GuruFocus -
- Revenue Growth: 5.8% increase in Q3 2024.
- Adjusted EBITDA Growth: 6% increase compared to the same period last year.
- Net Income: 51.3% increase in Q3 2024.
- Food Retail Revenue Growth: 7.4% increase with a same-store sales growth of 2.8%.
- Pharma Revenue Growth: 4.7% increase with same-store sales growth of 2.1%.
- Shopping Malls Revenue Growth: 3% increase with a same-store sales growth of 8.6%.
- Net Debt: PEN6,246 million with a net debt to adjusted EBITDA ratio of 2.2 times.
- CapEx: PEN228 million invested in Q3 2024.
- Cash Balance: PEN1,411 million at the end of Q3 2024.
- Store Openings: 75 net new Mass stores and 26 net new pharmacies opened in Q3 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- InRetail Peru Corp (LIM:INRETC1) reported a sound growth in revenues of 5.8% and adjusted EBITDA growth of 6% in Q3 2024.
- The Food Retail segment posted a strong revenue growth of 7.4%, driven by Mass and Plaza Vea formats.
- The Pharma segment showed recovery with a 4.7% increase in revenues, benefiting from a strong winter campaign.
- The Shopping Malls segment experienced stable growth with revenues and adjusted EBITDA increasing by 3% and 7.1%, respectively.
- InRetail Peru Corp (LIM:INRETC1) maintained a healthy consolidated leverage ratio with a net debt to adjusted EBITDA ratio of 2.2 times, showing a decrease from the previous year.
- Despite growth, the Food Retail segment's adjusted EBITDA margin declined by 44 basis points due to increased operational expenses from new stores.
- The non-pharma categories in the Pharma segment were partially affected by a decrease in discretionary categories like herbal supplements and baby care products.
- The Shopping Malls segment faced lower growth in income from management services, which represents a significant portion of total income from tenants.
- Cinemas within the Shopping Malls segment continued to be affected by the lack of blockbuster content, impacting tenant sales.
- The company faces challenges with short-term debt, although they are actively managing it through refinancing strategies.
A: We are seeing positive trends continue into the fourth quarter, with October showing a 2.6% same-store sales growth in Food and similar levels in Pharma. November is slightly better than October, indicating a positive trend. For Food Retail expansion, we plan to open approximately 350 locations this year and maintain a target of 300 new stores annually in the medium term.
Q: What are the expectations for openings of Plaza Vea and Macro (BCBA:BMAm) stores, and have there been any changes in competitive dynamics in Peru?
A: We plan to open about two big box stores annually, skewed towards Macro. We have accelerated the opening of the next Macro store to Q4 2024. Regarding competitive dynamics, we haven't seen a major impact from new discount stores and believe there is ample opportunity for growth in the market.
Q: Can you provide more details on the acquisition of the grocery retailer in Chile?
A: The acquisition involves 33 small grocery stores in Chile, each averaging 200 square meters. This is an exploratory investment to learn about the Chilean market. We estimate revenues of around $20 million this year. Currently, there are no plans for significant investments related to this acquisition in the short term.
Q: How will you manage the short-term debt, and what steps have been taken so far?
A: The increase in short-term debt is mainly due to medium-term loans maturing next year. We have already refinanced our Pharma bonds with a five-year medium-term bank loan. We are in active discussions with local banks and capital markets to refinance remaining short-term debt, leveraging the favorable interest rate environment.
Q: Have you discussed the negative outlook with Moody's, and is there a possibility of stabilizing the rating?
A: We are in constant communication with Moody's, updating them on our positive operational performance and deleveraging efforts despite higher CapEx. While they are positive about our business operations, any decision regarding the outlook will depend on Moody's.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.