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Research Tree provides access to ongoing research coverage, media content and regulatory news on COLRUYT SA. We currently have 2 research reports from 1 professional analysts.
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Persistent stunted growth in sales
21 Dec 16
Colruyt’s H1 sales progressed by only 2.6% yoy to reach €4,655m. The Retail and Wholesale division maintained steady sales growth compared to last year (4.1% and 2.9%, respectively) but the Filling stations and other activities showed a 15.6% decline in H1 revenues. The EBITDA margin was almost stable at 8.0% but EBIT lost 20bp to 5.5% due to the underperforming Corporate business. The Belgium retailer still enjoys a strong cash situation despite a higher capex and the increase in WCR. We note, also, the ballooning pension deficit, coming in at €167.2m vs. €83.8m recorded at the end of March 2016.
Tougher year ahead
17 Jul 15
In a challenging Belgian grocery market, Colruyt released revenues up 3% to €8.9bn. Due to the pressure on sales prices, volume growth was not fully reflected in revenue growth. Price pressure was brought about by price deflation, competition and the consumer trend towards cheaper products. The group continued to invest in employees, processes and efficiency gains. These investments and the fact that higher sales volumes were not entirely reflected in revenue growth, caused net operating expenses to rise slightly more than revenue. With the gross margin being in line with the prior year's level, the EBITDA margin remained stable at 7.9% of revenue. On 19 June 2015, Colruyt signed a settlement with the Investigation Service of the Belgian Competition Authority in relation to the period 2002-07. By doing this, Colruyt Group accepts that infringements of the Belgian competition rules were committed in the period 2002-07. However, the group assures that it did not set up a price-fixing scheme with other distributors and suppliers. Colruyt Group wants to refrain from engaging in years of legal wrangling with the government over the substance of the case and over facts that date back more than ten years. It has therefore decided to sign the Investigation Service’s settlement and pay a fine of €36.1m.
Retail sales still in trouble
17 Mar 17
Excluding fuel, Sainsbury’s Q4 retail sales were down on a lfl basis vs. a 0.1% uptick over the Q3. Following this disappointing quarter, FY 2016/17 retail revenues declined by 0.6% on a lfl basis. Including fuel, this came in at 0.2%. Argos’s sales delivered strong 4.3% lfl growth. Together, Sainsbury’s and Argos’s lfl sales were by up 0.3%. Sainsbury continues to lag behind Morrisons, the latter’s sales impressed with 2.5% lfl growth over the last quarter and 1.7% over the whole year. Regarding the outlook, management remains cautious about the highly competitive market and the cost price pressure impact.
Turnaround plan starts lifting profitability
10 Mar 17
Morrisons announced FY 16/17 sales at £16,317m, slightly higher than our expectations. Margins rose leading to a £305m net result, i.e. a net margin of 1.8% vs. 1.3%, a year ago. Morrisons succeeded in reducing its net debt despite a stronger capex, mainly thanks to improving cash flows from operations. The proposed dividend is about 5.43p per share vs. 5p a year ago (5.16p in our model). Regarding the outlook, Morrisons reiterated caution about Brexit’s impact on depreciation and pension costs (£272m surplus in the wake of the triennial valuation). Management remains confident of a £50-100m incremental profit as a medium-term target (vs. £18m this year) thanks to further cost savings (beyond £1bn) and the strong broader business (Ocado and Amazon). Net debt should continue to fall (less than £1bn by the end of 2017/18) due to improving working capital control.
Still positive but lower growth pace
03 Nov 16
Sales (excluding fuel) increased on a lfl basis for the fourth consecutive quarter. Fuel inflation prices led to a lfl sales rise of 3.4%. However, the smaller store portfolio following the disposal of M Local (140 stores) affected its total sales, capping the rise to just 1.1%. A strong Halloween period, when revenues soared by 20% yoy, has lifted Morrisons’ Q3 results. The online business contributed 0.9% lfl.
More convincing on its home turf
19 Oct 16
Q3 16 sales including VAT came in at €21,781m, leading the total sales from the beginning of the year to €62.33bn. Q3 revenues progressed by 3.2% on a lfl basis driven by accelerated growth on its home turf (1.2%) and resilient business in Brazil (12.4%). In France, the supermarkets and convenience stores are the main growth drivers. In China, struggling operations witnessed a continuous fall in sales of 7.8% on a lfl basis. Carrefour faces also a difficult time in Poland where sales were slightly down.
Lower than expected margin
24 Oct 16
Jeronimo Martins released strong Q3 sales growth leading to a 5.5% rise over the last nine months. Total sales reached €10,738m and EBITDA stood at €626,9m, i.e. an EBITDA margin at 5.8%, flat compared to 2015. The 9M net result came in at €501.6m, including gains from the Monterroio disposal for €224m. Adjusted net profit amounted to €266m, 5.6% yoy, boosted by a lower cost of debt. Biedronka remains the main driver for both the group’s top-line and profitability which offset a slight decrease in the Polish business margin (10bp). The underperformance of Ara and Hebe is more pronounced this year due to Ara’s network expansion (expected to be above 2015’s level). Despite the substantial capex, JM continues to enjoy a solid balance sheet with a lower debt burden (reaching €326m vs. €658m in 2015).
Sales slowdown in France and currency gains in Brazil
13 Oct 16
Q3 sales progressed by 6.7% yoy to €10,425m, mainly driven by the LatAm retail business accounting for 37.14% of group sales (vs. 35.1% in Q2 16 and 30.0% in Q3 15). Casino derives 45.7% of its sales from its domestic market where growth slowed due to an underperforming non-food business hit by unfavourable weather conditions and the decline in tourist activity in Paris. The transfer of stores to franchisees and the closure of loss-making ones have remarkedly pulled down Leader Price, Franprix and Convenience’s total sales. Casino’s e-commerce business was hammered by Cnova Brazil (negative sales momentum for non-food products) while Cdiscount France is delivering strong results (+5.6% net sales growth).