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Logotipo Supermercados Día Memoria Anual 2015
11 Earnings performance

11.2DIA Group earnings

DIA continued to grow in 2015, evidencing the solidity of its growth plan in all its markets. Gross under-banner sales rose by 13.9% in constant-currency terms to €10.55 billion, fuelled by the integration of the most recent acquisitions–El Árbol and the Eroski stores–in Iberia and accelerating new store openings in its emerging markets. Thanks to topline growth, coupled with cost effectiveness, adjusted EBITDA registered growth for the fifth year running (up 5.2% year-on-year) to €610.1 million.

2015 2014 YoY change YoY change in constant-currency terms
Gross under-banner sales 10,546.7 9,399.9 12.2% 13.9%
Revenue (net sales) 8,925.5 8,011.0 11.4% 13.2%
Adjusted EBITDA (2) 610.1 585.3 4.2% 5.2%
Depreciation and amortisation (214.0) (184.6) 15.9% 17.4%
Adjusted EBIT (2) 396.1 400.7 -1.1% -0.4%
Non-recurring items (122.0) (76.8) 58.9% 58.3%
EBIT 274.1 323.9 -15.4% -14.3%
Profit attributable to equity holders of the parent 299.2 329.2 -9.1% -8.1%
Adjusted net profit (2) 254.1 267.2 -4.9% -3.8%

(2) Adjusted for non-recurring items

By market, it is worth highlighting topline growth of 10.5% in Iberia, while revenue in emerging markets jumped by 20% in local currency terms despite the economic downturn.

The combination of revenue growth and operating cost control drove growth of 5.2% in constant-currency adjusted EBITDA to €610.1 million. Adjusted EBIT, meanwhile, contracted a slight 0.4% in constant-currency terms to €396.1 million.

In 2015, the group delivered its EBITDA growth guidance thanks to the earnings contribution by the Iberia business segment, shaped by defence of high margins under the DIA banner, margin improvement at Clarel and quick and efficient transformation of the supermarket network. Emerging market margins improved substantially despite challenging business conditions.

Adjusted net profit narrowed by 3.8% to €254 million due mainly to higher finance costs last year.

Net profit attributable to equity holders of the parent dropped 8.1% to €299 million, shaped by the recognition of a non-recurring gain on the sale of the French business in 2014.

Net finance cost was 37.6% higher in 2015 at €56 million, due mainly to a higher debt balance, as well as significantly higher rates in Argentina and Brazil.

The DIA Group is targeting organic revenue growth of 7% between 2015 and 2018 and accumulated operating cash flow generation of €750 million.

Capital expenditure

DIA continued to focus strategically on store growth as the most efficient formula for generating sustained value for its shareholders while responding better to its customers’ needs. At year-end its store network stood at 7,718.

To this end, capital expenditure–including the acquisition and refurbishment of the Eroski stores and the acquisition of Mobile Dreams SL, the company that owns the flash sales platform–oportunidades.dia.es–increased by 63.3%.

Stripping out these acquisitions, the company continued to earmark capital expenditure to new store openings and the transformation of existing establishments, investing €366.3 million in this effort in 2015, up 6.2% from 2014.

Capital expenditure in 2015

By geography (€ m) 2015 (€ m) % of total capex in 2015 2014 (€ m) % of total capex in 2014 YoY chg. (%)
Iberia 185.0 50.5% 200.5 57.4 -7.7%
Emerging markets 181.3 49.5% 144.4 41.3 25.5%
Total capex, excl. acquisitions 366.3 100.0% 349.9 100 6.2%
Acquisitions 197.0 0.0
TOTAL 563 100.0% 349.9 100 63.3%
By category (€ m)
Openings 165.9 45.3% 139.4 39.9 19.1%
Store transformation and maintenance 200.3 54.7% 210.0 60.1 -2.6%
TOTAL 344.9 100.0% 349.4 100 6.2%

The DIA Group earmarks around 3.5% of revenue to capital expenditure every year. Until this year it had been devoting more than half of this sum to developing its emerging markets businesses; exceptionally, this trend reversed in 2015 on account of the acquisition of the Eroski stores in Spain.

It is worth highlighting the fact that the company registered a record number of franchise openings in 2015: 612 new establishments managed by franchisees.

Working capital and net debt

DIA’s working capital requirement narrowed by 17.9% in 2015 to end the year at €735 million. Of the €160.2 million reduction, over half is attributable to currency depreciation and the rest is due to integration of El Árbol’s and Eroski’s purchasing functions within DIA’s structure. The latter effect has already reverted in full.

At 31 December 2015, DIA’s net debt stood at €1.13 billion, up 112.3% from year-end 2014. The growth in net debt is attributable to several factors: higher capital expenditure, the acquisition and refurbishment of the Eroski establishments, the €200 million share buyback programme and the need to fund the working capital requirement.

DIA remains fully committed to defending its current credit ratings (S&P: BBB-; Moody’s: Baa3) and investment grade status.


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