Sonae, SGPS, S.A.

Good afternoon. We welcome you to SENAI's nine-month 2023 results conference call. During the presentation hosted by Mr. Joao Delores, SENAI's CFO, all participants will be on a listen-only mode. There will be an opportunity for Q&A at the end of the presentation. If you wish to ask a question during the Q&A session, you may do so by pressing the star key followed by one on your telephone keypad. If you're experiencing any difficulty in listening to the conference at any time, please make sure you have your headset fully plugged in, or alternatively, please try calling from a different device. I now hand the conference over to Mr. Joao Delores. Please go ahead, sir.

Hi, everyone. Good afternoon. Welcome to SONAI's results conference call for the first nine months of 2023. Besides myself and the investor relations team, we have on the call Cristiano Nuvaez from BrightPixel, Fernando Wanzler from MC, Luiz Mota Duarte from Sierra, and Paulo Simões from Vorken. As you know, the third quarter of the year has continued to be marked by a challenging macroeconomic environment and persistent geopolitical tensions. Nevertheless, the Portuguese economy continued to be quite resilient. The inflation rate remained high, although in a downward trend, both in the Eurozone and in Portugal. Despite some financial pressure on companies and households, the labour market remained quite resilient, with the unemployment rate decreasing even further and closing the quarter at 6.1%, the lowest level in the past two decades. The Portuguese economy continued to grow, although at a lower pace, but still reaching 1.9% growth, significantly above the EU average of 0.1%. As you know, a significant part of our activity and underlying value creation is related with portfolio management. And in 2023, we have executed a number of important milestones in terms of capital allocations. During the first half of the year, we acquired the remaining 10% stake in Sierra at the 10% discount to NAB and now hold 100% of the company. Universo reached an agreement with Banco Inter Consumer Finance to create a leading consumer credit operator in Portugal. Completion is awaiting regulatory approval from the Bank of Portugal, but we expect it to close the transaction before the year ends. MC reached an agreement for the combination of Hernal and Druni in Spain, resulting in the leading health, wellness, and beauty player in Iberia, with completion expected also in the coming weeks after the approval of the Spanish competition authority. Bright Pixel, our corporate venturing arm, made six new minority investments and currently has over 40 companies in its portfolio, including three unicorn companies. In Q3, SONICOM acquired SONI's direct stake in NOF, 11.3% stake in the company for €213 million, reaching 37.37% of the total share capital in the company. And already in October, we concluded the sale of our stake in ISRG, resulting in €300 million of cash proceeds and a capital gain of 168 million euros that will impact Q4 results. Within our portfolio management activity, we launched Sparkfood, our investment platform dedicated to innovative companies in the food tech space, with a focus on the development of sustainable and healthy solutions. It's a space we have been analyzing over the past three years, having made our first investment back in 2021. And recently, we have committed more capital to widen the portfolio to a few additional exciting companies. Sparkfood is exploring investments in two main business platforms. The alternatives platform, which aims to be a European supplier of next generation alternatives to animal proteins, namely plant-based foods. and also the ingredients platform whose goal is to be a global provider of natural ingredients for health and wellness, food systems, and annual nutrition. In parallel and directly linked to these two platforms, Spark Food launched Ventures, an area dedicated to invest in scale-ups that will fuel innovation in both core platforms across different areas. By the end of the first nine months of 2023, Spark's portfolio included five investments and more than 110 million euros of capital invested. Two investments in the alternatives platform, one in the ingredients platform, and two in the ventures side of the business unit. So, regarding operational performance of our businesses in Q3 and starting with retail, I would like to point out that during the first nine months of 23, MC had a very positive operational and financial performance in a quite challenging macroeconomic and competitive environment. Top line grew 9.6% year-on-year in Q3, with a like-for-like of 8.7%. This was fueled by both grocery and non-grocery formats, as the company surpassed 4.8 billion euros in sales in the first nine months of the year, with a total growth of 12%, and 10.4% like-for-like increase. This enabled MC to retain its leadership position in the food retail market in Portugal. Continuance had another positive quarter on the back of very effective decisions regarding assortment, pricing, and promotions, underpinned by a unique customer data set. At the same time, we continued to ensure a state-of-the-art store network through targeted refurbishments and new openings. In the first nine months of the year, MC opened six proximity stores and two large supermarkets in the country. The health and wellness and beauty banners maintain their strong growth profiles both in Portugal and Spain as we look forward to partnering with Bruni and scale this business in Iberia. Regarding profitability, the top-line performance together with the decrease in energy costs and the ongoing operational efficiency measures enabled MC to offset the pressure of trading down movements and price investment initiatives, leading underlying EVTA to reach 179 million euros in Q3, an increase of 21 million euros year-on-year, or 14%, with a margin of 10.2%, and a total of 458 million euros in the first nine months of the year, representing a margin of 9.5%. CapEx stood at almost 200 million euros in the first nine months of the year, but still the company was able to generate 113 million euros in free cash flow, an increase of 11% versus 2022. Moving on to Wharton. Wharton also had a positive quarter, being able to outperform the market and reinforce its leadership position in Portugal, with market share gains both offline and online. In Q3, the company posted a 2.5% year-on-year growth to €323 million and 5.2% in the first nine months of the year, reaching €880 million. If we include marketplace sales, total GMV reached €923 million year-to-date, a 6.5% increase versus 2022, with new categories in the marketplace showing a much stronger growth level.

I'm sorry, Mr. Delores' line has disconnected. Please stand by for a moment while we reconnect.