Eurocash 1Q 20 - EBITDA mildly below consensus, FX impacts bottom line
Eurocash delivered a set of 1Q 20 operating results that broadly met our estimates on revenues and EBITDA. EBITDA missed consensus by a moderate 5.5%. Wholesale impressed with strong lfl sales, which we expect were aided by stocking up due to the pandemic in March. As expected the retail segment's profitability was impacted by integration costs. The bottom line loss of PLN 60.6 mn was significantly deeper than RCBe and consensus had expected due to financial costs growing by 83% yoy to PLN 63.6 mn, mainly due to valuation of liabilities in foreign currencies in relation to the application of IFRS 16. The impact of IFRS 16 on financial costs of PLN was PLN 25.4 mn. We expect a mildly negative market reaction driven by the EBITDA margin missing consensus by 0.2%p and the weak bottom line.Eurocash, through its subsidiaries, is engaged in the distribution of food products, household chemicals, alcohol, and tobacco products (fast moving consumer goods). Through a range of distribution formats, Co. and its subsidiaries focus its business activities on the wholesale distribution to customers across the wholesale market segments, in particular, to stores throughout Poland such as retail stores, convenience stores at petrol stations, restaurants, hotels and cafeterias. Co. and its subsidiaries operate a range of distribution formats focused on supplying independent stores in Poland, which primarily include: Cash and Carry, Franchise Systems, and Distribution.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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