Sonae, SGPS, S.A.

Good afternoon, ladies and gentlemen. Welcome to SONE's 2024 results presentation. Our host today is Mr. João Dolores, SONE's CFO. This conference starts with a presentation followed by Q&A. And I'll pass the call on to Mr. Dolores. You may start, sir.

Thank you very much for the introduction. Good afternoon, everyone. Thank you for joining us for SONAI's 2024 results presentation. I'm very happy to have you here with us today. As you will see, we had great results last year. Together with me, as usual, and besides the Investor Relations team, I have Cristina Novaes on my left, Miguel Moreira as well, Fernando Vanzalera on my right-hand side, and Paul Simoes. Today we're trying out a new format, a video one. I hope it works well and that it helps also in conveying the main messages that we have to convey to you. So I'll start with briefly recalling the significant moves in our portfolio during 2024. As you know, it was a quite intense year in terms of investments. We invested over 1.1 billion euros in M&A efforts. And there are two transactions in particular, which I would like to highlight given the importance that they have for the group. So in March, as you know, we successfully built a leading position, a majority position in Musti, a reference pet care retailer in the Nordics through a public tender offer. So I currently own just over 80% of the company and we see Musti as promising platform for growth in the European pet care landscape. Last November, Musti extended its presence to new geographies, to the Baltics, by acquiring Pet City, a player that operates in all three Baltic countries. In July, we concluded the merger of Arenal with Druni under MC, thus establishing the leading health and wellness and beauty player in Iberia. And this is also a platform where we see great potential for continued growth on the back of a very, very strong year of 2024. All the acquisitions, the major acquisitions that we did last year are important stepping stones for growth, and they've all been done together with good, solid management teams that remain alongside us in the management of these companies. That is true for Druni, it's true for Musti, and it's also true for BCF, the largest acquisition done under Sparkfood in 2024. I will share a bit more information about the financials and the performance of these companies as I go along. So if you look at our portfolio right now, we believe we strengthened the portfolio in a number of areas. We have enlarged our presence in the retail sector. We have expanded our geographical reach, positioning ourselves for growth. And we strongly believe that these new opportunities can be captured in the months to come and we can help these companies accelerate their growth potential. Most of our companies are leading companies in their respective sectors, and in the sectors where we are not leaders, we have a clear path to achieve leadership. I would also like to highlight the transaction which was already completed in 2025, which was the acquisition by Nosh of Clarinet Portugal, a very important transaction, an investment of over 150 million euros to better position Nosh in the ICT space, in terms of services for B2B customers. So Nosh wants to position itself more and more as a digital partner for Portuguese companies, and this acquisition is going to be instrumental in that regard. I will now go into each one of the businesses, starting as usual with MC. MC had a fantastic year in 2024, as you can see. It continued to increase its market leadership position in food retail in the country. We enhanced our market share by 50 basis points, thus increasing the gap versus number two in the country. We grew in total more than 7% to 6.5 billion euros in the grocery segment, with a like-for-like of 4.4%, and a stable EBITDA margin versus 2023. If you look at the other segment, the other big segment that composes the Portugal.mc Health and Wellness and Beauty, We more than doubled the size of the business there, obviously with a contribution from Druni's acquisition. But even without that contribution, the business had a like-for-like growth of 10%, with very strong performances from both Wells and Adenal during the year, and with an enhanced EBITDA margin of 12.5%, also benefiting from the integration of Druni's results in the latter half of the year. If you look at consolidated figures for MC, MC reached record level turnover, so going by 15% to 7.6 billion, and the total of the TA margin went up from 9.7% to 10% in the year. In terms of balance sheets, the company continued to enhance its financial position. And if you look at the pro forma consolidation of Duni's numbers into our accounts, this means a decrease in net debt to VTA of 2.8 times, from 2.8 times to 2.7 times. Moving on to Vorten. Vorten also had a very positive year in terms of growth. So total growth of 8% to 1.4 billion euros. Slightly above that, if you consider total GMV, which includes the sales done by the sellers on our marketplace. 4.2% like-for-like growth with a very strong performance, not only in the core electronics business, but also in extended ranges that we have in the marketplace and also in the services business units. And so we continue to have a very strong momentum in all areas of Vorten's offering. And that means that we increased also our market share in Portugal, both offline and online in the core electronics segment. Small notes to ICE services, which continue to expand its presence internationally. And so it continued to grow in Portugal, but also expanding its presence in Spain, France and Belgium with a quite distinctive concept, which we believe can have further potential to grow outside of the country. In terms of total profitability, the margin was a bit pressured by increased costs and also gross margin erosion. But still, the team was able to almost compensate that fully with efficiency measures, and we were able to maintain the TA margin at a healthy level of 5.6%. Regarding most team. The numbers I'm showing here are for Q4, as Musti had to close the year with a 15-month period to align with our financial calendar. I would say that Musti's performance throughout the year was improving, so a bit of a hard couple of quarters in Q2 and Q3, with a challenging macroeconomic backdrop in the Nordics, putting some strain and some pressure on private consumption. But already in Q4, we saw improvements in terms of like-for-like growth, but also in terms of total growth. In the quarter, the company actually grew 5.6% to 122 million euros. And throughout the year, the company continued to improve its market share in all its key geographies. And so it was a tough backdrop in the market. But in Finland, in Sweden and in Norway, we continue to increase our market share, which is obviously quite important for us to make sure that we maintain our leading positions in these geographies and are better prepared to seize market growth when it resumes. And we feel that happening already going into 2025. In terms of profitability, the margin was a bit pressured, came down to 14.1%. But the economic outlook and consumer confidence that we are seeing right now in the Nordics are improving, driven by lower interest rates and also increased purchasing power. And most of these fundamentals remain quite strong. So we believe the company is well positioned to capitalize on this economic recovery and, again, the return of the pet care market to its long-term growth trajectory. Sierra. Our real estate business had a very strong momentum in its core shopping center operations, both in Europe and in Brazil. In Europe, our tenant sales reached 3.5 billion euros, increasing 5.3% year on year. So a very strong display in terms of footfall, in terms of sales from our tenants, and so with a very positive impact in our EBITDA and our direct results. Our shopping centers in Europe continue with practically full occupancy, which is a good sign of the quality of the assets. And if you look at total net results, we increased that by 9.8% to 97 million euros here, also with the contribution from revaluations of assets in the portfolio. This improved net results was the main driver for the increase in NEV, which grew by 4.5%. And our total assets under management increased also to 6.8 billion euros with a very strong weight of shopping centers, but already with a higher diversification in terms of real estate uses. As today, a quarter of our assets under management are already in alternative real estate segments. If you look at our LTV, it remains practically flat versus last year, so the company has a very healthy balance sheet and debt position. NOS, in its 10th anniversary, had its best year ever in terms of operational and financial performance. So it grew 6.2% to 1.7 billion euros with strong performances across all the segments, not only the telco business, but also in terms of the cinema exhibition business and within telco with strong displays in both B2C and B2C segments. That growth means that the company continues to gain market share in the Portuguese telco market. and is now even closer to number one in the market as we strive to reach market leadership in years to come. EBITDA margin was improved by 20 basis points to 38% as we continue to have strong efficiency measures deployed across the company and have registered a very, very strong operational performance. net income and free cash flow had an extraordinary performance in 2024 as you probably saw already as the company announced the results of the markets a couple of weeks ago net income increased 50 to 272 million euros free cash flow had a very strong increase to 360 million euros here both metrics influenced not only by the strong operational performance but also by some extraordinary impacts such as the sale of an additional set of mobile towers to sell next but also some rulings in our favor in terms of the activity fee that Anacom had to return to operators in 2024. But overall, a very strong display from Nosh, both operationally and financially. Bright Pixel had a resilient year. It was a less active year in terms of the investment management activity. But it was quite resilient here in terms of the performance of the underlying assets and also in terms of the valuation of these assets on our balance sheet. So currently we hold 45 companies in the portfolio in the three segments that you know, cybersecurity, retail tech and infrastructure and software. And during 24 BrightPixel invested in four new companies, mostly in the cybersecurity area. We also sold a couple of companies in the portfolio, but NAV was practically stable and it still represents roughly a two times cash on cash return vis-a-vis the investment that was made historically in these businesses. So going on to consolidate the results. If you look at our consolidated figures, this year was a milestone year for us. So we practically reached 10 billion euros. And in pro forma terms, we more than overcame that figure. So an 18% increase versus 2023. And even excluding M&A, we are talking about 7% growth in total. So quite strong growth. And if you look at the longer term trend here, if you look at the last nine or 10 years, you can see that the growth momentum has been accelerating. And this is very important for us because it means that obviously we are generating higher returns. We are reaching more communities. We are reaching more people with our value propositions and with our mission. And so this is really what drives us and what makes us run at the end of the day. So if you look at the last few years, you can see the acceleration of growth, which we expect to continue to register in years to come. The growth came from several angles, as you can see. So a very strong display from most of our retail businesses, but also from the acquisitions that we made throughout the years. So strong contributions from the MC food component, also from health and wellness and beauty, organically and inorganically, Vorten also with an important contribution to our growth, and then the consolidation of Moosky obviously has an important impact here as well. And so if you see, most of the growth came from our major retail businesses, and we expect that to be the case also in the next 12 months. In terms of EBITDA, we reached for the first time over a billion euros of total EBITDA, a 4.5% growth, This growth is actually even more significant if you take into consideration that last year we had 168 million euros of capital gains from the sale of our 30% stake at ISRG. But even with that tough comparable, we were able to increase our EBITDA by 4.5%. And again, if you look at a longer-term trend, you see that the growth in EBITDA has been double-digit in the last few years. And so this is also something which is very important to us, making sure that we grow, but we don't go at the expense of operating profitability, which has been increasing and improving in all our major businesses. All in all, our net result reached 223 million euros on a comparable basis, an 18% increase versus last year, if we exclude the contribution from the capital gain of ISRG last year. So quite strong display in terms of net income and bottom line. If we look at the evolution of our balance sheet and our debt, our debt actually increased by 160 million euros, but that's mostly on the back of the acquisitions that were done. during the year. If you look at the cash flow generation capacity of our portfolio, it reached 286 million euros. And then obviously with the 1.1 billion of M&A, we have this increase in debt. But still, we are at quite comfortable levels of leverage, 16% LTV, which we will bring down in the next few quarters and with very strong very attractive funding conditions, very enlarged maturity profiles, and with a very comfortable profile of debts, which is above three years right now in terms of maturity. So we are quite comfortable with the balance sheet that we have right now, but we will probably deleverage the company significantly over the next few quarters. Our dividend policy remains the same, and so we The dividend that will be proposed to the AGM will be, again, a 5% increase in DPS, which equates to a dividend yield of roughly 6%, 6.5%, which complies with our historical and very consistent dividend policy. We continue to progress also in a number of ESG objectives. We are on track on most of these objectives, which are quite stringent and quite demanding. We continue to decrease our carbon footprint by lowering our CO2 emissions. We reached 90% of plastic packaging recyclability in our own label. We have a very strong target of 100% by 2025. We will probably not be able to reach it because it's technically not possible. But the fact that we put this target out there means that we went from 70% in 2019 to 90% this year, which is an amazing achievement. and we are very proud of that. In terms of leadership positions occupied by women, we have a target of 45% by 2026. We are at 41% in 2024 and also on track to reach our desired goal. So, when I think about what's coming in 2025, it's hard to say, as you can imagine, in terms of global geopolitics and macroeconomy, So we are living under a backdrop of a lot of uncertainty, trade tensions, a lot of protectionist policies being waved around. And at the same time, lower interest rates should provide for some relief in terms of financial costs and also consumer spending. But in this evolving landscape, we need to do what we've always done in the last few years, which is to remain flexible, agile, making sure that we have the ability to act quickly on changing circumstances. and ultimately seek for long-term growth and value creation. All our businesses will strive to maintain their leading positions in their respective businesses, and I'm quite confident, given what we are seeing at this stage, that that will be the case. And so very happy to share these results with you as they reflect, again, the efforts of thousands of people that worked throughout the year to make these results possible. And now we will obviously be open for your questions. Thank you again for listening and for your trust in Sonaic. You can open the session to Q&A, please.

Thank you. Ladies and gentlemen, the Q&A session starts now. If you would wish to ask a question, please press star followed by one on your telephone keypad. Our first question comes from Joao Pinto of Sone. Your line is open, please go ahead.