Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sendas Distribuidora SA (ASAI, Financial) hired over 2,000 new employees and gained 2 million new monthly customers in the second quarter.
- The company achieved a milestone of 79 million customers, an increase of 7 million compared to the previous year.
- Sendas Distribuidora SA (ASAI) reported a robust EBITDA growth of 18% compared to the previous year, with a margin of 7.2% pre-IFRS.
- The company is on track to surpass 300 stores by the end of the year, with significant store openings planned.
- Sendas Distribuidora SA (ASAI) has been recognized for its sustainability efforts and diversity, receiving multiple awards and recognitions.
Negative Points
- Consumers and B2B customers are pressured by debt and interest rates, impacting purchasing power.
- The company faces challenges with inflation and changes in consumer habits, affecting market conditions.
- High levels of leverage due to interest rates have resulted in significant financial expenses.
- The competitive environment remains challenging, with shifts in payment terms and installment sales impacting market dynamics.
- Same-store sales growth was slightly below expectations, with the second quarter performance not meeting initial projections.
Q & A Highlights
Q: Can you discuss the competitive environment and your perspective on payment installments and sales growth dynamics?
A: Belmiro De Figueiredo Gomes, CEO, explained that the market is shifting, and Assai has been a leader in introducing services in stores. The company is cautious about extending payment terms as it could lead to increased sales but also higher delinquency rates. The expansion plan remains on track with 15 stores expected in 2024 and 20 in 2025.
Q: How did same-store sales evolve throughout the quarter, and how are you addressing competition in payment terms?
A: Belmiro noted that while payment terms can increase sales, they also risk higher delinquency. The company focuses on maintaining competitive pricing and service levels. Vitor de Almeida, VP of Finance and IR, added that working capital dynamics are stabilizing, with a cash cycle of about five days.
Q: Given the recent inflation data, how do you see the food inflation dynamic affecting profitability and cash generation?
A: Belmiro stated that while there are monthly variations, the overall inflation is stable. The company is cautious about reducing margins as it may not lead to expected sales increases. They focus on maintaining competitive pricing and service levels.
Q: How are you managing leverage, and what are your targets for the end of next year?
A: Vitor de Almeida mentioned that the company aims to reduce leverage to about 2 times net debt-to-EBITDA in the midterm. By the end of this year, they expect leverage to be below 3.2 times. The focus remains on deleveraging rather than paying interest on equity.
Q: What is your strategy for differentiation and competitive advantage, particularly regarding seasonal opportunities?
A: Belmiro highlighted the importance of regional adaptation and service levels. The company is exploring opportunities for in-and-out items and seasonal promotions to attract customers and increase market share.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
