AmRest Holdings SE

My name is Lucia and I'll be your operator today. Ask a prepared remark or give an opportunity to ask questions. I'll now hand over to your host, Lisa Twitchell, to take it again. Please go ahead.

Good afternoon, ladies and gentlemen. My name is Piotr Watełko. I'm the director of the company and I'm the usual moderator of the call with on-race. Thank you Lugas.

Good afternoon and thank you for joining us today in SECOND QUARTET 2024 Canvas Results Presentation. It is my pleasure to share with you and updates of unrest situations at the end of the quarter. In this period, the major European economies have shown relatively weak economic growth and moderate increase in standard consumption, driven by the outage flow. However, with relevant differences across countries. As we are going to see later on, we had a very good performance in countries such as Spain and Poland, while business development in France and especially in Germany were negative. In addition, inflation pressure continues to moderate across the region, supporting a little margin expansion in most of our markets. But let's start with today's presentation if we go to the slide 2, please. As we usually do, let me remind you that Ambrose is Europe's leading restaurant operator with a portfolio of almost 2,200 restaurants in 22 countries across Europe, Middle East and China. We keep a balanced portfolio of franchise and proprietary brands that offers a wide range of consumption occasions. As a result, More than 30 million customers visit our restaurants every month, where they find a distinctive service provided by over 45,000 passionate and received. If we move now to slide 3, I'm going to try to summarize in 5 points the most relevant events for the first half of the year. This generated revenue of €1.2 billion in the first half of the year, with a growth of 5.2% compared to the same period in 2023. Second, the EBITDA generated amounted almost €194 million, of nearly 13% versus the same period of 2023. which puts the VISA margin at 15.7% over 1 percentage point higher than the same period of 2024. Third, the operating profit generated in the previous amounts to 23.5 million euros. After registering a value correction of 41 million euros in the goodwill of SushiShop, the total investment book reached 44 million. Fourth, the financial risk profile of the group is very stable, with a leverage of two times. This is at the lowest end of the target leverage range defined by the group. And finally, during the first half of the year, we opened 40 new restaurants and renovated 140 units. In the following slides, we will go into more detail on this point. Let's start with what we are doing in our different brands on the slide four. The commercial position of our brand plays a crucial role in the value generation of others. Let me start with a quick service and copy brand in this slide number four. Starbucks maintains its long, strong leadership position among coffee shop users. We have kept our strategy focused on customers' daily coffee addicts through coffee offers and everyday beverages. In KFC, since the beginning of the year, we have been delighting our customers by consistently offering totally new products as follows. Deluxe shakes with new flavors of bubblegum and popcorn, or pizza twisters, creating a culinary revolution is a delicious fusion of our icon KFC twisters and the worldwide love pizza. For Burger King, we are happy to inform that a new Burger King app is now working in Poland, Czech, and Romania. This gives our guests the opportunity to check current offers, find restaurants, and be able to use the special on-the-app user offers. During the following month, Additional app solutions will be formed as mobile ordering and loyalty products. Now, moving to the cash-landing brands in the United States. Regarding sushi shops, we already referred to the goodwill impairment group. Two reasons have triggered this new value correction. The first one, related to economic factors reflected in the increase in the discount rate used in the models. And the second is the construction in terms of our close expectations of the plans until profitability is fully restored. Commercial initiatives, as the new menu elaborated by the Spanish Chair, Albert Adria, for an unprecedented collaboration of the iconic video game character, Pac-Man, will help this route, complemented by a rigorous program of operational efficiency, commercial positioning, and the creation of synergies with the rest of the group. At Picturehut, we are cooperating with Darkshell Movie Premiere in Poland and Czech Republic. At La Tagliatella, following the demand and our goal to let everybody enjoy our dishes without the return of limitations, we have opened a new Tagliatella Stanza Brutine in Portugal. This is the second restaurant of this kind that shows our commitment with the Celiac audience and our objective of increasing our strength in this sector. And finally, at Blue Frog, we are providing to our workers with an unforgettable taste adventure. We have introduced our new quarter menu in May. Appetizers, snacks, and revolutionary grill products make a delicious blend of creativity and value for Blue Frogs. which has been a great success in mitigating the difficult consumption situation in China. If now we move to slide 6-3, as I mentioned, China generated a revenue of more than 1.2 billion in the first half of the year, which rose of over 5% compared to the same period in 2023. These growths were relevant in a context where consumer spending has been I think that the success has been to adapt in this moment to a very price sensitive and value-seeking cost. On the right-hand chart, you have evolution of the 12-month trading average revenue per score that continues the steady growth for the last three years now, providing a good indicator on both the health of our business and the level of exploitation of economies of scale through the sales leverage. Moving to slide 3, as can be seen in this slide, the group progress in digitalization is another factor that continues to support our activity merits, as sales through digital channels making up 57% of total sales during the quarter. In terms of consumption channels, dining consumption remains stable as the preferred alternative consumers, according to 45% of consumption locations. We see stability of the distribution channel breakdown during the last quarter. Now moving to slide 4. The beta generation stood at 194 million euros during the first half of the year. This is an increase of 13% compared to 2023. The beta margins reached almost 16%. This is over one percentage point higher than the same period of 2013. The main factors behind this margin exposure are lower cost pressures and the positive effects generated by the increase in the average sales progression. The continuous progress in efficiency and the achievement of clear strategic objectives aim at promoting optimization and saving initiatives throughout the group. The graph of the left shows the price evolution, according to the power of some of our main inputs. It is clear that the enormous cost-pressure experience in few quarters ago is now behind us, and our margin is benefiting from the rotation of new contracts. If we can go to slide 90, in terms of fluctuating profits, the generation amounted almost 20 million euros. representing a margin of 2% of the working impairment of 44 millions in the period. Let me share a few thoughts on this very important level of adjustment. More than 41 million corresponds to an extraordinary value adjustment of the goodwill associated with sushi shops. Therefore, it has no impact on the group's liquidity or cash generation capacity of the group. This remaining part is associated to restaurant impairments for the number of restaurants where impairments are reversed, 41. So, guys, the news is impaired for a restaurant. Let me straight this idea. This number of quarter-restaurants impaired is less than half of the last year number, which is 89. I think this is due to the evolution of the quality of the portfolio of resources. For this reason, I consider that it is also very important to look at the results generated in our ordinary operating business, excluding the extraordinary things. This adjusted operating profit, excluding issues of impairment that you can find in the draft shows a generation of 65 million during the first half of the year, and a margin of more than 5% with an expansion of 1.1% since last year. In other words, a clear sign of the strength of our country. Moving to slide 10, you can see that Ambrose operates directly or via franchisees a port-a-pollo of 2,177 vessels. This port-a-pollo has undergone structural changes during the last years. In order to provide a better and more efficient capital allocations, which resulted in the transfer of closure of underperforming businesses. We have listed the most relevant transfer of businesses performed and their EBITDA contribution. As I explained, currently we are negotiating the transfer of an additional business unit that comprises the 123 sub-franchise EBITDA hot restaurants of the French market and the equity that we operate. In addition, you can see that the growth of the restaurant company during the previous four years. With this, Santi, you can cover the next financial targets here. Many thanks, Eduardo, and good afternoon, everyone. Always, it's my pleasure to have the opportunity to address you on our quarterly results presentation. I would like to present a few ideas before starting. the results that we present today have a different taste. On one side, as Eduardo has explained, the ordinary course of our business has been very positive despite the very challenging situation in some of our markets and some of our brands. This fact, precisely, highlights the distinctive advantage of the diversification of our business model. Second, margin expansion is still to be in flow. On this level, innumerable amounts of revenue and e-vita continue to be our dynamic. Behind this growth, there is a huge work in terms of digitalization, data analytics, marketing statistics, and so on, that allow us to be close to our customers and serve efficiently to millions of guests across 22 countries every day. The latter part, of course, is part of the deterioration of the company's history in sushi shops' goodwill. A lot of things have affected the brand of this last work. The situation in the French market that is very challenging and that we have talked on several occasions. Also, the impact of the salmon prices, the transformation of the weekly business and marketing. However, I think that it is important to stress but the value correction resistance is mainly due to a revision on the growth expected for this round, which is conditional on an improvement in profitability. But by the way, this is a very big impact, so this trend should consolidate. As we have underlined, this adjustment has no impact on liquidity or on the cash flow generation capacity of the group. Andres is a well-diversified company with many brands in many countries, and we don't see any reason for changing the full-year guidance that we share at the beginning of the year. The weakness that we are experiencing in the French or European markets has been compensated by the excellent performance in other markets. Now, let's back to the presentation. On slide 12, we have the main financial issues of the half year, which I think all of us have already covered, so let me zoom in on the figures for the quarter on slide 13. During the second quarter of the year, revenue amounted to almost $639 million. This is 5% higher than in the same period of 2023. with the same store sales level of 100 versus last year. In this regard, the most accurate information, or the middle of all, points to a level of 101. These are accurate numbers that include excellent performances in some markets as Poland and Spain, but important contractions in other relevant markets as France and Germany. it has enough talent to have to repopulate a new record in revenue generation from the growth. The ETH generated was almost 113 million euros. It is also a new record in nominal terms, with a year-on-year growth of 11%, which puts the ETH margin at a very decent of almost 18% level, which is over 1% higher than one year earlier. In terms of operating profit, EBIT, we generated 4.9 million euros due to the value correction already explained. This represents an EBIT margin of almost 1%. Finally, the capital cut at 47 million euros. which is almost 40% higher than one year ago. In this regard, let me remind you that we expect a more linear allocation during the year of investment and new restaurant openings than on previous occasions. Moving to slide 14, you can find the total sales and sales index evolution. The upward trend in terms of value generation continues with the 5% growth in nominal terms, which I referred before. Again, you need to understand that these aggregated numbers include growth in many markets, as 16% in the case of Poland, 7% in the case of Spain, that declined of 9% in the case of Germany, or 2% in the case of France. In slide 15, we have plot the quarterly EBITDA evolution. For more than 130 million euros were generated with a growth in nominal terms of 0.1%. This figure, once again, is a new record that is very important in the recovery in profitability with a margin expansion of 1% each month. In terms of operating profit, the figure decreases at almost 5 million euros. Moving to slide 16, the adjusted or reasonable printing profit hits at 46 million euros. This is 25% more than a year ago, and represents a margin of more than 70%. As we have regulated, This adjustment of the theoretical value of good value has no impact on the growth of the income cash flow generation, which, however, due to seasonal factors of the business cycle and payment terms, should increase in the coming quarter. On slide 73, I would like to point out a few things. We have a mid-increase of 80 equity restaurants during the last year. In the last 12 months, we have increased our equity portfolio in 80 restaurants. In terms of percentage, the number has been flat due to the decrease of we experience in the French market. Second, the 5% increase in revenue, which was last semester, We consider that it is a good performance, given the extremely challenging commercial conditions that we are having. And of course, this is a huge advantage that we are seeing that we are doing in most of the markets. If we move now to the slide 18, you can find your change changes in the restaurant portfolio. Just to recap, the book has a net growth of 8 restaurants within the quarter, with 22 new openings and the closure of 15 units. With this, at the end of the quarter, the company cooperated a portfolio of 2,127 restaurants. Moving on to slide 183, here we have the cash-compact evolution. The group's gross financial debt was slightly reduced to €609 million after €12 million repayment during the last quarter. The risk profile has not changed much and the leverage remains at the low end of our target, at least 2%. In terms of liquidity, we keep a cautious level of almost €137 million at the end of the quarter. This implies a decrease of €31 million during a period that is full of accelerated investments. This level of liquidity, together with additional liquidity lines and cash fatalities for more than €255 million, we consider is a prudent but efficient level according with the group's needs. In the slide 20, you can find our financial debt structure and maturity profile. Basically, no changes were received in the previous quarter. More than 90% of the carbon financial debt is long-term debt. Going into the slide 21, you can find the fixed amount of revenue and the number of restaurants that we have in each department. This department comprises businesses in 22 countries where we observe daily experience, commercial dynamics, and business experience during the presentation. In slide 22, as usual, we start with Central and Eastern Europe. And one more relevant vision from business activities that we present 58% of business revenues. Revenues generated during the quarter in Africa reached €369 million, an increase of more than 10% over the previous year. Highlight the excellent performance of the Polish market, where revenues increased by almost 16%. Moving into profitability, the ETH generated during the quarter amounted 74 million euros, representing a margin of 20% and an 8% increase year-on-year. The restaurant portfolio amounted 1,169 units, following the opening of five restaurants and the closure of one during the quarter. Community companies for the year amounted 17 and closer Let's continue now, in slide 23, with Western Europe, where what is held in the freedom amounts to 224 million euros. This is flat compared to 2023. This development hides its significant divergence in the evolution shown by different hands. While sales in Spain grew at a rate of more than 7%, Germany released a decline of 9% from France's almost 2% contraction. Nonetheless, the EBITDA in the region reached almost 37 million euros, representing a margin of more than 16% and a growth of also 16%. The restaurant Portugio closed the period with 903 units after the opening of 14 restaurants and the closure of 8. In communes at this time, cities of town were open during the first six months of the year and 14 units were closed. 8% in town. If we move now to the slides for the 24th, most of the platforms in China were closed during the quarter declined by 6% in Europe. To a total figure of 25 million euros. However, the decline in sales in the current currency bears forfeiture. The macroeconomic situation and the global downtime and contraction explain this decline in business generation. However, I would like to remark the recovery and activity of the year across. Behind this, it is the commercial management carryover, the loop of teams that is adapting well to this complicated environment. which have resulted in a significant expansion of margin and growth in each of the generations. Each of the generations was worth almost 6 million euros, representing a margin of 24% compared to less than 2.1% one year ago. Finally, the number of customers managed to close up in the region, and the end of the quarter were 56 units. following the opening of three restaurants and the closure of five. During the first half of the year, we have opened five restaurants in the region and closed seven. From Registro Barro, thank you. Thank you, Santi. And with this, we are open to any questions that you may have.