Sonae, SGPS, S.A.

Good afternoon and welcome to the Sinai 9 Months 2025 Results Conference Call. The call will be structured in two parts. First, a presentation by the Sinai Group Management Team. And afterwards, there will be a Q&A session. During this session, you may ask question in two ways, by submitting a written question in the box below the player, or by joining the conference call and dial pound key 5 on your telephone keypad to enter the queue. I will now hand over to João Delores, CFO. Sir, please go ahead.

Thank you. Good afternoon, everyone, and thank you for joining us for SANAE's results presentation for the first nine months of 2025. Besides myself and the investor relations team, we have on the call with us Cristina Novaes from BrightPixel, Fernando Wanzler from MC, Paul Simonis from Vorten, and Miguel Moreira from Sierra. I'll start with a few highlights from our portfolio this quarter. In July, we completed the sale of our Maw and Zippy fashion retail banners following the agreement reached in May. This transaction reflects our ongoing commitment to active portfolio management and disciplined capital allocation. At the same time, we're seeing the successful integration of new businesses and the consolidation of key partnerships, which are producing very promising results. we are witnessing a stronger, more connected portfolio, unlocking new opportunities for collaboration across the group. A few highlights from the quarter include new cross-loyalty initiatives, which help us deepen our understanding of consumers and ultimately improve the value we offer to customers. For instance, Vorten launched its new loyalty program, Vorten Life, connected to the continent ecosystem, allowing customers to earn and redeem balance on their Vorten purchases. Our financial services joint venture, Universo, relaunched its credit card, now called Universo Plus, offering new functionalities and extra cash back at Continent. And finally, Musti and MC have been working closely together, most notably with Musti's own pet food brand now available in continent stores, and also through several collaboration initiatives in areas such as logistics, food safety, and risk management, among others. These are just a few examples of cross-business synergies and collaboration initiatives that we have launched in recent weeks and months. let's move on to our results by business starting with mc in grocery continents sustained its market share gains reinforcing its position as the leading grocery retailer in portugal like for like sales grew to nine percent in the third quarter mainly driven by the strong volumes performance Grocery underlying EBITDA margin improved by 110 basis points year-on-year to 11.2% as sales increases and continued efficiency gains offset ongoing cost inflation pressures. In health, wellness, and beauty, our Wells, Druni, and NNL banners continue to strengthen their leadership position in Iberia. Topline growth was again solid this quarter, up 12% year-on-year or 7% on a like-for-like basis, supported by strong performances from Druni and Wells in particular, as well as continued network expansion. The underlying EBITDA margin improved by 50 basis points to 14.3%, mainly reflecting Druni's stronger profitability and greater operational efficiency. Druni continued to expand at a quick pace, having opened its first store in Portugal, and we expect more stores to come in this geography in the next few months. So overall, MC delivered revenue growth of 10%, reaching 2.3 billion euros in the third quarter this year. Underlying EBITDA margin increased by 100 basis points year-on-year to 10.8%, driven by stronger performance across both the grocery and health, wellness, and beauty segments. Regarding leverage, total net debt to EBITDA decreased to 2.5 times at the end of September, underpinned by the solid cashflow generation in the period. As for Vorten, the company posted turnover growth of 7.9% year-on-year in the third quarter, supported by a solid like-for-like increase of 6.9%. Growth was driven mainly by higher volumes in core categories, such as electronics and home appliances, along with continued momentum in services and new product categories. The online channel also performed exceptionally well, accounting for 19% of total turnover in the quarter. the company continued to increase its market share across all channels with a quite solid gross margin display. Underlying EBITDA reached 21 million euros and remained broadly stable year on year. Nevertheless, the margin stood at 5.6% year on year, 5.6% down from last year, but showing a positive trend in terms of recovery. The cost base remained under pressure from higher logistics and strategic investments, which we expect to bring down to more normalized levels in the coming quarters. Now, looking at Musti, the company released its quarterly results yesterday. In this period, Musti further strengthened its leadership position across both its core Nordic markets and the newer Baltic region, benefiting from improving market conditions. Turnover grew 14%, supported by the consolidation of Pet City and also solid life-for-life performances across the Nordics, with Norway and Finland performing particularly well. Gross margin improved year on year in the third quarter, supported by a more favorable sales mix, particularly a higher share of own brand food production. Underlying EBITDA increased to 16.9 million in the third quarter of 25, although the underlying EBITDA margin comparison versus last year remains impacted by ongoing investments in growth and higher operating costs. We remain confident that Q4 will see a continued positive trend in terms of growth, and also in terms of evolution of a BPA margin. Moving to Sierra, our real estate business. The key highlight this quarter in strategic terms was the acquisition of Unibel Rodamco's real estate management division in October, which positioned Sierra as the second largest shopping center property manager in Germany. Sierra's European shopping center portfolio continued to perform well, with tenant sales up 6% on a like-for-like basis, near full occupancy in our centers and robust grant collections. The company also advanced key strategic expansions and refurbishments in its shopping centers, unlocking additional growth potential while continuing to actively manage its portfolio through capital recycling initiatives aimed at enhancing returns. Sierra's net results rose to 21 million euros in the third quarter of this year, up 4.7% year on year, supported by a strong operational performance across both the shopping center portfolio and the services activity, contributing to an NAV of 1.2 billion euros at the end of the period, after dividends paid to the shareholder. Regarding Nosh, the company already reported its results to the markets, delivering solid profitability growth due to continued focus on operational excellence, despite a more pressured top line in telco B2C revenues. Consolidated revenues in the quarter were also impacted by a softer performance in the cinema and audiovisuals business following last year's record blockbuster releases, which included the most watched film ever in Portugal. In any case, consolidated EBITDA increased by 2.7%, supported by robust performances across both the telco and IT segments. In SunEyes consolidated accounts, NOSH equity method results increased by 32% year-on-year, reflecting the company's solid operational execution. And finally, BrightPixel, with 55 companies in the portfolio, invested in five new companies and sustained a solid pace of capital recycling. NAV reached €341 million at the end of the period, and cash invested 240 million, implying a potential cash-on-cash return of almost 1.5 times in the existing portfolio. Moving on to the consolidated figures. Overall, our turnover grew 8% year-on-year to 2.9 billion in the third quarter, driven by the strong performances of MC, Vartan, and Musti, which more than offset the deconsolidation of Malt and Zippy fashion banners. On a comparable basis, excluding the consolidation of Pet City and also the exits of Mall and Zippy, consolidated turnover posted a solid 10% year-on-year increase. Underlying EBITDA grew by 17% year-on-year, mainly reflecting the stronger operating performance AMC. And on a comparable basis, it actually increased by 20% versus last year. Overall, EBITDA increased by 13%, supported by the solid underlying EBITDA performance and higher contributions from equity-accounted businesses, particularly Notch. Net result group share increased to 98 million euros, up 34% versus last year, driven by the improved operational performance across our portfolio companies and also lower financing costs, reflecting the reduction in net debt and also in the average cost of debt. We made progress in our deleveraging path with consolidated net debt standing at 1.8 billion euros at the end of September, down 45 million euros year on year, driven by the evolution of operational cash flow. The holding LTV stood at 13.6% at the end of September, down from 15% last year, as our balance sheet remains strong with an average debt maturity of 3.4 years and a steady decline in financing costs driven by lower net debts and a lower average cost of debt as well. As a final note, our net asset value grew 5.7% quarter on quarter and surpassed 5 billion euros at the end of September. This positive evolution was mostly fueled by improved valuations of MC and Sierra, which offset the softened performance of the mostly stock price. On a per share basis, NAV reached 2.58 euros per share, up by 5.7%, with the share price trading at a 48 discount to NAV at the end of September, after the steady increase in share price in recent months. This is all for now. Thank you. And you can now open the session to Q&A.

If you wish to ask a question, you may do so by submitting a written question in the box below the player or click on the blue hand button on the audio player to ask orally. You can also ask a question via the conference call and dial pound key 5 on your telephone keypad to enter the queue. The next question comes from Jose Rito from CaixaBank. Please go ahead.

Yes, good afternoon to all. So I have a question on IMC, specifically on the grocery division, if you can split between what was volumes and price evolution in the quarter. A second question on the margin evolution also in terms of grocery. Just to confirm if the gross margin was stable in the quarter or if there was also some positive contribution from the gross margin to the profitability because it was really quite relevant increase year-on-year in terms of margin. And finally, the last question on MUSTi, if you can update a little bit on that. competitive landscape and what are the company's expectations regarding profitability going forward? Thank you.

Thank you, José. So maybe I'll take the Musti question first, and then I'll ask Fernando to take the two MC questions. So starting with the Musti question, the competitive landscape remains challenging, obviously. It's a quite competitive market in the countries where Musti operates. But Musti has been doing much better than competition in all key markets. And so we are seeing a recovery in terms of the market rebounding as a whole, but also mostly doing better than competition, given its value proposition and positioning in the Nordics, but also in the Baltics. And you asked also about expectations in terms of Q4, in terms of growth and profitability. Look, we see the same trends, the same positive trends going into Q4 in terms of like-for-like growth, very strong in Norway, also quite strong in the main market of most, which is Finland, and also quite resilient in Sweden and in the Baltics, the same trend of positive display there in terms of growth. And in terms of profitability, we clearly see a positive evolution throughout the year. We had a very tough Q1, but Q2 and Q3 were already much better. And we see Q4 and Q4, the continuation of that trend, both in terms of gross margin evolution but also in terms of full EBITDA margin. And so our expectation is that we can reach the end of this year, we can have a Q4 which is more consistent with the historical EBITDA margin that the company enjoyed in the Nordics historically. Fernando, do you want to take the MC questions?

Sure. Good afternoon, José. Very quickly, first of all, in terms of the volumes, as you rightly said, in Q3 we saw a 9% like-for-like growth, which is split between a 5% volume growth and a 4% price growth. So that's more or less the same trend as the year to date. That being said, we have seen an increase in terms of the price and that's mainly driven by specific categories such as meat and fish, where we're seeing more limited supply and therefore on the supply side, we're receiving higher costs, which then drives to a higher price for the consumers. But that's, I would say the main difference compared to the first half of 2025 on the grocery side. In terms of margin evolution, as you said, in terms of gross margin, we are broadly stable in this quarter. The big difference here is really the cost to serve program and what we have seen in the third quarter. was actually savings that were double the savings of the first half and mainly around productivity. So volumes per personnel sold, a huge increase there, shrinkage facilities. So a lot of different initiatives we have in our cost to serve program, which are really yielding very strong results.

Okay, Ernesto, thank you.

Thank you, José.

The next question comes from Julian Maguias from Kepler Shoebrew. Please go ahead.

Hi. Hi, afternoon, guys. Thank you for the presentation. I had a couple questions. How sustainable do you think is the 9% like for like in food coming into 2026 or the midterm? And what would you say is your run rate like for like on the midterm for food? And then another question on like for like, how does this like for like on the proximity banner compares to the rest of the food division? Thank you.

Okay, Juliano. Both questions for Fernando. Fernando, take them away.

Very good. Very difficult question around what's the run rate like for like. So as you rightly pointed out, the 9% like for like is an extremely strong number in a mature market such as grocery retail. So there is a couple of factors which explain this. Firstly, immigration. So finally, in Portugal, over the last couple of years, we have seen growth in population. And that's obviously a key driver of growth. of the growth in the grocery retail markets. We are seeing an increase in tourism, which is also an important driver, as well as an increase in the household income. And therefore, we believe that looking at the macro trend in Portugal, that's obviously translating in a higher growth in terms of the grocery retail market. That being said, obviously, when we look at the long-term series of growth of grocery retail, we're talking probably around four to five percent or three to five percent depending on the on the trend on a long-term trajectory of the growth of grocery retail and therefore obviously these nine percent in the long term are obviously not sustainable given the dynamics of a very mature market But it's very, very difficult to predict when we'll see a slowdown of the market. And obviously, 2026, it's difficult to estimate at this point where it will land. But obviously, we are seeing a little bit of a slowdown in terms of the growth of immigration. and the tourism and the household income, it's difficult to predict, but obviously there is a positive momentum both in Portugal and in Spain, but difficult to see where we get in 2026. In terms of the banners and the growth, between proximity and hypermarkets. We typically don't disclose this, but obviously we are seeing a higher like-for-like growth in the proximity banners. That's where the market is growing. That being said, we continue to see a very strong like-for-like performance in our hypermarkets as well. And so we feel quite confident both in maintaining the momentum of the hypermarkets as well as accelerating proximity, which is clearly the format that we are investing more in terms of expansion. And it's the format that is growing more in the market as a whole, even the changing of the habits of the Portuguese consumers.

Okay, many thanks Fernando. And then another quick question on financials. Why was the working capital lower in Q3 2025 compared to last year in Q3?

Sorry, can you repeat the question?

So I was asking about the working capital on consolidated group financials. Why is it lower in 2025 compared to Q3 2024?

So I think the question is for you.

So it's obviously consolidated working capital is a mixture of many different impacts on different businesses. It's true that we had a tougher year so far in terms of inventory management, particularly at Vorten. And that's probably the main deviation versus last year. But it's something that we are currently working on.

Okay. Okay. Thank you. Thank you, guys. Thank you, Julian.

As a reminder, if you wish to ask a question, you may do so by submitting a written question in the box below the player or click on the blue hand button on the audio player to ask orally. You can also ask a question via the conference call and dial hound key 5 on your telephone keypad to enter the queue. The next question comes from Antonio Saladas from As Independent Research. Please go ahead.

Hi. Good afternoon. Thank you for taking my questions. So first one is on MUSTi. I think that yesterday at conference call, MUSTi conference call, I understood that they mentioned or company mentioned about expanding abroad. And I understood that that will be very short. So very short. I understood that probably to 2026. And I think that the CEO letter also mentioned something about it, about being relevant, mostly being relevant in the European market. So that is my first question, if you would like to comment on this. Second question, in Sierra, well, Sierra has been very active. Could provide some color in terms of capital spending for the coming quarters. And I think I already asked it in the past, but it makes sense to have a spin-off on Sierra or not. And that is, of course, for Mr. João de Loures. And finally, on Bright Pixel, a question that I already asked in the past about, I think that company is adding assets to the portfolio, but is showing some difficulty to sell assets. uh what what are the reasons to to not having more ipos uh well it could be the valuations of private equity higher and that is a reason to to be difficult to to have ipos or not so some comments on this on this on this front thank you very much thank you antonio good questions and some of them a bit provocative but i'll try i'll try to answer a few of them

And then I'll ask my colleagues to compliment. So starting with Musti. So I think we mentioned in previous calls that we see Musti as a potential active consolidator in the European pet care retail space. We obviously made a first move going into the Baltics a year ago, but we continue to see the opportunity for Musti to bring its value proposition to other countries in Europe. And that might happen organically or through acquisitions. And so we are supportive of the strategy. Obviously, we need to take very good care when we make these types of steps and we need to analyze the opportunities and see if they make sense. But yes, so we have the ambition to grow mostly outside of the Nordics and explore other geographies. And obviously, we have been looking at the wider sector and we have been analyzing different possibilities. We have nothing to announce at this stage, but we do have the ambition, as management mentioned yesterday on their call, we do have the ambition to explore such opportunities. And in terms of spinning off Sierra, we do not have any intention to do that in the near future. And so we believe that Sonai Sierra is an important asset in our portfolio. It has very strong synergies with other businesses in the group. and namely in terms of obviously real estate locations. And so it's important for us and it's an important part of our portfolio. It's also important in terms of managing cash deployment across different parts of the group and managing that dynamically. And Sierra has been a strong contributor to cash flow generated for the holding company. in the last few years. And we are actually quite supportive of the strategy of the company to continue to grow and basically grow in adjacent opportunities to its current lines of business and portfolio. And so we like Sierra, we feel it's an important part of the portfolio and we feel that the synergies with the other businesses are quite strong. So we don't see a clear rationale for spinning off the company. And then I would just briefly comment on BrightPixel, but then I'll ask Stina to compliment me and also Miguel to take the one on capital recycling or capital spending for Sierra. Obviously BrightPixel is a business that we need to be aware of market moments and market cycles, right? And so it's actually, the company has been doing a great job in investing, but also in recycling capital and returning capital. And we've seen some exits recently. And we anticipate some disposals as well in the next few months. But you need to manage the right moments in the cycle to invest and to divest. And so these moments most often are not in the same period. So you need to manage that dynamically. I think the good thing is that this is not a fund as such with very strict guidelines in terms of investment horizon and capital returns. to LPs. And so we have the flexibility to make the most of the moments in the cycle and try to manage them as best as we can. In terms of specifically talking about the moments for IPO or specific exits, I will let Christina comment because she's much more knowledgeable than I am about the subject. Christina, do you want to take that one?

Yes, of course. Thank you all. And thank you, João. You have already answered the majority of the question. But, of course, the market has been promoting some positive signs, it is true. But we cannot say that the IPO market is already open. And we, as João mentioned, we don't have the pressure to sell the assets as a normal fund. As such, we can wait for the best moment to do it. And we are always active looking for the market and looking for the best opportunity to sell. And we have been recycling capital. Of course, probably we don't have any disclosure of that because, as you know, many of our transactions are not public, but we are delivering cash for the group. And we have at the moment several active processes for the M&A. But as you know, these negotiations take time and the outcome is always uncertain. But I'm pretty confident that in the next couple of months we'll return some additional cash. But we are in a normal recycling cycle, so everything is on time. And we hope that better news are coming in the coming months.

So I go for the question of capital deployment at Sierra. And thank you for the question, Antonio. As you know, we have been quite active in terms of portfolio and we bought some companies and sold some of the assets in recent months. but we don't have plans to make more of these kinds of acquisitions in the short term. So we'll be focused on capital deployment in our projects, in our development projects. And we have eight open projects that will be open for the next years and we have capital to deploy on them. And we have some vehicles, investment vehicles open also, and some of them starting and we'll be deploying some capital on those vehicles also. So it's part of our strategy. We'll be focusing on development projects and investment management in the coming months or years. So that's where we are going to put the money. In terms of the volume of capital deployment, will be more or less in line with recent quarters, so no news on that.

Okay, thank you very much. I think that we don't want to disclose the figure of the last investment done in Germany. I think the figure was not public. Probably we will know in three months, but probably we don't want to disclose it now.

Yeah, it's not a public number for the moment, so. Okay. Thank you.

Okay. Thank you very much.

Thank you, Antonio.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Okay, thank you. Look, I would just like to add that we are quite happy and proud with the results that we are presenting to the market. I think they reflect the quality of our portfolio. They reflect the quality of our businesses and ultimately the quality of our management teams. And we are quite confident that we will end the year on a positive note. And we will have remarkable 2025 results to present to you in March. So looking forward to that. Thank you very much for listening. And thank you very much for your questions as well. Bye-bye.