Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales grew by 4% in local currency, aligning with the company's guidance.
- Foodservice distribution (FSD) operations saw a significant 16% growth, continuing a double-digit growth trend.
- Digital sales increased by 43%, with 8,000 new subscribers for digital solutions.
- The company successfully completed nine network transformation projects, enhancing delivery capacity.
- Positive free cash flow of EUR239 million was achieved, driven by improved net working capital.
Negative Points
- Adjusted EBITDA in Q3 remained roughly at the previous year's level, indicating limited growth.
- Germany's sales decreased by 2%, impacted by a delayed season start and deflationary environment.
- Segment West saw a slight sales decrease of around 1%, with negative effects from a delayed season start in France.
- Net debt stands at around EUR3.3 billion, a slight increase from the previous year.
- Earnings per share for the first nine months were negative, and the company expects to break even or slightly positive by year-end, impacting dividend payouts.
Q & A Highlights
Q: Can you provide more details on which FSD channels (fine dining, casual, organized) you plan to grow, and whether this will be through M&A or organic growth?
A: We plan to grow all three segments. For casual dining, growth will be organic, leveraging existing assortments and infrastructure. For fine dining and organized segments, growth will be a mix of organic and opportunistic M&A, with about 80% organic and 20% through acquisitions.
Q: How do you plan to close the gap to your 2030 free cash flow target of EUR600 million?
A: We will continue executing our sCore strategy, focusing on productivity gains and cost optimization. This includes simplifying assortments, improving admin productivity, and optimizing financial processes. We are confident in reaching our EUR600 million-plus free cash flow target by 2030.
Q: Will the focus be more on productivity gains or gross margin increases to achieve your financial targets?
A: The focus will be more on productivity gains, although we are also working on improving gross margins through common sourcing and private branded items. Optimizing net working capital and inventory management will also contribute to margin improvements.
Q: Given the small net profit in Q3 and your EPS guidance for the full year, what do you expect for the final quarter and the possibility of a dividend payout?
A: We expect a positive development in the fourth quarter, aiming to end the year around zero EPS. According to our dividend policy, we will not pay a dividend if EPS is zero or negative.
Q: Why not close any underperforming stores in Germany given the long period of underperformance?
A: All stores in Germany are contributing positively. We are optimizing the business model, especially in non-food sections, and improving productivity. The transformation is ongoing, and we are progressing towards a true wholesale business model. This is a long-term effort, not a quick fix.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
