Sonae, SGPS, S.A.

Hello, and welcome to the SENAI 2025 full year and Q4 results. My name is George. I'll be the coordinator for today's event. Please note, this conference is being recorded, and for the duration of the call, your lines will be in the listen-only mode. However, you have the opportunity to ask questions during today's presentation, and this can be done by pressing star 1 on your telephone keypad to answer your question. If you require assistance at any point, please press star zero and you'll be connected to an operator. And I'll hand the call over to your host, Sunai's CFO, Juan Dolores, to begin today's conference. Please go ahead, sir.

Thank you. Hello, everyone. Thank you for joining us for Sunai's results presentation for 2025. Besides myself and the investor relations team, I have with us, we have with us Christina Neuweiss from BrightPixel, Miguel Moreira from Sierra, Fernando Maslé from MC, and Paulo Simões from Vorten. I'll start with the main highlights from our portfolio management this year. In January, Nosh agreed to acquire 100% of Clarinet Portugal with the aim of strengthening its ICT offering for the B2B segment, an important milestone in the company's strategy to extend its revenue streams. in may we reached an agreement to sell more and zippy our fashion retail banners that saw its closing in july this was a result of our active portfolio management and disciplined capital allocation approach during this year an mbo in which the management team basically got together with an investor to take over these brands later in august Sierra announced an agreement to acquire Unibel Rodanco Westfield's real estate management division in Germany. So this ensures that Sierra is now the second largest shopping center property manager for third parties in Germany. And this acquisition was completed in October. In December, MC agreed to sell its pet retail business in Portugal, Zoo, to Musti. And with this acquisition, Musti strengthens its position in the European market and expands to its seventh market. And also in December, Sierra agreed to sell its direct stake in Parque Dom Pedro, one of the largest shopping centers in Brazil. And this sale allows Sierra to streamline its presence in Brazil, exclusively through its investment in Alor. So quite an active year in terms of portfolio changes, which we believe are strong operations to enable us to face the future with more confidence. By being part of the Sonai Group, our companies benefit from value-creative opportunities to collaborate. And this is true in a number of different areas, namely stronger consumer value propositions, and also the unlocking of meaningful synergies across the portfolio. And 2025 was a powerful year for Sonai in that regard. Just a few examples that you can see on this slide. Vartan Life was launched as Vartan's loyalty program and with an integration with a broader continent loyalty card ecosystem, bringing clear benefits to consumers in a mutually beneficial partnership. As you recall, Continent Card is the largest loyalty program in Portugal, covering almost 5 million families. So this provides immediate leverage to Vorten's value proposition, while also reinforcing the strength of the Continent ecosystem. In the same context, Universo, our partnership with Bank Inter, relaunched the Universo Card, Universo Plus. Universal Plus brings additional benefits to consumers and also a wider integration with the Sonang ecosystem, namely with MC and Vorten. At the end of last year, Continente and NOS, together with Calp, launched Combina. Combina is the largest discount ecosystem in Portugal, enabling cross-company discounts and further strengthening the value proposition of our businesses. And we have, as you know, brought Musti into the portfolio recently. There's a number of synergies that have been extracted between our existing businesses or our historical businesses and Musti. You can see on the slide Musti's own brand being sold in our continent stores in terms of pet food. But there are also other areas of collaboration covering areas such as sourcing, supply chain, logistics, cybersecurity and sustainability, all of which are important areas for MUSTi and MUSTi has benefited from being part of the SONAI ecosystem. So all of these initiatives, along with many others that I could cover, make SONAI's companies more valuable. then they would get a standalone basis. And this is a key driver of our superior performance in recent months, and we hope in years to come. So now I will cover the results business by business, and then I will end with the consolidated figures for 2025. Starting with MC and grocery, the grocery segment delivered a remarkable performance in 2025. Turnover grew by 10% year on year, driven by more than 8% like for like growth. which was primarily volume-driven, and also the impact of the expansion of the store network. We opened 13 new food retail stores during the year, mainly in the proximity format. And with these results, Continuum strengthened its market share, so we increased further our market leadership in the Portuguese market, despite the very competitive market that we continue to face in the country. This top line increase, combined with a continued focus on efficiency, led to a further improvement in profitability, with the ABTA margin increasing 60 basis points from 9.6% at the end of 24 to 10.2% in 25. In the health and beauty segment, all banners continued to deliver strong results, Wells, Arenal and Bruni. Turnover grew by 55%, but this growth implies the contribution of Druni for the full year for the first time. But we had a solid like-for-like sales growth of 5.6% during the year and the opening of 42 stores, including four new Druni stores in Portugal. The underlying BPA margin improved from 12.5% to 13.1%, mainly reflecting Druni's profitability and higher operational efficiency. So overall, if you look at MC's consolidated figures, revenue grew 16% year-on-year, with a like-for-like of 8%. We reached €9 billion, almost €8.9 billion in the year, and the underlying VTA margin improved from 10% to 10.8%, an improvement of 80 basis points. This fantastic operational performance delivered solid cash flow generation, And this resulted in a further reduction of net debt to the EPA from 2.9 times at the end of 2024 to 2.3 times at the end of 2025. As for Vorten, Vorten saw its turnover increased by 7.5%, supported by a solid like-for-like growth of 6%. This performance was driven by the increasing relevance of the digital channel that outperformed the physical channel. Online sales today weigh roughly 24% of total sales at Wharton. We saw strong performances in the core appliances and electronics categories and also a continued growth of the services business line. Vorten reinforced its market share in 2025, consolidating its leading position across an omnichannel value proposition. And profitability was under pressure, if you recall, in the first few quarters of the year. But in the last quarter, we saw profitability already at the same level of 2024 with a 7.1% EBITDA margin, which reflects the impacts of many mitigating measures that were implemented throughout the year to counteract some of the cost pressures that we saw at the start of 2025. Finally, a word to say that we've implemented significant management changes at Orton with a new CEO being brought in in October, followed by adjustments to the company's executive committee and board composition, and which positioned the company well to deliver solid results in 2026. Now, regarding Moospeed, the company reported its results to the markets in early February. and has been strengthening its position in the Nordics and expanding geographically into other countries, namely the Baltics and, more recently, Portugal. As you can see, the company saw strong growth in 2025, 14% on a comparable basis, with a solid like-for-like growth of 3.3%, with particularly strong performances in Norway and Finland, and also in ZOO in Portugal, although ZOO does not consolidate into most of these accounts until the very last stretch of the year. Profitability has been registering a progressive recovery. We hit 12.2% of the BTA margin at the end of 25, but with a growing performance throughout the year. Gross margin improved from 43.6% to 44%. And we are seeing costs becoming more under control as months go by, as we expect the CBA margin to continue to increase going into 2026. Regarding Sierra. and sierra had an important year in terms of the milestones strategic milestones as i mentioned before we had some important portfolio moves namely the acquisition of rem in germany and also the sales that directs taken part from pedro at the end of the year but if you look at the operational performance of the shopping centers we saw very very positive results during 2025. Our shopping centers maintained an occupancy rate of 99%, almost full occupancy. Tenant sales were up by almost 5% on a like-for-like basis, and we saw robust rent collections from the tenants in our shopping malls. The company also advanced in key strategic expansions and refurbishments in its shopping centers. while continuing to recycle capital throughout the year. And overall, Sierra generated 114 million euros in total value. NAV actually only went up by 66 million, but that's because the company paid dividends to Sonai in the delta between those two values. But overall, it was a very positive year for Sierra, not only in terms of operational performance, but also in terms of strategic milestones that were achieved throughout the year. Now, moving on to NOSH. NOSH has also already published its results, as you know. It's continued to deliver a very solid operational performance, despite a very competitive telecom environment in Portugal, particularly in the B2C segment. Overall turnover increased by 2% to 1.8 billion euros, while EBITDA after leases grew by 4% to 680 million, leading to a margin improvement of 90 basis points to 37.3%. This performance reflects a diversification of revenue streams, as the additional pressure on B2C has been countered by a higher growth in the B2B segment, namely given the strong growth in ICT services following the acquisition of Clarinet Portugal in early 2025. This strong top-line performance, coupled with strong operational discipline as well and very strong efficiency gains, has led our margins to increase this year once again. Net income reached 246 million euros in a year. This was actually a decrease versus 2024, but only due to very positive one-off effects that we had in 2024 from asset sales, tower sales to sell next, and also some one-off cash proceeds from regulatory purposes from Anacom, excluding these, net income actually increased by 55 million euros on a comparable basis, and in some isolated accounts, NOSH contributed 92 million euros in our equity method results in the full year. As for BrightPixel, the company ended 2025 with more than 50 companies in the portfolio. It was a record year in terms of investments, 68 million euros deployed in existing follow-on investments, but also new companies. In total, we added 11 new companies to the portfolio. NAD stood at 318 million euros. Slightly down in some investments driven by exchange rate fluctuations, portfolio evaluations, and some portfolio reconfigurations. Moving on to the consolidated view. Overall, our consolidated turnover grew 14% to 11.4 billion euros, driven by the strong performances of our retail businesses, which more than offset the deconsolidation of Mo and Zippy, which contributed to our full-year turnover last year. On a comparable basis, excluding the impact of M&A activity, turnover growth would still have been 9%, so it's quite solid for the size of the group. Underlying EVTA grew by 24%, mainly reflecting the stronger operating performance at MC and also the accretive contributions from the recent acquisitions. By year-end, underlying EBITDA margin rose from 9.1% to 9.9%, an improvement of 75 basis points. Consolidated EBITDA increased by 18% year-on-year, supported by the solid underlying EBITDA performance, and also higher contributions from equity-accounted businesses, particularly Sierra and Universo, that had a very strong year in terms of operating performance and operating profitability. This growth came despite the overall lower contribution from NOSH due to the extraordinary results that we had last year. And also, despite some one-off costs that we had at the end of 2025, including 13.5 million euros linked to a price adjustment in the acquisition of Druni at MC. And so we had a small price adjustment to the acquisition of Druni because a year had passed since the original investment. We had to register that as a one-off cost in the P&L. and also some restructuring costs at Vorten that we also accounted for at the end of 2025, and M&A-related costs at Sierra, given the two transactions that Sierra executed at the end of the year. I would like to stress again that these are all one-off costs which we do not expect to be repeated in the future. All in all, in 2025, our net results grew by 11% in the year to 247 million euros, This result would have been higher if not for the impact of some unfavorable FX trends, namely the US dollar euro FX evolution, as well as some prudent year-end asset revaluation decisions. Again, these impacts are all one-off, and we do not expect any significant negative impacts in the near future. The strong operational performance generated 265 million euros of operational free cash flow, This, together with a more limited impact from M&A activity compared to last year, which included major acquisitions at the time, such as mostly BCF and Bruni, enabled further progress in our deleveraging path. We reduced our net debt by more than 100 million euros at the end of 2025, and our loan-to-value reduced from 15.9% at the end of 2024 to 13.7% at the end of 2025. And we expect this deleveraging path to continue in 2026. In total, our net asset value grew by 15% in 2025, reaching more than 5 billion euros at the end of the year. This is an achievement we are very proud of because it translates very clearly the value creation that we have been able to achieve in several assets in the portfolio, a result of consistent, solid operational results quarter after quarter, and also a reflection of the quality of our assets, namely our real estate assets at Sierra that continue to appreciate. On a per share basis, NAV reached 2.62 euros per share. With the appreciation of SONAI's share price in 2025, the discount between NAV per share and the share price narrowed significantly from 60% at the end of 2024 to 38% at the end of 2025. And today that discount is even lower, but there's still room to grow and we are still committed to reducing this gap going into the next few months. The Board of Directors will, in compliance with SONAI's dividend policy, propose at the shareholders' annual general meeting a dividend of 6.2 euro cents per share, so a 5% increase year-on-year, as is normal in our dividend policy. And basically, this is all for now. Thank you, and you can now open the session to Joanna.

Thank you very much, sir. Ladies and gentlemen, once again, you can ask questions by pressing star one on your keyboard, and you can also submit questions using the chat feature of the web and pressing send. So that's star one if you wish to ask an audio question, and you can also send it by chat. Our very first audio question is coming from Luis Colaco of J.B. Capital. Please go ahead, Luis. Your line is open.

Yes, good afternoon. Thank you very much for your time, and congrats for the great set of results. I have two questions, if I may. The first one is regarding the like-for-likes in Sonai MC, namely the grocery parts. You exit, you have an exit rate of 8.4 in the quarter. Given where we are seeing now the food retail sales in Portugal, Do you think that your guidance, I would say guidance that you provide, that is of low single-digit like-for-likes going forward, isn't that conservative, given where we are at this stage? And my second question is also regarding the grocery part of Sona IMC. The EBITDA margin increased year on year, but still the expansion was lower than we saw in the previous quarters. Any reason for this? Thank you very much. And the last question, of course, in terms of the indirect results, can you provide us some more color on what happened over there? Thank you very much.

Sure. Do you want to take the question?

Sure. Hi, Luis. Good afternoon. In terms of the like for like, as you mentioned, we had a like for like last year of around 8%. What we have mentioned in previous calls is our view in terms of mid-term growth for the grocery market is about three, four percent, as you mentioned, low single digits. What we are seeing and mainly driven by the increasing disposable income as well as population growth is clearly over the last year and the beginning of this year, we are seeing a higher growth compared to what we see as our long, medium, long term perspective. And so I would say that looking at the first months we have, there is a slight deceleration on the like for like, but not clearly to the levels of the midterm of the three, four percent. So we are not so distant from what we have seen in 2025 in the first two months of 2026. Regarding the EVTA margin, you are correct. So we have a lower expansion of margin in Q4 versus Q3 of 2025. And the main reason was the majority of the efficiencies we are capturing within the business, they started to accelerate in Q4 2024. And therefore, what we expect, what we had seen in Q4 2025 and what we expect going forward is a lower expansion in terms of EBTA margin compared to Q4 2025, for example.

Okay, I can take the indirect results question. And so basically, in the indirect results in the quarter, we had two major impacts, I would say, one related to BrightPixel. And as I said, BrightPixel, we continue to see negative impacts from the effects of the US dollar versus the euro. And we have several investments in dollars, which translates that that Delta in the quarter, but we also registered in terms of prudence, some write-offs in a couple of assets in the portfolio. And then we had an impact in SparkFood, but this was mainly a correction of a value that we had registered in the middle of the year. And so if you recall, we had a positive impact in our indirect income line midway through the year from a transaction that we did at SparkFood, but we decided to be prudent and to basically counter that positive impact at the end of the year to make sure that we have a conservative approach to valuations at SparkFood. If you look at the indirect income line at the end of the year, as a whole, it's practically flat. So the value is residual, and I think you should take a look at the year as something more meaningful than the variations between the quarters.

Thank you very much. Thank you, Luis. Thank you for your question, sir. Sorry to interrupt you, sir. Once again, ladies and gentlemen, if you have any questions, please press star one. We will now go to Antonio Saladas of AS Independent Research. Antonio, please go ahead.

Hi, good afternoon. I'm just finishing the call now. So I don't know if it's some questions or I'll get the answer. So the first one is related with MC and the EBITDA margin on the fourth quarter, despite still very, very strong, it went down from the on the sub-quarters, so it was an adjustment about one of the various points, which is not normal, at least when we look in the past. That is the first question. And second question, if you can provide some color or some, I will not say guidance, but some color about the performance on grocery in 2026. Thank you very much.

Both for you for now.

Very good. Good afternoon, Antonio. I think I already addressed the first question, but I'll do it again briefly. So what we have seen in the fourth quarter was actually a deceleration of the expansion of EBITDA margin versus Q3. And the main reason is we have seen an acceleration on efficiencies in Q4 2024. And so we shouldn't expect the same level of expansion of margin that we have seen in Q3 2025. That being said, please bear in mind that in Q4 2025, we increased the EBITDA margin by 0.4. And on a pro forma basis during the year, we increased the margins by 0.5. So that's not a huge gap. That being said, that was the reason. In terms of performance, 2026 on the grocery part. We are seeing a slight deceleration on the like for likes, but I wouldn't say it's very material. So we continue to see the market in a very good performance and MC is continuing to get getting, get gaining market share in the first two months of the year.

Thank you very much. So follow up question on Bright Pixel. There's some problems with the private market debt and equity, and some of them are related with software companies. I don't know if you want to add some color or some information on this issue. Thank you very much.

Thank you, Antonio. I can give you a little bit of color, but it's more or less the same that I've been sharing. So the private market is a little bit better in the last quarter of 2035, but only at M&A part, not on the IPO market. So the liquidity is still very limited because the M&A operations that have been seen are done at lower multiples, which is not enough to give the liquidity that the market is needing to pull. But having said that, we have been seeing an increase on the M&A part and we have, of course, done some transactions, as we have mentioned in the results. So we have recycled more or less 30 million euros And we have been able to do it every year. So we will try every year to do our best and to maximize the value that we have. We were expecting a better year for 2036. But as you can see, the geopolitical part and the uncertainty that we live in the market, it's very difficult to predict in the short term an opening of the market and the liquidity that we would like to have.

Just a final question on Sierra, sorry. A very strong investment, some capital spending on the court. I don't know if you want to provide some information on this.

I can hand it over to Miguel to give you more detail, but it's fair to mention that it's true that Sierra has been investing in its strategy, but it has also been recycling capital and generating cash proceeds from asset sales. And the most important transaction that we did in that regard was the agreement and the sale of Parque Dom Pedro, the direct stake in Parque Dom Pedro. where we only saw the initial down payment at the end of 2025 of 10%, but we will get the additional cash proceeds in the first semester of 2026. So those cash proceeds will be flowing in. And Sierra, as always, this strategy of recycling capital, then we deploy in its growth avenues. But I will let Miguel comment a little bit more.

Hello, Antonio, and thank you for the question. As Jean mentioned, it is mostly related with operations that we made at the end of the year. And as already mentioned, we made an investment on RAM, a property management company in Germany. And we also made some investments in our development projects that we have in pipeline and we keep investing to make the projects going forward. a significant amount at the end of the year. Most of them were not investments related to M&A operations.

Okay. Thank you very much.

Thank you, Antonio. Thank you very much for your question, sir. Ladies and gentlemen, as a final reminder, if you have any audio questions, please press star one on your tablet keypad and you can also submit them through web. We'll pause just a moment. Another question that came in on audio is coming from Rita Bello of CBI. Rita, please go ahead.

Hi, everyone. Good afternoon. Thank you for having my question. I just wanted to ask Fernando, in the food retail segment, how has MC managed to keep margins significantly above the sector quarter after quarter? And is this mainly related to your product mix, pricing strategies, or does this result from supplier agreements and operational cost management? Thank you.

Thank you, Rita. Rita, thank you very much for the very challenging question. So it's a good question. What we have seen over the years was that our cost efficiency program has been quite successful. Obviously, it's very difficult to compare between retailers and especially between discounters and full-length supermarkets. And so it's very hard to do that comparison. But when we look at our cost structure, I would say what and allow us to increase our EBITDA margin over the years has really been the efficiency measures. On the commercial margin, as you know, we have been relatively stable for a couple of years now, so we haven't seen an improvement or a deterioration on the gross margin. What we have seen is with the growth of the market, in Portugal, which has been clearly above the medium to long-term average over the last couple of years, that's obviously helped on the dilution of the fixed costs. But on top of that, and more important, what we have seen is a very significant cost-to-serve program where I would say there are a couple of areas where we have been quite successful. One is around the productivity in stores, so the personnel cost over the sales, we have been able to optimize it significantly. I would say on the energy part and on the indirect costs, we have also, I would say, important programs to improve our efficiency. And I think that's really the thing that we have been able to do well, as well as obviously leveraging the growth in the sector, and especially the increasing market share of MC over the last couple of years.

Okay, thank you so much.

Thank you very much, Rita. We have several questions on the chat. Do we have more questions on the voice line?

We have nobody on audio, so we'll pass over to the web. And I think Pascal will read them out for you.

I'll cover some of the questions we're getting on the chat, and if there's any more audio questions, we'll take them afterwards. But we have a question from Juan Rios from Santander. And two questions, actually. What explains the negative indirect results in Q4? I think I already answered that question. And the second one was, why was Sierra's EBITDA in Q4 lower than in previous quarters? Miguel, do you want to take that one?

Yeah, I can take that one. A part of that was already explained, and this is the other side of the M&A activity in some part. Those are all one-off adjustments that we have in the accounts. And the value that you can see on the numbers that we published, that's the sum of several things. The two main points and the two key impacts on this number are the M&A movements that we have done with REN, as I told before, and probably, as you know, we bought 100% of the company, so we have to recognize all the costs of the transaction in our P&L. And the other one is the selling process of Parc Pompietro. We also have several costs with that operation, and we are recognizing that already on the accounts of 2035. There are a lot of different other small topics that are not material for the explanation, but those are the key adjustments that we have on the accounts.

Yeah, so the Sierras underlying recurring a bit, they've maintained its growth trends, and the only explanation for this is this, Miguel was talking about. We have a second question from Julien about the potential higher energy costs against the current backdrop. So what's the percentage of energy costs that are hedged? Overall, we have a bit over 60% of our energy costs that are either we have on production or we have some sort of hedging strategy. And that's fixed for the remainder of the year, so we are only exposed to 38% of our energy bill to the existing markets. We have another question from Samuel, asking if the group is considering a direct entry into the insurance sector to replicate the insurance float model. so as to have a permanent low-cost capital source to fuel the growth of new verticals while reducing reliance on external debts as a persistent high cost of capital environment? It's a good question. The answer is quite straightforward. So we do not have any intentions to enter the insurance sector. We are nevertheless quite comfortable in our debt position. Our cost of funding right now is very low. refinanced over a billion euros in debts in the last few months at a very low cost of spreads of roughly 55 to 60 basis points. And so we are quite happy with our cost of debts and we expect that net levels to come down further in the next few months. And so we are on a deleveraging path, which is going to be quite consistent over the next few quarters. And then we have another question from Alexander. Could you give some color on the potential impact of the Iranian war on MC? Fernando, do you want to take that?

Sure, sure. Alexander, thank you very much for your question. I think Joel already addressed it partially. So in terms of top line and obviously inflation being a key factor, we are not seeing yet any impact on the inflation in our sales prices. So as Joel mentioned this morning, We have an inflation of around 3% year to date at MC. This 3% is actually mainly driven by some fresh categories due to the scarcity of some products. So even when we look at the FMCG products, we are very close to the 2%, which is, as you know, our medium term when you look backwards average. And so no impact there. When we look at the energy costs, Yes. So there might be an impact. Just to give you some metrics. At MC, energy represents less than 1% of our sales. Out of that bill, we have, as Will mentioned, more than 60% edged. And then you have multiple variables, such as the access tariffs and all other charges. So if you want to have a very, I would say, high-level... value, our unedged part of energy is about 10 million euros a year. So for this year, 2026. So the direct impact on the energy bill shouldn't be that high. Obviously, when you look at other variables that might be impacted, such as logistics and other costs, it's very difficult to predict at this stage. So the impact yet is quite limited in the business. Let's see how things progress and what measures we need to implement. Okay.

Not sure if we have further questions.

Okay. No question on the audio, sir.

Okay. I think we covered all the questions on the chat as well, so thank you very much for listening in. I think the key points that we would like to stress in the call are that we are very happy with the 2025 results. They show very strong performances from all our businesses. Basically, all our businesses improved their competitive positions in their market shares in their respective markets. We are quite happy not only with the growth level, but also with the operating profitability that we were able to achieve throughout the year. And we are also quite confident on what lies ahead in 2026, given the start of the year that we already had. So thank you very much for listening in, and we'll see each other in May when we present our Q1 results for 2026. Thank you.

Thank you, sir. Ladies and gentlemen, that will conclude today's conference. Thank you for your attendance. Have a good day, and goodbye.