19 July 2007 - Sligro's total net sales in the first half of 2007 were 26.7% higher at Euro 960 million. Like-for-like sales growth was 5.6%. Net profit rose Euro 3.8 million (17.3%) to Euro 25.6 million.
Food retail sales were up 50.5% at €318.9 million, most of this increase being due to the conversion of mainly former Edah stores. The number of EM-TÉ stores increased with 25 to 55 in the first half-year, with 11 added in the second quarter. Average sales growth relative to the Edah level of a year ago remained unchanged at around 40%. A further 16 Golff and MeerMarkt stores were opened in the first half-year, of which 7 were in the second quarter.
Like-for-like sales by the existing food retail operations grew 2.7%. As previously reported, while the sales performance of the new supermarkets is satisfactory, their results are still hampered by additional non-recurring start-up costs and pressure on margins. It is also taking some time to optimise management at the new stores, so wastage rates and wage costs are higher than normal. This had the effect of halving the operating profit on the food retail operations to €5.1 million and reducing the operating profit before depreciation and amortisation (EBITDA) in the first half-year by 14.3% to €11.4 million.
Sales by the food service operations were 17.5% higher at €641.1 million. Like-for-like sales grew 6.7%. A new store was opened in Hilversum in the second quarter. Further sales growth was generated by the acquisition of Inversco in May 2006. The food service operations benefited strongly from rapid sales growth, reduced pressure on margins and cost savings accruing from the new logistics infrastructure. The operating profit on food service operations was 59% higher at €32.6 million and EBITDA was up 40.8% at €43.5 million in the first half-year.
Group operating profit rose 21.5% to €39.6 million but declined as a percentage of sales from 4.3% to 4.1%. After financial income and expense and profit tax, the net profit for the first half-year was 17.3% higher at €25.6 million and earnings per share were up 13.5% at €0.59.
Outlook
We expect the market conditions to remain relatively favourable, but the sales growth recorded in the second half of 2006 will gradually make comparison less flattering. The group plans to open around 30 new supermarkets in the second half of 2007, completing the programme of transformation of the former Edah stores. It should than be possible in the fourth quarter to start transferring the MeerMarkt and Attent formats to Spar Holding, as recently announced. The group’s food retail business will then consist of some 150 full-service supermarkets under the Golff and EM-TÉ banners. Group sales for 2007 will pass the €2 billion mark.
As in the first half, the food retail results in the second half of 2007 will again be held back by the new stores. In 2008, however, we shall be able to concentrate all our attention on optimising the new outlets. Foodservice will continue to develop strongly and is on track to post its best-ever annual results. There are plans to increase the number of Sligro cash-and-carry wholesale outlets still further. A new foodservice distribution centre in Gilze, which will serve a large proportion of the client base in central and western Brabant, is to open shortly. A presentation on the half-year figures will be given at a press conference and analysts’ meeting today.