Colruyt 1H22/23: The squeeze continues
Colruyt's 1H22/23 figures disappointed again, with the net profit (gs) decreasing 45% y/y, well below our estimate of -29% y/y. The strong decline was driven by Colruyt's inability to pass on inflation, hereby weighing on gross margins (as did higher gasoline sales). In the meantime, Colruyt is being pressured by higher operational costs following the automatic labour indexation in Belgium as well as increased energy costs. Looking ahead, we don't expect the situation to significantly improve in the short term, with Colruyt mentioning that similar results could be expected for FY22/23. This is well below our estimated decline in net profit of -30%, despite already being at low end of the streets estimates. As a result, we have further revised our estimates to the downside, deriving a new TP of € 22.0 ps. Although we believe there is value to be unlocked from a potential Parkwind sale (€ 26.5ps valuations based on a € 2.0bn takeover price), we stick to our Hold rating and lower our TP from € 29.0 to € 22.0 ps.Etablissements FR Colruyt is engaged in wholesale, food service, distribution of fuels, production of electricity and digital printing. Co. has three operating segments: retail, which relates to stores under Co.'s own management which directly sell to retail customers and bulk consumers; wholesale and foodservice, which supplies to wholesalers, commercial customers and affiliated independent merchants; and other activities, which operates gas stations, engaged in printing and document management and provides alternative energy.
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