to fight food waste in the area of perishables.
- DEVELOPMENT OF HUMAN RESOURCES AND CREATION OF OVER 2,000 JOBS
Sonae’s generation of economic and social value translated, y.o.y., in the creation of over 2,000 jobs at the end of the six months of the year. This job creation is a result of the growth registered in all of Sonae’s business areas, which expanded their activities in Portugal and abroad, particularly the development of the area of Health & Wellness by Sonae MC.
Sonae continued to create opportunities for young talents through the Contacto Programme, an initiative that offered over 50 young adults the opportunity to start their professional lives with paid internships, with the possibility of integrating the company’s staff in the future.
Additionally, Sonae also continued to promote diversity in companies, under the belief that it does increase their performance and it is not limited to genre, including also aspects such as ethnicity, religion, sexual orientation, physical handicap or generation. Accordingly, MDS is leading an international movement to promote diversity in companies, the Women Leadership Team, which gathers 20 leading business women in Europe and in the USA, having already hosted a meeting in Paris on the subject of diversity.
During the first six months of the year (1H17), Sonae continued to expand in Portugal and abroad, strengthening its multinational character by developing its activity across over 80 countries around the world. From a statutory standpoint, Sonae consolidated turnover
reached €2,603 M in 1H17, posting an 8.0% increase y.o.y., with all businesses contributing positively to this evolution: Sonae Retail, Sonae IM and Sonae FS. In the 2Q17, consolidated turnover posted an accelerated growth, increasing 10.0% to €1,324 M.
Sonae underlying EBITDA
increased by 9.2%, to €116 M in 1H17, driven by the positive evolution in the operating profitability of all businesses. Sonae underlying EBITDA margin increased from 4.4% in 1H16 to 4.5% in 1H17. In 2Q17, the underlying EBITDA stood at €67 M, growing by 6.8% y.o.y. Importantly, equity methods results (which translate NOS and Sonae Sierra contribution to EBITDA) reached €17 M in 2Q17, the highest result ever achieved in a quarter.
The strong operating performance across all businesses in the first half of 2017 represented a positive contribution to Sonae’s profitability indicators. However, last year’s first half registered a €56 M positive impact in non-recurrent items, benefiting mostly from capital gains related with the sale and leaseback transactions completed by Sonae RP in 1Q16, which hinders comparability between periods. Accordingly, EBITDA totalled €142 M, corresponding to an EBITDA margin of 5.5%, and Sonae direct results reached €43 M. In 2Q17, which is not affected in terms of comparability, EBITDA grew 16.9% to €80 M, which corresponds to an EBITDA margin of 6.1% (0.4pp above the same quarter last year), and Sonae direct results increased 50.3% to €34 M.
Sonae indirect results increased €22 M in 1H17, reaching €33 M, benefiting mostly from the positive effect of Sonae Sierra asset’s valuation.
Sonae net financial results improved €7 M when compared to 1H16, driven by the y.o.y. decrease in the cost of outstanding debt. The average interest rate of outstanding debt stood at 1.3% on 30 June 2017, improving by 30 base points when compared to 1H16. It should be noted that Sonae financial results exclude Sonae Sierra and NOS businesses.
Net income group share
rose to €73 M, as a result of sales growth across all businesses and improved operating profitability, together with the valuation of shopping centres and reduced funding costs thanks to a recognised robust capital structure in Sonae. Excluding the non-recurrent capital gains registered in 1Q16, mainly due to sale and lease back operations, Sonae’s net results would have been clearly positive. In fact, in 2Q17, in which comparability if not affected by non-recurrent items, net income group share
grew by 39.7%, to 65 million euros, with improvements in all operating and profitability indicators.
It should also be noted that Sonae continued to reinforce its capital structure. Sonae shareholders’ funds surpassed 2 billion euros, reaching €2,034 M at the end of 1H17, an amount that translates a 7.5% increase compared to that of 1H16. Net debt to invested capital also improved, from 42.3% to 41.1%, meaning, 120 base points below.
Total business investment amounted to €121 M in the first six months of the year, representing about 4.6% of turnover. Investment was channelled to opening new units, launching new businesses and boosting internationalisation and customer service, reaching €67 M in Sonae MC, €13 M in Worten, €16 M both in Sonae Sports & Fashion and Sonae RP, and €5 M in Sonae IM.
To check the operational and finantial analysis per business and the full PR, click here.