1. HIGHLIGHTS OF FIRST NINE MONTHS OF 2017:
· Consolidated turnover increases 6.9% to €4,115 M, driven by growth across all businesses
· Profitability improves consistently, with a 9.6% increase in the underlying EBITDA to €221 M
· Net results grow €1 M in the quarter and remain healthy in 9M17
· Net debt decreased €30 M in year-on-year terms
Ângelo Paupério, Co-CEO of Sonae, says: "During this 3rd quarter, in which the business portfolio is now comparable to the same period of last year, we continued to grow at a healthy trend (4.8%) in aggregated terms, thanks to the positive contribution from all our main activities, particularly from our various retail businesses, which grew by 5.1%.
This performance was equally positive in terms of profitability, with aggregated EBITDA growing by 10% when compared with the same period of 2016, and at the same time strengthening competitive positions without compromising the quality of our value proposals as once again highlighted by the recognition in another DECO study showing we are the retailer offering the lowest prices in the Portuguese market.
In a quarter in which investment was kept at high levels, we continued to reinforce capital structure through lowered debt, increased maturity and improved financing conditions.”
2. GIVING BACK TO THE COMMUNITY
SUPPORT TO THE COMMUNITY
In the first nine months of 2017, Sonae maintained its commitment to the community and sustainability, supporting 1,150 institutions across the country, 75 more than in the same period last year. Sonae sought to create and distribute value, with contributions above €6.3 M in total, involving material goods, skills and financial and human resources. Sonae and its businesses implemented and developed projects in areas spanning from social solidarity, culture, health and sports, education and environmental awareness.
In the context of the serious fires that broke out during the Summer of 2017, Sonae banners came together to fight its impacts on the several local communities that were affected, providing support with donations and mobilising over one hundred employees for volunteering activities on the field which resulted in 1.650 hours.
DEVELOPMENT OF HUMAN RESOURCES AND CREATION OF OVER 3,000 JOBS
The economic and social value created by Sonae has translated, y.o.y., in the creation of over 3,000 jobs as of late September this 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.
Sonae continued its policies to attract talent and foster its culture and values, leading several Onboarding initiatives in which new employees are invited to spend a day dedicated to learning about Sonae history and values, about the common purpose of the Group and the commitment to its ethical legacy, as well as to developing their internal network. The Onboarding Day afternoon is dedicated to a Social Responsibility activity during which employees get to experience one of Sonae values on the field.
Furthermore, Sonae led yet another edition of the Contacto Programme, an initiative that offered over 50 young adults the opportunity to start their professional lives with paid internships at one of the Group’s several companies.
3. CONSOLIDATED ANALYSIS
During the first nine months of 2017 (9M17), Sonae grew across all its businesses, improving profitability and strengthened its multinational stance, expanding its activities abroad. From a statutory perspective, Sonae consolidated turnover totalled €4,115 M, growing 6.9% in comparison to 9M16, fuelled by the performance of all businesses: Sonae Retail, Sonae FS and Sonae IM.
Sonae underlying EBITDA reached €221 M, more €19 M (+9.6%) when compared to 9M16, benefitting from a positive contribution from retail businesses and financial services. Sonae underlying EBITDA margin increased 10 bps compared to 9M16, reaching 5.4%. In 3Q17, the underlying EBITDA reached €105 M, growing 10% y.o.y.. It should be noted that the equity method results reached €48 M in 9M17, which represents a 21.2% increase compared to the same period last year.
The strong operating performance across all businesses in the first nine months of 2017 had a positive effect in Sonae’s profitability indicators. Nonetheless, last year saw a positive impact of €56 M in non-recurrent items, benefiting mostly from capital gains related with the sale and leaseback transactions completed by Sonae RP in 2016, which limits comparability between periods. Accordingly, Sonae EBITDA rose to €273 M in 9M17, corresponding to a 6.6% EBITDA margin. On a quarterly basis, EBITDA grew 18.9%, or €21 M, when compared to 3Q16, reaching €130 M and corresponding to an EBITDA margin of 8.6% (1.0 pp above the same quarter last year). In 3Q17, Sonae direct results increased by 12.0% to €59 M, which led to an amount of €102 M in the whole of 9M17.
Sonae indirect results stood at €37 M in 9M17, increasing by €16 M y.o.y. as a result of the positive effect of the valuation of Sierra’s assets, as well as from a capital gain driven by the deconsolidation of MDS (already reported in 1H17).
Sonae net financial activity improved €8 M, reflecting a decrease in the cost of outstanding debt. The average interest rate of outstanding debt was 1.3% in 3Q17, a value that compares with 1.4% in 3Q16. It should be noted that Sonae financial results exclude Sonae Sierra and NOS businesses.
Total net income remained flat during 9M17 and grew one million during the quarter, to €64 M, translating an improvement in all operating and profitability indicators. Net income group share rose to €133 M in 9M17, as a result of sales growth across all businesses and improved operating profitability, along with the valuation of shopping centres and reduced funding costs thanks to a recognised strong capital structure in Sonae. Excluding the non-recurrent capital gains registered in 1Q16, mainly due to the already mentioned sale and lease back operations, Sonae’s net results would have been clearly positive.
Sonae remains focused on presenting a robust capital structure, optimising funding costs whilst maintaining sufficient back up liquidity and a long maturity profile. Sonae continued to fulfil its practice of being fully financed for the coming 18 months and at the same time improving its general funding conditions. As of 9M17, the average maturity profile remained close to 4 years. Net debt to invested capital also improved 210 bps compared to 9M16, to 36.7%. Sonae’s net debt benefitted from a €30 M decrease, totalling €1,217 M at the end of 9M17.
Total business investment amounted to €202 M in 9M17, representing about 4.9% of turnover. Investment was channelled to opening new units, launching and developing new businesses and boosting internationalisation and customer service, having reached €109 M in Sonae MC, €26 M in Worten, €27 M in Sonae Sports & Fashion, €28 M in Sonae RP, and €9 M in Sonae IM.