CONSUMER STAPLES: Elo/Auchan; FY earnings results leaks (x3)

Heavy cautioning that this is all based on leaks and our interpretation of La Lettre wording and is translated. No press release from company or email communication. The key points mentioned;

• 'Parent company Elo ends the year with a €1 billion net loss'
  • 1H was -€981m and implies 2H was milder -€19m (+88%yoy)
     
• 'operating result for Auchan Retail is -€140m'
  • So we assume it is referring to the adj. EBIT ("operating income from continuing operations"). Auchan retail means only the grocery operations/excluding RE.
  • 1H was -€320m (-250% yoy) so this implies +€180m in 2H (-40%yoy).
     
• 'Auchan is struggling, especially in France, where it posted an operating loss of €230 million in 2024.'
  • it generally does not break out EBIT for France (only EBITDA).
  • Makes us tad concerned paper is referring to EBITDA in the earlier remark not EBIT.
  • If it was referring to -€140m EBITDA for retail then it is more disappointing -€306m in 2H EBITDA (-139%yoy).
     
• [parent company] 4% drop in revenue to €32.3 billion.
  • Reported revenue was flat in 1H but LFL -3%. Reports say the -4% is in reference to LFL growth (i.e. ex. acquired stores). The number of €32.2b is net -1.8% vs. FY23 reported revenue so we are biased to read -4% as LFL growth.
  • If this refers to FY LFL -4% then it is no surprise; it has had weak market share trends and Carrefour has reported similar trends on falling volumes - even as it made small market share gains (Carrefour LFL Q3-3%, Q4-2%).
     
• 'However, its real estate arm (New Immo Holding) remains profitable'
  • We would expect this with no reported signs of weakness in RE metrics. 1H adj. EBIT was +€72m (-5.3%yoy).
     
• 'Its banking unit, Oney, breaks even'
  • small -€17m loss in 1H for the 50% it owns
     
• 'Sales are declining, especially in non-food (-10%) and food (-3.4%)'
• 'Auchan’s acquisition of 95 Casino stores exceeded revenue expectations but underperformed in profitability'
• 'To counter losses, the company is slashing costs and selling assets, including a 47% stake in its Hungarian subsidiary.'
  • Hungary sale was announced in early Dec for an undisclosed amount, co said it was for cash and would move pro-forma leverage down (it reports most debt under RE arm, so moving pro-forma grocer leverage down is not hard). It was often flagging operating headwinds in Hungary.
  • Job cuts were announced in early Nov.
     
• 'With shareholders unwilling to reinvest and borrowing costs high (9% interest rates), Auchan faces another tough year ahead, with no positive results expected for 2025'
  • The shareholders unwilling to invest is a slight negative. Unlike Casino, they have supported the company recently injecting €100m in '23 and €300m in 1H24.