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Although Sonae posted lower net income in 9m-23 owing to higher funding costs and tax expenses coupled with an increase in depreciation due to the investment in the expansion and digitalization of its businesses, the company once again demonstrated the resilience of its business model. The Portuguese HoldCo reported a 7% yoy improvement in consolidated EBITDA, with the underlying EBITDA margin up by 20bps. In terms of NAV, too, Sonae was in the green, with an increase of 4% qoq to €4.4bn.
Sonae SGPS Sonae SGPS SA
While Sonae recorded a fall in net income in H1 23, due to higher financing costs, tax charges and increased impairment, as a result of investment in the expansion and digitalisation of its activities, Sonae demonstrated the resilience of its business model with an expanding EBITDA margin. The challenging environment had no impact on the valuation of its businesses, with NAV growth of 4% qoq.
Sonae posted a good set of H1 23 results in terms of operating performance, demonstrating once again the resilience of its business model.
Sonae started the year on the right foot in terms of NAV (+2.6% qoq), top-line growth (+12% yoy) and profitability (fairly stable EBITDA margin) amidst lingering inflationary trends, and increasing interest rates. The story was not all rosy, however, when it came to net income (group share), which fell by 38.3% to €26m on the back of higher depreciation, taxes, financial costs and inflation.
Despite a 28% increase in headline net profit Sonae, owner of Portugal’s largest food retailer, was adversely hit by supply chain disruption, inflation and rising interest rates in 2022. Margin compression in an inflationary environment with soaring energy prices led to a 17% fall in Sonae’s underlying net profit, a decline that was more than offset by €142m of one-off capital gains. The outlook for the coming years remains bleak on the back of high inflation coupled with a projected decline in consumption.
Over 9m 22, Sonae demonstrated resilience in the increasingly-challenging environment of rising energy costs and interest rates. However, the first signs of fragility were felt in Q3, as evidenced by the decline in margins, which were under pressure from inflation. Fortunately, the Portuguese HoldCo can boast of a 3% increase in NAV in Q3 to €4bn, which should somewhat reassure investors.
