CONSUMER STAPLES
Positives; RE metrics look firm on declining vacancy rates and edging in valuation gains and for longs basis remains well negative (4Y -110bps). We have no firm view noting this mornings approach to reporting results. Re. next catalyst; market share data is released monthly but co reports half yearly (FY generally late Feb to Early March). New ITM Enterprises has moved to Z+305 some similar dynamics there (low margin with RE holding etc.) but less clarity on reporting (our view). Casino, for the speculators, has a single 27s PIK as well.
Financials;
- Revenue at €15.7b (constant currency -0.1% and reported -1.2%), gross profit margin at 26.6% (-70bps).
- Within the headline retail was €15.4b (-0.2%) and Property €323m (+5.5%).
- EBITDA was €339m (-38%) at a margin of 2.2% (-130bps). Auchan retail was €166m (-53%) and RE was €178m (-4.2%).
- EBIT was a loss of -€745m worse than the -€83m loss it had last year. Reason for the larger D&A is €495m its classified as "other operating income and expenses" including €350m in impairment of goodwill and assets (NOT in Russia/Ukraine) and €47m related to dispute in the property side.
- Interest cost was €107m up from €86m tied to the net financial debt increase of €437m (+13%yoy).
- Cash flow gets worse (even if we exclude the 1H seasonality in working capital). Cash flow from operations was €272m (-43%) - reminder this is ex. all the hefty non-cash amortisation charges above. Interest cost and taxes is leaving it nearly breakeven. WC swing in line with last year (-€862m). Below that another -€931m in investing activities and offset slightly with +€421m from financing activities (€300m shareholder capital increase). It left cash use at -€1.3b (-30%yoy).
- Net debt totals €1.2b under retail arm and €3.3b under the RE to total €4.5b; increase as expected on the acquisition of Casino store in France and Dia stores in Portugal.
Segment asides;
- LFL France (50% of sales) down -4.7% which it says is " in the face of competition that is currently better positioned in terms of prices and (more compact) formats". It's pricing was not bad at -0.6% but looks like that cost it on volumes that were -3.9%. Hypermarkets were -5.2% vs. Supermarkets -1.6% and is costing it.
- Western Europe (21%) was -1.2%, Central & East Europe (26%) -1.9% and Africa (1%) +0.5%. It said across ex. France regions most of the drag was from volumes (-2.8%) vs. pricing (+1.5%).
- On the Real-Estate; rental income was €323m (+5.5%), mainly helped by indexation. Foot fall was +4.8%, vacancy rates down 50bps to 5.5%. FV of assets at €7.2b (+0.2%). Net debt under it was €3.3b leaving LTV at 39.6% (unch from last qtr).
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