- In the fourth quarter of 2015, Eurocash Group, the leader in wholesale FMCG distribution in Poland, recorded PLN 5.04 billion in revenue from sales, up 13% from the same period in 2014. Consolidated sales grew by 20% last year, to PLN 20.32 billion.
- The strong sales growth was driven by the effects of the acquisitions of Service FMCG (carved out from Kolporter) and Inmedio in 2014 as well as improved sales in other key formats and further organic expansion.
- In Q4 2015, Eurocash launched 10 new Cash&Carry locations, bringing the total for the year in this format to 19 (187 at the end of 2015).
- Gross profit on sales was PLN 553 million in Q4 2015 (up 9% compared to the same period in 2014) and PLN 2 billion for the whole year, denoting 11% growth y/y.
- EBITDA for the fourth quarter of last year came close to PLN 185 million (+17% y/y), and PLN 476 million for the year (+15% y/y).
- Net operating cash flows reached PLN 147 million in Q4 2015 and PLN 978 million in the entire year, allowing Eurocash Group to reduce net debt to 0.37x EBITDA.
- Higher EBITDA and lower finance costs stemming from a debt reduction translated into 45% growth in Eurocash Group’s net profit in the fourth quarter of last year, to PLN 109 million. Consolidated net profit for 2015 was PLN 230 million, denoting 26% growth y/y.
- Net profit attributable to Eurocash’s shareholders was PLN 97 million in Q4 2015 (+34% y/y) and PLN 212 million in 2015 (+18%).
“Conditions on the FMCG market were more favourable towards the end of 2015 than in the earlier quarters, because the deflationary trend finally reversed. In the last quarter of 2015, inflation on food and non-alcoholic beverage prices was 0.1% y/y, although this small growth resulted largely from a low-base effect. In 2015, prices declined by 1.7% on average. Given the persisting pricing pressure and stiff competition, particularly from discount retailers, traditional retail continues to face substantial challenges,” said Jacek Owczarek, management board member and CFO at Eurocash.
“In these conditions, Eurocash Group managed to reinforce its market position and recorded a visible sales growth: over 13% in Q4 and close to 20% in all of 2015. This was largely driven by acquisitions made in 2014. In the past year, we sped up organic expansion in the Cash&Carry format. This was a record year for us in terms of the number of new wholesale locations opened – launching 10 Cash&Carry sites in the fourth quarter alone, and 19 sites in this format in all of 2015,” added Jacek Owczarek.
Thanks also to positive sales performance across other formats, particularly Eurocash Dystrybucja and Delikatesy Centrum, Eurocash Group’s sales were higher than in the previous year, also adjusted for revenue of the acquired entities (up by about 4% y/y).
Stronger sales translated into higher gross profit on sales in Q4 2015, reaching PLN 553 million, i.e. up 9% y/y, and PLN 2.02 billion for the whole year, denoting 11% growth from 2014.
Eurocash Group’s EBITDA for the last quarter of 2015 was close to PLN 185 million, up 17% from the same period of 2014. Despite a less favourable sales mix, i.e. higher share of cigarettes and tobacco products (after the acquisition of a part of Kolporter’s business), which carry lower margins, EBITDA margin in Q4 2015 grew to 3.66%, compared with 3.54% a year before. In 2015, consolidated EBITDA reached nearly PLN 476 million, denoting 15% growth y/y.
Q4 2015 was another quarter in which Eurocash Group recorded substantial positive cash flows from operating activities, reaching PLN 147 million (compared with PLN 51 million in Q4 2014), and PLN 978 million for the whole year (PLN 246 million in 2014).
“As mentioned on previous occasions, we continued to optimise inventory levels, and the cash freed up allowed us to further reduce debt. In effect, the Group’s net debt at the end of 2015 was low, at around 0.37x EBITDA, whereas a year before that it was double the EBITDA,” said Jacek Owczarek.
The stronger EBITDA, combined with lower finance costs resulting from lower debt, translated into a substantial improvement in net profitability. Consolidated net profit for the fourth quarter of 2015 was PLN 109 million, i.e. up 45% y/y, and PLN 230 million in all of 2015 (+26% y/y).
2015 was also a year in which Eurocash was strongly involved in supporting the competitiveness of the Group’s clients, mainly small and medium independent retail stores (operating independently or within franchise or partner networks). “We continued to successfully develop, among other things, the Faktoria Win concept, thanks to which this product category, in a format appealing to consumers, returned to independent stores from the so called traditional market. In 2015, we also organised a nationwide promotional campaign, MEGATURNIEJ, which covered nearly 10 000 independent stores, and featured the Shopping Master TV competition. We believe in the future of traditional retail in Poland and we intend to continue investing in it,” said Jacek Owczarek.
Aside from delivering effective solutions for gaining a competitive edge on local markets and improving store profitability, Eurocash also provides other forms of support. “The Skills Academy, which we are developing, trained about 3 500 store owners and employees last year. For gifted children of the employees of our franchisees, we have founded a special scholarship programme,” added the member of Eurocash Group’s management board.
Eurocash Group key financials:
